AI Agents: The End of SaaS As We Know It?

Microsoft CEO Satya Nadella just dropped a bombshell: traditional business applications (the SaaS we use every day) are on the verge of obsolescence. And AI agents are the reason.

In a recent interview on the B2G podcast with Bill Gurley and Brad Gerstner, Nadella made some striking predictions about how AI will transform software. According to him, business logic that once lived in software layers is now migrating to AI. When that happens, the infrastructure that supports these applications becomes redundant.

Microsoft isn’t just talking – they’re acting on this vision. The company recently created a new AI engineering group focused on building AI platforms and tools, showing their commitment to transforming from software-as-a-service to a model where once-manual human tasks are automated by software and AI.

“They’re going to update multiple databases, and all the logic will be in the AI tier,” Nadella explained. “Once the AI tier becomes the place where all the logic is, then people will start replacing the back ends.”

Think about it – if AI can understand what you need, anticipate your requirements, and automate complex processes across multiple systems, why would we continue to use SaaS with segmented tools? The new era of “Agents as a Service” (AaaS) is starting!

What’s Happening to SaaS?

SaaS won’t disappear immediately and will be available for a while, but it’s facing stagnation. Legacy systems will continue to exist, but the way we interact with technology will change radically.

Nadella revealed that Microsoft is already “aggressively” working to “collapse” backends in its Dynamics platform. This is happening because customers are demanding AI-native business solutions that can seamlessly transition from copilot to agent to business app.

Microsoft has spent the last 15 years selling cloud computing to businesses, convincing them to move from traditional software to cloud services. Now they’re betting on automating people-based services and packaging this as software they can sell to businesses. It’s a major shift in strategy that shows how serious Microsoft is about AI.

The Microsoft CEO envisions a future where AI agents handle specific workflows across multiple applications – using Excel for data analysis, Word for legal documents, and so on – all with a central copilot guiding the process.

We’re Already Seeing This Transformation

The shift has already begun with search engines. What started with Microsoft’s Bing AI integration has expanded to Google and others. Users now expect more than just indexed search results – they want AI to provide concise summaries and understand the context of their queries as well as the content of pages.

Microsoft is also pushing AI across all their products. They recently relaunched their Copilot service with free ChatGPT-like features and pay-as-you-go AI agents. For consumers, they’re now bundling AI features into Microsoft 365 subscriptions rather than charging separately for premium AI features. All these moves show how Microsoft is working to make AI an essential part of everyday computing.

Nadella highlighted another powerful example: Python integration in Excel. This transforms Excel into something “like GitHub with copilot.” The integration doesn’t just analyze data; it plans and executes tasks while using Excel’s visualization capabilities as an analysis workspace.

“Python in Excel doesn’t just analyze; it plans and executes, using Excel’s visualization capabilities as a scratchpad for analysis,” Nadella explained. The AI copilot becomes a tool within Excel, leveraging the Python interpreter for advanced tasks.

At some point, this could evolve into generating entire Excel-like experiences via a code interpreter, with copilot acting as the organizing AI layer connecting with various agents.

What This Means For Business

The implications of this shift are profound, especially for areas like marketing:
↪ Marketing campaigns will be orchestrated by AI, which personalizes messages and optimizes performance in real time. Instead of marketers managing separate tools for email, social media, and analytics, AI agents will work across all these platforms simultaneously.

↪ The customer experience will become fully proactive, with AI anticipating needs and solving problems before they occur. AI agents will monitor customer behavior across multiple touchpoints and take action before issues escalate.

↪ Data analysis will no longer be a tedious task, but an AI-powered conversation that reveals insights and proposes actionable strategies. Marketers can simply ask questions and receive comprehensive analyses pulled from multiple data sources.

Industry Reactions

The customer experience tech sector has responded with various opinions to Nadella’s predictions.

Sabeel Ahmed, Chief AI Product Developer at Skyward Blue, emphasized the importance of building AI-first solutions now: “Companies that start building AI-first solutions now will be ahead of the game when this shift really takes off.”
Meanwhile, Maurizio Ceccacci, Associated Digital Coach for SMB, argues that this shift means “returning to a focus on solving the problem rather than on the technology to be implemented.”

Some experts are more cautious about the timeline. Ivan Landabaso, JME Ventures Partner, suggests that moving business logic to the AI tier will be time-consuming and complex, with enterprise adoption potentially taking years due to deep reliance on existing SaaS solutions.

The Challenge Ahead

Marketers and other professionals will need to adapt quickly to this new era, understanding AI not as a replacement, but as a strategic collaborator. This means developing new skills focused on directing and collaborating with AI rather than performing tasks directly.

There’s also concern within tech companies themselves. Some engineers worry about their future roles as AI becomes more capable. Meta’s Mark Zuckerberg recently predicted that in 2025, companies will have “an AI that can effectively be a mid-level engineer.” These changes will reshape how tech companies operate and what skills they value.

The Opportunity

Those who adopt AI early will gain a competitive advantage in efficiency, personalization, and return on investment. The most successful companies will be those that recognize the shift happening and position themselves to leverage AI agents across their business processes.

Microsoft’s competitors are also making moves – Google just made its business AI features free instead of charging monthly fees. As AI features become standard rather than premium add-ons, businesses will need to find new ways to stand out.
Microsoft’s willingness to discuss how AI could impact its own legacy products shows they’re embracing self-disruption. As Kane Simms, Founder of VUX World, pointed out: “In a world of AI agents, what do you even need Excel for?”

This raises an important question for all of us: If Microsoft, one of the largest and most diverse companies on the planet, believes AI is a fundamental game-changer, what will it do to your business?For more information, check out the original interview on the B2G podcast where Satya Nadella shared these insights.