What Makes Software Defensible In The Age Of AI?

Paul Lachance, Chief Industry Strategist & Technologist, Software Equity Group.

​I spent a significant part of my development career working with languages such as Visual Basic, Pascal and C++. At that point, building software still required specialized knowledge.

Over the decades, I’ve watched the barriers to building software steadily fall, from more accessible programming languages to low-code platforms, and now, AI-assisted development and “vibe coding.”

Of course, AI is much broader than coding acceleration and generative AI. Machine learning, natural language processing, computer vision and predictive and prescriptive analytics have been part of software for years. What’s different today is the accessibility and sophistication of these technologies, and the pace at which they’re advancing. Today, someone with an idea and limited programming experience can build a working application pretty quickly.

That is an incredible technological shift, but it raises an obvious question for anyone building, investing in or acquiring software companies: If software is becoming easier and cheaper to build, where does enterprise value come from?

The ‘So What?’ Test For AI-Era Software Value​

I think about that question from two perspectives. I’ve spent much of my career in technology and software, and now I evaluate software companies through an M&A lens. In a recent discussion with my team about what makes a software company durable in the AI era, one of my colleagues offered a simple test: “So what?”

You added an AI capability. “So what?”

You have an AI road map. “So what?”

Your employees are using AI every day. “So what?”

None of these, on their own, tell us much about the durability or enterprise value of the business. For that, we need to go a layer deeper. What does this company have that gives it real staying power?

What Sits Below The Waterline​

Where Software Defensibility Lives​

AI doesn’t make those layers irrelevant. If anything, it raises the bar for each of them.