Recent headlines declaring the 'death of SaaS' have gained momentum as AI-driven disruption reshapes enterprise software. But the reality is much more subtle. SaaS is not going away, it is evolving into something more intelligent, connected and results-driven.
stephen howe
This debate intensified in early 2026 when SaaS company valuations saw a massive selloff. Nearly $1 trillion of market value was erased from software stocks as investors reassessed growth expectations amid rapid AI adoption and structural change in enterprise software (Forrester).
Yet despite volatility in public markets, broad industry forecasts indicate that worldwide spending on public cloud services is projected to double from $805 billion in 2024 to $805 billion by 2028 (IDC Worldwide Software and Public Cloud Services Spending Guide).
In other words, SaaS is not shrinking. This is scaling.
For Stephen Howe, director of Times 3 Technologies (T3T), the 'SaaS extinction' story misses an important point about how enterprise systems actually function.
Howe says, “Is SaaS dead with AI? Absolutely not.” “For AI to deliver real value, you need a cloud-connected ecosystem, trading partners, and shared data environments. You can't unlock those benefits if you're still sitting in a closed on-premise system with no external connectivity.”
They argue that AI does not replace enterprise software systems such as enterprise resource planning (ERP), human capital management (HCM), customer relationship management (CRM), or IT service management (ITSM), it depends on them.
“These systems are not optional tools. They are systems of record,” he explains. “AI needs structured, reliable data to be meaningful. You can't train intelligence in isolation and expect it to perform better than years of accumulated enterprise logic.”
Increasingly, AI is being embedded directly into SaaS platforms. With industry research showing that 60% or more of enterprise SaaS products now include embedded AI capabilities, AI has increasingly become an essential layer in SaaS platforms from predictive analytics to generative copilots and automated workflow engines (Founders Forum Group).
This shift is transforming SaaS platforms into intelligent systems rather than static applications.
However, Howe emphasizes that the real value of AI lies not in isolated automation, but in shared intelligence across organizations.
“There are two layers of AI emerging,” he says. “One is internal process optimization and how a business runs its own workflows. The other is AI-powered automation across businesses, where learning and insights are shared. This is where vendors should enable collaboration and best practice frameworks.”
He points to practical examples already emerging in HR and payroll systems, where AI co-pilots can respond to employee queries such as leave balances or pay slip clarifications in real time, reducing administrative burden and improving the employee experience.
“What used to be a data-capture role is becoming an insight-driven role,” Howe says. “Instead of searching for information, employees are being inspired with relevant insights while they're doing things like identifying a customer who hasn't paid or suggesting relevant discounts based on prior purchase behavior.”
He argues that this shift fundamentally changes the way organizations operate. AI is not replacing ERP or payroll systems, it is removing the friction between users and data.
At the same time, South Africa remains in what Howe describes as the “early adoption stage”. While large enterprises are actively exploring AI integration, many organizations are still experimenting with how to incorporate it into their operations.
He says a key strategic question is whether businesses should attempt to build proprietary AI systems or instead take advantage of the global software ecosystem that already embeds AI at scale.
“The best approach is to build on established enterprise platforms that already encode best practices,” says Howe. “This ensures that governance, compliance and scalability are in place from the start.”
This is in line with broader industry thinking: as AI becomes more pervasive, data sovereignty, governance and auditability are being viewed as strategic capabilities and competitive advantages, particularly in regulated industries, where trusted data and compliance-ready architectures are essential for successful AI deployment.
Ultimately, while SaaS is going through one of its most significant changes since its inception, its foundation remains intact.
AI is not destroying enterprise software. This is rewiring it. Mother-in-law is not dead. It is becoming much more powerful.