Last week we were working with Miguel Alava and the Amazon Web Services (AWS) ISV leadership team.
They provide computing services that support the entire corporate market in EMEA for small, medium and large organisations.
Almost inevitably our conversation included what they were seeing in relation to AI in their marketplace and on their customer base.
They had noticed that the SaaS-pocalypse was causing significant concern for their client base. We discussed how, in the global marketplace, the SaaS-pocalypse had, in one day, wiped off ~$300 billion of market value from SaaS firms.
This dramatic drop in market value was not because those SaaS companies had budgeted poorly. It was not because they missed their sales target. It was not because the market had been disrupted by some unforeseen convulsion.
The drop was down to an AI product release.
Those who've been watching the whole SaaS sector will have noticed that the sector has been in decline since September 2025. The companies in this sector have seen their share price eroded by 30% in the last 6 months.
There’s also been a massive drop in SaaS company valuation, with their forward earnings multiple plummeting from ~39x to ~21x as investor confidence declined.
But what was most surprising last week was the speed of the share price drop. Salesforce, Adobe, and Workday each dropped 7% in just one day.
But what’s causing this crisis in confidence and the share price plummet?
SaaS companies are still in a fight to the death for feature supremacy. But such increased competitiveness just compresses margins, it doesn’t cause a collapse in confidence.
The implosion was due to the realisation that AI will take out entire workflows and all the people associated with them.
The very nature of the competitive advantage that SaaS companies have enjoyed just changed.
This change caused investors to redirect their spend and restructure their portfolio.
The belief is that by 2030, up to 60 percent of software companies’ revenue will be driven by agentic AI rather than the efficiency of SaaS systems.
This suggests that companies who are betting on the benefits of developing their own customer Apps, are massively at risk. The belief that their company App or software service will generate additional revenue, justifying their investments, by connecting them to their customers through a phone or computer screen is increasingly unlikely. It looks like the speed of AI adoption in the marketplace is already moving in a different direction.
Companies and customers, whether B2B or B2C, will most likely interact with each other through agents, and the interface will be controlled by voice not screens.
All of us will increasingly speak to our Agentic AI, or ‘virtual twin’, who will connect with SaaS companies, retailers, or any service provider directly. Our agent will work with the providers Agentic AI to meet our needs.
Human to human contact will be significantly reduced. Why? Because such AI systems are adaptive, intelligent and remember our preferences, whereas static SaaS systems follow preset protocols and can’t adapt to live changes with the speed and agility of agentic AI.
This shift away from SaaS processes suggest we are moving away from a license fee model and towards a system where we start paying for outcomes and fulfilment rather than software, which may sit dormant for months.
Such a shift is borne out by investors and traders already moving their money out of software companies.
Just as software companies replaced labour, AI is now replacing software companies. Each time this is driven by cost and efficiency savings.
The software boom of Web2.0 may be coming to an end as we enter the era of Web3.0.
Software in a way became a prison for progress, driving recurring revenues for their owners, but user benefits diminished over time and with AI adoption many benefits can now be chieved cheaper and faster with AI.
AI liberates us from the constraints of the SaaS thinking.
Behind all this is one of the most powerful forces the world has ever seen and that’s evolution.
The evolutionary adaptability of AI is already commoditising the LLM market. Most LLMs are diversifying into sub-brands and sub-capabilities. Each creating its own competitive space.
Future thinking organisations will shift to LLM-agnostic AI platforms that will interface with multiple LLMs. Cutting edge organisations’ agentic systems will play quarterback to a field of other agentic systems; just like a leader organises their leadership team. Intelligence becomes a product.
And here’s where it gets really interesting.
With all this AI evolution, human intelligence still has a role to play.
If we upgrade human intelligence can we find our place in this ecosystem.
We can use agentic AI to gradually replace the expertise that SaaS systems offered. We can also use agentic AI to improve human driven workflows, making our systems more efficient.
This creates a space for us. That space is where we leverage what is uniquely human.
Human intelligence can be used to architect an AI meta-system. One capable of integrating workflows driven by agents, and the intelligence that has replaced expertise.
The role of humans in this new future is not as a coder or an expert selling a service. Our role will be as a polymathic integrator; a choice maker, deftly handling the complexity and nuance delivered by SaaS systems and Agentic AI.
The answer to the SaaS-pocalypse is to develop ourselves.
Developing what is uniquely human.
Ironically, AI may just be the critical nudge we need to help us uncover a new version of ourselves; a more advanced version that is smarter than you. That is more capable than you. That is more competitive than the current version of you. A new version of you that has a better future than you have right now.
The future will belong to those who understand how both types of intelligence are evolving:
- AI (artificial intelligence) and
- HI (human intelligence).
If we say HI to AI, we can affect each other’s evolution in a beautiful symbiotic dance that has mutual benefit.
If we don’t understand this, then the risk is AI makes us dumber, because we become reliant, unable to figure things out for ourselves. Unable to make a unique contribution. Down this road we encounter universal basic income and a purposeless existence.
But if we upgrade human intelligence, partner with AI the future looks much brighter.
Dr Alan Watkins’s book Smarter Than You, written in collaboration with GC Cooke will be published in April 2026 by Routledge