Partner, Don't Replace: Will AI/SaaS Eat Service Economy?

Did you know that the Business and Professional Services industry is 🔟X the size of the entire software market?

It seems ripe for disruption by SaaS, AI and cloud, but there is one challenge

📊 SaaS Growth Potential

With professional and business services spend dwarfing the SaaS market, there's still untapped potential for software to eat into this services pie. Many processes and workflows in this huge sector are not digitized or automated.

New SaaS players can target underserved segments, while existing companies can expand into higher-value services.

📈 AI-Powered SaaS: Game Changer?

Recent Gen AI’s acceleration changed the rules. AI can automate and augment many language-based tasks that are the lifeblood of professional services. This drastically expands the TAM for AI-SaaS companies and drives incredible valuations.

Two scenarios are possible:

🚀 AI as a disruptor

Vertical AI apps can capture spend that used to go to armies of human professionals, like AI contract review in legal or AI generating draft reports in consulting.

🤝 AI as an enabler

AI-powered tools can supercharge human productivity, allowing them to serve more clients, tackle more complex problems, and deliver better results. AI + humans don't just capture share from incumbents, but grow the overall pie.

Forward-thinking pro serve firms that embrace AI can gain a competitive edge and market share.

AI-SaaS startups can partner with these firms, providing the tools and expertise to help them level up. Think OpenAI partnering with McKinsey & Company, BCG, etc.

🔐 "Dirty little secret" of AI

In our recent podcast, Yan Zhang, frm. COO of PolyAI, highlighted the challenge of the "last mile" in AI deployment.

AI often struggles with edge cases and needs guidance to work well in real-world settings.

Services can play a critical role in customizing, and fine-tuning AI to meet client needs. For AI-SaaS companies, offering services in-house or through partners, may be key.

Pure self-serve AI tools may struggle to gain traction if they can't bridge the gap to real results.

🎯 Cloud Marketplaces as Orchestrators

As more of the services economy gets digitized and automated by AI-powered SaaS, cloud marketplaces have a huge role to play:

1️⃣ Many service engagements are still brokered and billed manually.

2️⃣ Services are often tied to software purchases, so it’s natural to sell them together.

Marketplaces, with large catalogs, central billing, and GTM support stand to benefit big from the migration of services spend to the cloud and AI.

That’s why all hyperscalers are working hard to enable service and channel partners. Partners are expected to drive 50% of cloud marketplaces revenue.

As this multi-trillion services market is set for rapid transformation, are you capturing this opportunity?

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