Enterprise software has easily been the first casualty of the great cost decline of intelligence. SaaS itself is just crystalized information processing of workflows into code. The three moats of SaaS, switching costs of data (data is trapped), workflow lock-in (learning the UI), and integration complexity (how Slack works with Jira) have all been partially eroded at the margins. The 75% gross margin of SaaS looks like a huge opportunity, as agents migrate data between systems with lessened migration costs, Agents themselves do not rely on human oriented workflows, and MCP integrations make integration much easier. Every aspect of SaaS is cheapening, and the margins have become the first opportunity of AI. A simplistic example is an agent can now query a Postgres database directly on your behalf, generate a chart, and email it to a stakeholder. That was effectively the cost of a SaaS workflow like CRM, and it doesn’t need to train humans on UI changes or update software. It just “works”. BI/analytics (agents querying databases) data entry, ITSM (L1/L2 tickets triage) and back-office reconciliation is already in the process of automation! These are knocking on some of the doors of the most sacred moats in software already. In our view, anything that has a human click buttons, gather information, reformat it into another medium (email, chart, excel, presentation) is a huge risk. LLMs thrive at this kind of data interchange exclusively, effortlessly changing text into audio, English into Chinese, and words into images. And this in our view has a huge threat to one of the biggest companies in the world: Microsoft.

Why does a company need to standardize Salesforce if an agent is just going to query data on leads on your behalf? Salesforce is a form and workflow wrapper, and the form and workflow can likely be scaffolded by AI into a database and then queried as needed. Every bit of UX or preference is at risk. Tableau as a concept is outdated; Figma (wireframes for humans) are at risk. The core way of how a human interacts with a computer is about to change, and Microsoft sits at the center of the old paradigm.