The Success of SaaS and Signs of Its Decline

On January 28, 2026, the Nikkei newspaper website published an article titled "The Death of SaaS: AI Substitution Waves Hit Business Software; Four Companies Lose ¥15 Trillion in Market Value."

The main points of the article are roughly as follows:

• The stock prices of SaaS companies are declining due to concerns that AI will replace their services.

• The combined market capitalization of four major companies—including Salesforce, Intuit, Adobe, and ServiceNow—decreased by ¥15 trillion in less than a month from the end of 2025.

• Concerns are increasing that the users of software may shift from humans to AI, destabilizing existing business models.

• The launch of the new service "Cowork" by the AI company Anthropic caused a sharp decline in the stock prices of these companies.

• SaaS companies are also taking countermeasures, such as adding AI capabilities to their own software or partnering with startups that possess AI technologies.

As you may know, SaaS stands for Software as a Service. Instead of purchasing software outright, SaaS allows users to access software functions through the internet on a monthly or annual subscription basis.

SaaS vendors began to appear in the early 2000s. Salesforce, which provided CRM (Customer Relationship Management) through the cloud, became a pioneer of the SaaS model.

Before SaaS was proposed, software was purchased as packaged products. Individuals installed it on their PCs, and companies installed it on servers in their data centers. In other words, software usage was based on on-premises environments.

With the release of Windows 95 in 1995, the internet began to spread widely. Both individuals and companies started using content and services on the internet, and the late 1990s were marked by the enthusiasm of the dot-com boom.

At that time, all companies providing software assumed it would be used on-premises. However, as communication infrastructure developed and the internet spread rapidly, companies such as Amazon and eBay, which operated consumer-oriented businesses, began disrupting industries such as local bookstores and small retail shops with new internet-based business models. In contrast, nothing changed in the world of enterprise software.

Marc Benioff, the founder of Salesforce, believed that if software were provided not as a physical package but as a service delivered through the internet, large-scale servers would no longer be necessary, expensive upfront investments would disappear, and users could access the functions they needed through a monthly subscription fee.

In that case, software installation and configuration would no longer be required, and users could always access the latest features from anywhere. From the vendor's perspective, there would be no need to burn software onto CD-ROMs for distribution, and there would be no need to distribute new CD-ROMs each time the software was upgraded, significantly reducing costs.

Marc Benioff, who held this view, introduced the provocative catchphrase "No Software." With this message, he brought about a change in the way vendors deliver software, shifting the payment model from one-time purchases to monthly or annual subscription fees. This also led to a financial shift in which software was no longer treated as a capital asset but rather recorded as an expense, much like electricity or water.

Looking back now, this was a major turning point.

While it enabled anyone to use software that had previously been expensive at a much lower cost—something that could be described as the "democratization of software"—the technological foundation that made SaaS possible was the multi-tenant architecture, a design approach in which a single system infrastructure is shared by multiple customer organizations. For SaaS vendors, this dramatically reduced infrastructure operation costs, enabling them to offer services at even lower prices. As a result, multi-tenant architecture created a situation that benefited both vendors and customers.