AI Disrupts SaaS: Why Enterprises Are Choosing to Build Over Buy
OpenAI’s CFO warns AI is shifting SaaS from buying software to building in-house solutions. This challenges providers as customization becomes standard, not a premium.
The ‘Buy Versus Build’ Paradigm Shift
OpenAI’s CFO, Sarah Friar, has issued a clear warning about shifts in the SaaS sector driven by advances in AI. Drawing from her experience at Square and Nextdoor, she points out how generative AI is changing the traditional decision companies face: whether to buy off-the-shelf software or build custom solutions internally.
According to a recent Business Insider report, AI tools are enabling faster, more efficient software development within companies. This trend risks reducing reliance on established SaaS providers like Salesforce or Adobe, as AI automates coding and customization tasks that previously required vendor solutions.
With AI lowering the barriers for in-house development, the traditional SaaS model faces serious challenges. Customization is no longer a premium feature but an expectation, forcing software providers to rethink their offerings. Industry analyses, such as one from Bain & Company, suggest autonomous AI agents could replace many SaaS functions by handling complex tasks without human input.
Friar notes that OpenAI’s own tools, like ChatGPT, already help developers prototype software rapidly, accelerating this shift. Businesses may soon favor AI-driven, customized tools over generic platforms, reshaping the software market landscape.
Navigating Competitive Moats in the AI Era
As AI commoditizes generic software solutions, companies need to build competitive advantages that AI alone can’t replicate. Friar emphasizes investing in proprietary data, creating seamless integrations, and upholding ethical AI standards.
She highlights the importance of unique datasets, strong user communities, and security as key differentiators. These elements form a “competitive moat” that protects against commoditization. This advice is timely as OpenAI aims for ambitious revenue targets, with $11 billion projected for 2025.
Friar also pointed out that major cloud providers like Microsoft and Amazon have benefited from OpenAI’s advances but face scrutiny. OpenAI’s plans to build its own data centers could reduce dependence on external infrastructure and support more autonomous AI development within industries.
From Hype to Reality
While AI promises significant efficiency improvements, the transition involves challenges like workforce reskilling and regulatory compliance. Critics caution that AI’s impact is still unfolding and shouldn’t be overhyped.
Business Insider describes the current period as AI’s “meh” era, following less exciting releases such as GPT-5. Bob McGrew, former OpenAI research head, noted that “vibe coding” prototypes still need professional engineers for production-level software.
Looking ahead, Friar’s warnings mark a critical moment for SaaS. As AI models evolve, possibly with GPT-6, companies must innovate or risk losing relevance. Enterprises can benefit from AI empowerment, but success depends on effective integration and ethical considerations.
The Broader Economic Ripple Effects
AI-driven changes extend beyond SaaS, potentially reshaping labor markets, investment strategies, and the role of capital in a future influenced by artificial general intelligence (AGI). OpenAI’s recent fundraising efforts highlight this dynamic, especially amid concerns that AGI might disrupt traditional monetary systems.
With valuations reaching $300 billion and concerns about a tech bubble, the urgency to adapt grows. Industry leaders agree that embracing AI-driven transformation is essential for survival and growth.
