{"id":306667,"date":"2025-01-20T07:17:14","date_gmt":"2025-01-20T15:17:14","guid":{"rendered":"https:\/\/www.saastr.com\/?p=306667"},"modified":"2025-02-02T14:07:10","modified_gmt":"2025-02-02T22:07:10","slug":"ai-is-the-best-thing-to-ever-happen-to-saas-why-its-unlocked-more-budget","status":"publish","type":"post","link":"https:\/\/www.saastr.com\/ai-is-the-best-thing-to-ever-happen-to-saas-why-its-unlocked-more-budget\/","title":{"rendered":"AI is the Best Thing to Ever Happen to SaaS. Why?  It\u2019s Unlocking Even More Budget"},"content":{"rendered":"<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The thing that is underpriced right now in software is that AI will meaningfully increase the TAM of many software categories. With AI Agents that do work for people, from coding to reviewing contracts, these are brand new dollars in software spend that didn\u2019t exist before. <a href=\"https:\/\/t.co\/e1NBd87S0f\">https:\/\/t.co\/e1NBd87S0f<\/a><\/p>\n<p>&mdash; Aaron Levie (@levie) <a href=\"https:\/\/twitter.com\/levie\/status\/1879680309916234114?ref_src=twsrc%5Etfw\">January 16, 2025<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>So there was a looming meta issue in SaaS many of us older times worried about for years, until the 2020-2021 boom:<\/p>\n<h3>Will we run out of budget to buy SaaS? \u00a0The dollars put into SaaS can\u2019t just keep growing \u2026 forever.<\/h3>\n<h3>Or put differently, when will it no longer be \u201cearly innings\u201d in the overall amount of global SaaS spend?<\/h3>\n<p>Because forget about any individual SaaS or Cloud company, the overall markets kept growing at a breathtaking pace:<\/p>\n<p>Gartner not only has predicted SaaS spend will hit $300 Billion this year, but importantly, grow almost 20%. \u00a0And that\u2019s after years of similar growth:<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-306668 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png?resize=1000%2C567&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"567\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png 1000w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027-980x556.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027-480x272.png 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1000px; --smush-placeholder-aspect-ratio: 1000\/567;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-306668\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png?resize=1000%2C567&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"567\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png 1000w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027-980x556.png 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027-480x272.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" \/><\/noscript><\/p>\n<p>There was no way this could last forever. \u00a0SaaS couldn\u2019t consume 100% of all global IT budgets. \u00a0It had to slow down at some point, and maybe soon.<\/p>\n<p>And then all our jobs would just get a lot harder.<\/p>\n<p>Well, it\u2019s not clear exactly how much of a permanent boost to overall software IT budgets AI is giving, but one thing is clear: the boost is significant and real. \u00a0It\u2019s not all a substitution change (i.e., swapping out old b2b software for new AI).<\/p>\n<p>Some budget is coming from headcount reallocated to agents and per resolution outcomes, e.g. in contact center. \u00a0Some budget is coming from an expanded \u201cwe have to keep up\u201d IT budget. \u00a0But it\u2019s clearly expanding.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-307215 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-scaled.jpeg?resize=1000%2C653&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"653\" data-srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-scaled.jpeg 1000w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-980x640.jpeg 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-480x313.jpeg 480w\" data-sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1000px; --smush-placeholder-aspect-ratio: 1000\/653;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"aligncenter size-full wp-image-307215\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-scaled.jpeg?resize=1000%2C653&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"1000\" height=\"653\" srcset=\"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-scaled.jpeg 1000w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-980x640.jpeg 980w, https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7062-480x313.jpeg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1000px, 100vw\" \/><\/noscript><\/p>\n<p>I don\u2019t think we\u2019ll know clearly exactly how much AI is <em>adding<\/em> additional budget to overall business software \/ SaaS spend for a while. \u00a0It\u2019s crystal clear how much it\u2019s adding to data center and infrastructure spend, but exactly how that translates to increase application spend will take a little time to know for sure.<\/p>\n<p>But however much it is \u2014 is a gift to us all. \u00a0It\u2019s more budget to buy all our products. \u00a0Importantly, much more than we would have anticipated just 12-24 months ago.<\/p>\n<blockquote class=\"wp-embedded-content\" data-secret=\"tGV8mFEoei\"><p><a href=\"https:\/\/www.saastr.com\/gartner-saas-spend-is-actually-accelerating-will-hit-300-billion-in-2025\/\">Gartner:  SaaS Spend is Actually Accelerating, Will Hit ~$300 Billion in 2025<\/a><\/p><\/blockquote>\n<p><iframe class=\"wp-embedded-content lazyload\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; visibility: hidden;\" title=\"&#8220;Gartner:  SaaS Spend is Actually Accelerating, Will Hit ~$300 Billion in 2025&#8221; &#8212; SaaStr\" data-src=\"https:\/\/www.saastr.com\/gartner-saas-spend-is-actually-accelerating-will-hit-300-billion-in-2025\/embed\/#?secret=pGnJu6IrTk#?secret=tGV8mFEoei\" data-secret=\"tGV8mFEoei\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" data-load-mode=\"1\"><\/iframe><\/p>\n<p>AI is leading to massive disruption in SaaS.<\/p>\n<p>But we\u2019ll look back and see it was the best thing that happened to SaaS in a decade. \u00a0Not just because it makes our software better. \u00a0But because it let the Good Times in B2B software budgets roll \u2026 for another decade.<\/p>\n<h3>Now the tough question is this: are you truly taking advantage of this change and increase in AI spend?<\/h3>\n<p>How is your SaaS product leaning in here? \u00a0 To truly, honestly grab this new budget?<\/p>\n<p>So many \u2026 aren\u2019t. \u00a0I see too many SaaS players rolling out minor AI features and basic enhancements. \u00a0That\u2019s great, but it won\u2019t grab new budget.<\/p>\n<p><iframe title=\"LIVE SaaStr AI Day: What&#039;s New with AI in SaaS with SaaStr, Synthesia and Theory Ventures\" width=\"1080\" height=\"608\" data-src=\"https:\/\/www.youtube.com\/embed\/EwHresQ1kEA?feature=oembed&#038;enablejsapi=1&#038;origin=https:\/\/www.saastr.com\"  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The thing that is underpriced right now in software is that AI will meaningfully increase the TAM of many software categories. With AI Agents that do work for people, from coding to reviewing contracts, these are brand new dollars in software spend that didn\u2019t exist before. https:\/\/t.co\/e1NBd87S0f &mdash; Aaron Levie (@levie) January 16, 2025 So&#8230; <br \/><a class=\"more-link fade\" href=\"https:\/\/www.saastr.com\/ai-is-the-best-thing-to-ever-happen-to-saas-why-its-unlocked-more-budget\/\">Continue Reading<\/a><\/p>\n","protected":false},"author":19,"featured_media":306668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_selected_social_profile":[]},"categories":[24898,31,24987],"tags":[],"class_list":["post-306667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-blog-posts","category-saastr-ai"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png?fit=1000%2C567&quality=70&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5oib2-1hMf","jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/www.saastr.com\/wp-content\/uploads\/2025\/01\/IMG_7027.png","_links":{"self":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/306667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/comments?post=306667"}],"version-history":[{"count":9,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/306667\/revisions"}],"predecessor-version":[{"id":307768,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/306667\/revisions\/307768"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media\/306668"}],"wp:attachment":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media?parent=306667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/categories?post=306667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/tags?post=306667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}