How enterprise software became the ultimate game of musical chairs – and why half the industry still thinks the music will never stop

As someone building vertical SaaS tools in this AI hurricane (hi, Tanay here – CTO at Problock.ai), I’ve developed a Pavlovian response to VC pitch decks. Claiming ‘We’re adding AI features next quarter’ is like Blockbuster announcing streaming in 2007 – everyone knows it’s already too late.

The Great Unbundling (And Why Your SaaS Stack Looks Like My Teenage Winamp Playlist) [remember Winamp?]

Let’s start with an analogy every founder will recognize. Remember when enterprise software categories were neatly organized like a 1990s CD collection? CRM, ERP, HRMS – each in their plastic case with a clear label. GenAI has thrown these into the digital equivalent of a college dorm room laundry pile.

Exhibit A: The average enterprise now uses 371 SaaS applications (Bessemer, 2024). But here’s the kicker – 68% of these will be rendered obsolete by AI-native solutions within 24 months (Gartner, 2025). Why? Because GenAI doesn’t just automate tasks – it collapses entire workflows.

Take expense reporting. Previously you needed:

1. OCR tool for receipts ($15/user/month)

2. Approval workflow software ($22/user)

3. Accounting system integration ($300/month base)

4. Audit compliance module ($45/user)

Now? A single AI agent that:

1. Extracts data from crumpled lunch receipts

2. Flags policy violations using natural language

3. Auto-generates audit trails

4. Sings you a lullaby when submitting Q4 reports

This isn’t evolution – it’s software entropy. And it’s creating three distinct survivor archetypes:

1. The API Ninjas

(See: OpenAI, Anthropic, Mistral)

These are the new electricity providers. As a16z’s Martin Casado famously tweeted: “In the AI stack, infrastructure players are the new oil barons – everyone needs their crude, but refining is where fortunes are made.”

Winning Move: Becoming the AWS of model hosting

Losing Move: Trying to be all things to all enterprises (RIP $2B unicorn that bet everything on bespoke HR chatbots)

2. The Vertical Vanquishers

(Shoutout to CB Insights in tech intelligence)

These players are doing to horizontal SaaS what algorithmic trading did to Wall Street – replacing gut feelings with data-driven precision. While generic market tools drown you in noise, vertical specialists like CB Insights weaponize industry-specific data to deliver tactical intel.

Winning Moves:

• Nuke-Specific Data Moats - Owning proprietary tech industry deal flows & startup post-mortems (their 2024 "State of AI" report broke VC Twitter)

• Founder Whispering - Tracking founder LinkedIn updates before they're trending (yes, they knew about the Anthropic pivot before your favorite VC)

• Addiction Engineering - Creating FOMO loops with real-time tech IPO trackers and unicorn watchlists

Losing Moves:

• Chasing vanity metrics like total reports published (quantity ≠ insight)

• Trying to be Bloomberg Terminal for every industry (stick to tech’s gossip mill)

3. The Bundlers

(ServiceNow, Monday.com, emerging AI orchestration layers)

These are the Marie Kondos of enterprise tech – folding, stacking, and sparking joy through ruthless consolidation. Their secret sauce? Turning integration spaghetti into AI-generated lasagna layers.

Winning Moves:

• API Origami - Creating seamless connections that even non-techies love (like Monday.com’s no-code ServiceNow integration)

• Compliance Jiu-Jitsu - Baking in regulations like GDPR and HIPAA so customers don’t get fined into oblivion

• Bundleconomics 101 - Mastering the 2-5x CLTV boost from embedded AI/fintech (see Toast’s restaurant payment stack)

Losing Moves:

• Building "Frankenstacks" that require more maintenance than a crypto mining rig

• Ignoring the open-source uprising (ask Salesforce about Llama 3 plugins)

The Silent Mass Extinction

While we’re busy applauding the winners, let’s pour one out for the dinosaurs:

The real tragedy? Most casualties won’t see it coming. As one soon-to-be-acquired CEO told me: “We’re adding AI copilots!” Meanwhile, their entire category is being Thanos-snapped by startups that rebuilt workflows from first principles.

The Founder’s Survival Kit

(Stolen from my own near-death experiences)

1. The 10x Rule of AI ROI

Forget incremental efficiency gains. As Amplify Partners’ Mike Dauber argues: “If your AI feature doesn’t enable 10x better outcomes or 10x cheaper operations, you’re just decorating the Titanic.”

We killed our roadmap for 6 months to rebuild around autonomous project estimation – resulting in 92% reduction in pre-sales engineering costs. Painful? Like chewing glass. Necessary? Left as an exercise to the readers.

2. The Data Moatsmanship

In the words of Scale AI’s Alexandr Wang: “Data is the new uranium – raw, messy, and explosively valuable when enriched.” Our playbook:

1. Turned years of CX operations data into proprietary fine-tuning fuel

2. Created industry-specific embeddings that make GPT-4 look like a first-year intern

3. Launched “AI Audit Trails” that became our #1 upsell driver

3. The Pricing Paradox

Traditional SaaS metrics are collapsing faster than a Jenga tower at a caffeine convention. We’re experimenting with:

1. Outcome-based pricing: % of project savings delivered

2. AI Token Economics: Consumption-based models for heavy users

The Horizon: 2026 and Beyond

Prediction time (with appropriate disclaimers):

1. The Great Rebundling

Expect the “iOS of Enterprise AI” – closed ecosystems where your data trains models that only work within their walled garden. Controversial? Absolutely. Inevitable? Ask mobile app developers.

2. Regulatory Thunderdome

As the EU finalizes its AI Liability Act, compliance will become the new cloud migration – a trillion-dollar forced march.

3. The Rise of the Chief AI Officer

Not because we need more C-suite titles, but because someone has to explain to the board why the company’s AI keeps writing passive-aggressive Slack messages.

Final Thought: The Paradox of Plenty

We’re living through the most exciting (and terrifying) era in enterprise software history. The same GenAI that threatens to vaporize $500B in SaaS market cap also creates $3T in new opportunities (McKinsey, 2025). The difference between riding the wave and being crushed by it comes down to three choices:

1. Build foundational AI capabilities or borrow from platforms

2. Specialize viciously or generalize desperately

3. Lead the value shift or follow someone else’s roadmap

The music’s playing, folks. Time to decide if you’re conducting the orchestra or about to lose your chair.

Full Disclosure: This analysis wouldn’t exist without the mental scaffolding provided by AcquiredFM’s 8-hour deep dives, Business Wars’ dramatized corporate smackdowns, Dwarkesh’s galaxy-brained guests, and enough VC reports to paper the Burj Khalifa. All errors remain proudly my own.

Until next time,
Tanay