SaaS Resilience: Why Software Is More Human Than We Think
No, neither is SaaS over, nor its going away anytime soon
After many years of investing in SaaS companies, I've witnessed countless predictions about the death of software. Each time, these predictions miss something fundamental: software isn't just technology – it's a mirror of how humans work, collaborate, and create value.
The Cycle of Technology Predictions
Every few years, a new technology emerges that's supposed to fundamentally disrupt how we build and sell software:
2016: Containers promised to make SaaS obsolete
2018: No-code platforms were going to democratize software
2020: API-first companies would replace traditional SaaS
2023: AI would automate away the need for software
Each time, something interesting happened instead: these technologies strengthened SaaS rather than replacing it. Why? Because they addressed the technical challenges of software, but not the human ones.
The Human Side of Software
The average enterprise uses nearly 300 SaaS applications
78% of digital transformation initiatives struggle or fail
Successful software switches typically take 12-18 months
But these aren't just numbers. Behind each statistic is a story about people trying to get their work done.
Why Software Is Sticky
The real strength of SaaS comes from four deeply human elements:
1. Organizational Memory
Every successful company has its own way of working – its own language, processes, and shortcuts. Software becomes the vessel for this organizational memory. When a sales team has spent years customizing their CRM, they're not just using a tool; they're building their collective knowledge base.
2. Data as Story
Companies don't just collect data – they create their narrative through it. A marketing team's campaign history, a product team's development cycles, a support team's ticket resolutions – these aren't just records, they're the company's story told through numbers.
3. Human Investment
When people spend months or years mastering a tool, it becomes part of their professional identity. I recently met a Salesforce administrator who told me, "This isn't just software I use – it's a career I've built."
4. Community Trust
The most successful SaaS companies don't just build products; they build communities. These communities become support networks, learning environments, and professional development platforms.
The AI Question
Every so often, someone claims SaaS is on its way out. Now, with AI riding high, the chatter’s back: "Will AI replace SaaS?" The answer is simple—nope. SaaS isn’t going anywhere, and AI is only making it better.
AI will undoubtedly transform software, but not by replacing it. Here's why:
1. AI needs structure
AI may sound fancy, but it needs structure—SaaS provides that.
Reliable processes: Businesses need systems they can count on. AI works best when paired with consistent workflows.
Clean data: AI relies on good data, and SaaS platforms keep it clean, structured, and usable.
Accountability matters: When something goes wrong, SaaS provides the audit trails and governance AI can’t handle alone.
2. Human oversight remains critical
AI is smart, but it’s no substitute for human judgment.
Augments, not replaces: AI is great at pattern matching at scale. But it still lacks the complete context and understanding to make nuanced decisions. Why? Business rules are rarely black-and-white. Humans handle the gray areas.
High-stakes decisions: Compliance, ethics, risk—these aren’t things you want to leave to a robot. People bring judgment, empathy, and accountability to the table, and that’s irreplaceable.
3.The Investment Perspective
From an investment perspective, I’m drawn to SaaS companies that truly understand these dynamics. The ones that succeed don’t just layer AI on top like a shiny new coat of paint – they weave it into their offerings in a way that respects the human side of software.
What sets these companies apart?
They prioritize user education, ensuring customers understand not just what AI can do but how it integrates into their workflows.
They cultivate vibrant communities, fostering spaces where users can share insights, learn from peers, and grow professionally.
They focus on smooth transitions for customers, offering clear paths for migration and onboarding.
They respect the existing workflows their users rely on, making gradual enhancements instead of forcing disruptive changes.
And it’s not just feel-good principles – the metrics prove this approach works:
Net revenue retention above 120%.
Customer churn rates below 5%.
A healthy pipeline of expansion revenue growth.
But beyond the metrics, I look for companies that understand they're not just building software – they're supporting human workflows and relationships.
The future of SaaS isn't about surviving new technologies – it's about evolving with human needs. The most successful software companies will be those that:
Build with empathy for human workflows
Respect the complexity of organizational change
Support genuine community building
Understand that technology serves people, not the other way around
Closing Thoughts
After years of investing in and working with SaaS companies, I've learned that software's resilience comes from its humanity. Every time we predict its death, we're forgetting that software isn't just code – it's the crystallization of human knowledge, relationships, and ways of working.
The next time someone predicts the end of SaaS, remember: technologies change quickly, but humans and organizations evolve thoughtfully and intentionally. That's not a bug in the system – it's the feature that keeps our digital world human.