AI-Driven Transformation: The Future of Software

At a glance

• The main takeaway: While the SaaS industry has experienced a slowdown, companies are beginning to recover, driven by renewed economic optimism and opportunities in AI.
• Impact on your business: SaaS companies that strategically integrate AI into their offerings are positioned to deliver transformative value, setting themselves apart from their competitors.
• Next steps: Whether your goal is to enhance your technological capabilities or to simply optimize operations, Aprio’s Technology advisors can help you navigate the complexities of today’s market to drive sustainable growth.

Have any questions? Schedule a consultation with our team today.

The full story:

The SaaS industry has faced a noticeable slowdown, with 2023 and 2024 marked by reduced activity and tempered valuations. This shift has sparked questions about whether the AI hype has peaked. Despite this, optimism is returning as the economy shows signs of recovery, and businesses across industries increasingly rely on SaaS solutions. AI has emerged as a pivotal focus for SaaS companies, driving innovation as they explore ways to integrate it into their operations to retain customers and stay competitive. Today, SaaS companies leveraging AI can deliver significantly greater value to their users than they could just two years ago.

Low-code and no-code upswing

Low-code and no-code platforms aren’t new, but they are certainly fueling the next wave of software development. Startups are leading the charge, demonstrating how drag-and-drop functionality can replace traditional coding. Looking ahead, technologies like voice-to-code and image-to-code promise to drive even faster, more accessible transformation across software development.

Digital transformation to AI transformation

AI is changing SaaS beyond customer service, pushing companies to incorporate it into every facet of their platforms to avoid losing their share in a highly competitive market. As SaaS companies recover from a period of slower growth, they are racing to add AI functionalities that can enhance their core offerings and keep clients engaged. AI is now essential for improving coding, delivery, development, managed services, and customer support.

Normalizing of valuations

SaaS valuations saw a steady correction from the highs of 2021 and 2022, gradually normalizing to pre-pandemic levels. While investors are ready to deploy capital, they’re looking for more grounded valuations that better reflect the current market. Founders may feel the pressure of this adjustment, but the trend indicates a more sustainable approach for SaaS growth moving forward, especially for those who are bringing real value to their customers with AI enhancements.

Customer churn and ROI

Customer churn remains a top challenge for SaaS companies, particularly in marketing tech, where ROI can be tough to justify to clients. Customers investing heavily in software expect transparent and quantifiable outcomes, especially when they are spending six figures on a platform. SaaS companies that embed ROI-tracking tools directly into their products can empower customers to link spend to outcomes, adding a valuable selling point and helping teams justify their investment to management. Companies who continue to post 95% plus renewal rates are capturing the attention of investors.

Embedded iPaaS

The modern tech stack focuses on integration, as highlighted in the G2 2024 Buyer Behavior Report, which saw integration as a key factor for B2B software buyers. Embedded integration platform as a service (iPaaS) solutions help B2B SaaS companies easily link their products with other tools used by their clients, enhancing the connectivity of SaaS applications.

The SaaS formula

When companies transition from tech-enabled services to a SaaS business model, they are effectively using technology to generate higher margins and gain recurring revenue. Through the power of SaaS, historically people-driven processes are automated, and workflows and business operations are adapted into software-driven solutions. That alone generates recurring revenue not seen under a human-driven model. The appeal of SaaS is its predictable revenue streams and high margins. In 2025, the priority will be figuring out how to combine people and software.

The bottom line

In today’s SaaS landscape, staying adaptable and prioritizing innovation is paramount. Focusing on real, quantifiable ROI and embedding robust integration solutions will be key to customer satisfaction and loyalty. Taking proactive steps now can position your company to not only adapt but also to lead the charge in this new era of digital transformation.

Our new report highlights the essential role of AI in redefining traditional business models and the repercussions of this shift on business operations. The report also delves into the increasing emphasis on low-code and no-code platforms, which are democratizing software development and accelerating digital initiatives. By analyzing these trends and more, the report serves as a vital resource for business leaders seeking to capitalize on new opportunities and strategize effectively for the coming years. Aprio’s “Technology Outlook 2025: Pioneering the Next Wave of Digital Transformation” report is out now. Download the full report here.

Related Resources/Assets/Aprio.com articles/pages

The Challenges of Post-Purchase Software Integration and Customization – Aprio

A Data-Driven World – Aprio

SaaS spend is out of control – Aprio