The SaaS Reckoning

The enterprise software landscape is undergoing a profound shift, driven by the transformative power of artificial intelligence. For decades, companies have accepted high costs for essential platforms like CRMs and ERPs, viewing them as complex technological assets that only specialized vendors could deliver.

This paradigm is breaking down. The economics of building software have fundamentally changed, with AI dramatically reducing the cost and time required to create enterprise-grade applications. What was once a barrier to entry—the extensive coding expertise needed—is now becoming accessible through AI-assisted development tools.

The moat for these platforms wasn’t the code itself but rather the prohibitive cost of writing it in the first place. With that cost rapidly declining, vendors face increasing pressure to reevaluate their pricing models.

The Rise of Internal Development

Evidence of this shift is already emerging: Retool’s 2026 Build vs. Buy Shift Report found that 35% of teams have replaced at least one SaaS tool with a custom build, and another 78% plan to do so in the coming year.

The categories where we see the most displacement? Workflow automation and internal administrative tools—precisely the functions that many enterprise platforms provide as their core offering.

Integration capabilities, once a key differentiator for SaaS vendors, are also becoming commoditized. Tasks that previously required significant engineering effort can now be accomplished through simple prompts and API connections.

The Human Factor in Tech Decisions

Enterprises haven’t fully embraced internal development because the challenge extends beyond technology. Replacing core systems requires managing organizational change at scale—retraining employees, adapting workflows, and navigating operational risks that go far beyond software implementation.

The actual coding effort represents only about 30% of the total project; the remaining 70% involves people, processes, data migration, and addressing the inertia built up by years of reliance on existing systems.

This is why we’re seeing pricing inflation in SaaS—not because products are inherently more valuable but because switching costs (in terms of productivity disruption) have outweighed the financial benefits so far.

What’s Next for Enterprise Software?

The dynamic will shift when the cost-benefit analysis favors internal development. As AI tools continue to improve and companies demonstrate successful proof-of-concept builds, that tipping point will accelerate.

Vendors who proactively respond by lowering total cost of ownership, building platforms that are easier to customize, and adopting pricing models aligned with AI-era economics—rather than legacy seat-based licensing—will be best positioned for the future.