Just as the iPhone expanded the software market by transforming mobile, and just as the cloud reshaped software delivery, AI will usher in a new era for software. I think we're going to see brand new software reimagined for this paradigm and it's going to just be an expansion of opportunity, not a killer.
Nearly every founder and product-facing exec, from seed stage to public, faces the same question whenever there's a major tech-related decision to be made – do we build, or do we buy? The struggle began with the explosion of cloud SaaS applications, but AI has only made it more challenging. AI's ability to accelerate the building of internal tools may sound like an appealing alternative to costly software subscriptions, but just because you can do it, doesn't always mean you should.
While some prominent voices are predicting that the Enterprise software market from $trillions to $billions as companies use AI to build bespoke internal tooling to replace their bloated SaaS stack, others say this thinking is flawed, and the market will only expand.
Embracing the unknown: "It's like we're in the year 2007 and Steve Jobs has just walked on stage and showed us the iPhone. That's where we're at in AI. We don't actually know what's coming next," says Chase Roberts, COO of Northflank. "It's going to take a lot of creativity, a lot of dreaming, and a lot of innovation among developers and entrepreneurs before we fully understand how its usage progresses."
Northflank is a self-service DX platform that helps automate deployment across apps and databases. The company is particularly well-positioned at the intersection of internal engine tooling, off-the-shelf solutions, and the major cloud infrastructure pillars in companies' tech stacks.
Roberts points out while AI is exciting and even inspiring, it doesn't mean it's here to decimate every industry. In fact, software could see an entirely new chapter. "Just as the iPhone expanded the software market by transforming mobile, and just as the cloud reshaped software delivery, AI will usher in a new era for software. I think we're going to see brand new software reimagined for this paradigm and it's going to just be an expansion of opportunity, not a killer," says Roberts.
Dreaming of problem solving: No matter the future potential that software might have thanks to AI, it still has a solid, defensible moat within how its used by businesses. It's what enterprise software has finessed and iterated over time that makes it hard to replace by any internal developer, according to Roberts.
"People forget that when you're buying software, you're not just buying the technology. You're buying the support, the documentation, and the thousands of successful case studies that have shaped that product into something useful," Roberts explains. "The software you bought is the product of a company that has spent thousands and thousands of hours iterating on it in so many different scenarios. They wake up and go to bed thinking about how to solve that problem exceptionally well. And we expect my internal person to compete with that? It’s a fool’s errand. It makes no sense to me."
Iteration as a missing piece: The assumption that internal teams can build a software solution as good as dedicated providers misses the reality of product development. Roberts says, "Building a great product is not as simple as throwing a body at a problem. And building a great product is not a point-in-time activity where I decide I need to do this thing, and then I do it. Great products take iteration—lots of iteration."
Building a great product is not as simple as throwing a body at a problem. And building a great product is not a point-in-time activity where I decide I need to do this thing, and then I do it. Great products take iteration—lots of iteration.
Time better spent: The idea that companies will move en masse to replace software vendors with AI-built alternatives doesn’t hold up under scrutiny, Roberts argues. While businesses may talk about cutting software costs, history shows that actual change is rare.
"I think companies like to pay lip service to pruning software vendors, but very seldom does that actually occur," Roberts observes. "The time we saw it most actively was during the pandemic when there was an economic downturn, and everyone was looking under seat cushions to reduce burn."
"But in general, people understand how hard it is to rip software out of a company," Roberts continues. "Even for software that wasn’t hard to implement, one credit card swipe by an employee somewhere can be surprisingly difficult to track down and cancel."
Putting things into perspective he adds, "The mental tax of trying to figure out how to cancel a $20-a-month subscription is likely not worth the time that could be spent on making my sales team successful."
Following trends: The current debate around AI replacing enterprise software could be fueled by generalized AI hype. Businesses are jumping on the latest AI trends, believing they can create AI powered solutions to most of their problems—but this is dangerous territory, Roberts warns.
"You have to be super careful not to take the wrong step into a trend. Where companies get mixed up is they see a trend and think, ‘I need to figure out what my play is in this trend.’ And they kind of forget everything else. They do something outside of their core competency and end up looking silly, most likely failing, or just creating more chaos inside their company because it’s not clear what the overall strategy is."
Better questions, better decisions: Instead of chasing trends, Roberts suggests businesses should ask themselves more strategic questions.
"The best companies start by asking: What’s changing in the market? How is buyer behavior evolving?" Roberts explains. "Are there new technologies emerging? Are there problems we needed to solve before but couldn’t? How is the competitive landscape shifting? Then they look inward: What are we great at? What problems are we best suited to solve? What problems do we have the right to solve because we've been intimately thinking and iterating around those problems for years? That’s where the magic happens."
