Innovation

Sequoia, the venture capital firm, has written about some of the similarities and differences between SaaS and AI. The following is an interesting comparison from their article:

"SaaS was an evolution from on-premise, license-based software to cloud. AI is a revolution, where we are building new intelligence for the first time. There is no precedent, so we don’t even know what problems are worth solving. Fundamental innovation is going to be exceptionally important."

Their view is that 2023 was the "Big Bang" with Chapgpt and that 2024 is the "Primordial Soup" as new companies and solutions develop. The "Primordial Soup" will include:

• Visionary founders
• Moving away from "AI for X" toward customer-centric companies
• Building companies that are fundamentally architected for the murky reality of AI

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Types of new products

MIT Sloan Management Review writes about 5 Key Trends for AI for 2024. One of the trends I found particularly interesting is the two different types of data products they envision. The two visions are first, a product that includes data, analytics and AI and the second is where data is seperate from AI/Analytics. I think the former is a much more interesting and customer focused approach. By putting together the data and the tools for product recommendation, pricing or other business function a customer has what they need for a data solution. This is also a great approach for existing SaaS companies, who have a substantial data set, to extend and expand their product.

Blume, another venture capital firm, believes that AI in 2024 may drive further verticalization of SaaS using the data/analytics/AI product model above.

Business Disruption

The Harvard Business Review article, 6 Ways AI Could Disrupt Your Business is a good structured way for any business to look at the potential disruption they may be facing with AI. From a SaaS business perspective some of the disruptions could apply but equally important is that SaaS and AI products will drive and exploit these disruptions so it's important to understand them.

• Gains Through Granularity
• A Reshaped Partner Ecosystem
• Expansive Regulatory Regimes
• Radical Cost Transformation
• Value Proposition Redefinition
• Obsolescence

The obsolenscence section specifically asks the question, "Can AI make your core product and offering obsolete?" In the case of many SaaS businesses, the answer is yes.