The End of SaaS Applications: AI Agents and the Future of Software Development

AI agents will replace business applications, eliminating the need for traditional SaaS and significantly altering software development.

### The Future of Software: Transitioning from Apps to AI Agents
* 🤖 Microsoft's CEO Satya Nadella has boldly declared that **traditional applications are on the verge of collapse**, giving way to **AI agents that will redefine software development**.
* 📉 The concept of SaaS (Software as a Service) is being challenged, as Nadella suggests that these applications are merely a **thin UI layer** over **CRUD (Create, Read, Update, Delete) databases**.
* 🔍 The future will see AI agents directly interacting with databases, **eliminating the need for complex applications** and potentially **reducing the demand for developers** in the SaaS space.
* 📊 This shift means that business logic will be handled by AI, allowing users to simply **instruct agents to perform tasks** like **generating reports or sending emails** without the need for hard-coded logic.
* 💻 Chatbase, a platform for creating intelligent AI agents, exemplifies this shift by enabling businesses to **streamline operations and provide personalized interactions** through advanced AI capabilities.
* ⚙ As AI takes over backend logic, the choice of database will become **crucial**, with agents capable of **interacting with multiple database types seamlessly**.
* 📈 The integration of AI into tools like Excel raises the question of their **necessity**, as users may simply **describe desired outcomes** and allow AI to **generate the required analyses**.
* 🚀 Overall, the software landscape is poised for a **significant transformation**, with companies needing to **adapt or risk obsolescence** in an era dominated by **AI-driven solutions**.

I think the notion that business applications exist, that's probably where they'll all collapse, right in the agent era. Microsoft's CEO Satya Nadella said apps as we know them are going away in favor of agents, and this is a huge statement. He basically put a flag in the

ground showing where the future of software development is going. No more applications, which means no more SaaS, which also means likely far fewer developers. So let's watch the video, and I'm going to break it down for you. So this is on the BG Squared podcast. I'll

drop a link to the full interview down below. SaaS applications or biz apps. So let me just speak of our own Dynamics thing. The approach, at least we're taking, is I think the notion that business applications exist, that's probably where they'll all collapse right in the agent era because

if you think about it right, they are essentially CRUD databases with a bunch of business logic. Okay, I'm going to pause there because what he just said might sound like no big deal, but it is actually a stunning proclamation of the future. What he essentially said is that SaaS, and that

means Software as a Service, is essentially just a thin UI layer on top of a database. And when he says CRUD, that means Create, Read, Update, Destroy; those are the base units of interactions between an interface and a database. So create, create a new record, read, extract information from the

database, update, make a change to an existing record, and destroy, delete. So all he's saying is there's going to be the underlying database, the fundamental data of what you need, and then it's going to be agents that are interacting directly with the database, and if you've

I've been watching this channel; you know, I've been talking about this for a long time. I truly believe the entire application stack is going to disappear. There just really is no need for it when you have artificial intelligence interacting with the core, grounded data that sits within a database. And again,

what does that actually mean for the entire SaaS industry? What does that mean for application developers? I don't know exactly, but I have a feeling it's going to look vastly different than it looks today. And I've been in SaaS my entire career. I have built multiple SaaS

companies. I've worked for SaaS companies, and if I'm being transparent, I probably wouldn't start another SaaS company right now, and I probably wouldn't invest in any SaaS companies right now either. It's just too unknown. Now, that isn't to say there won't be software companies in the

future; it's just going to look drastically different. Let's keep watching. Crowd databases with a bunch of business logic—the business logic is all going to these agents, and these agents are going to be multi-repo CRUD. Right? So they're not going to discriminate between uh,

what the backend is; they're going to update multiple databases, and all the logic will be in the AI tier, so to speak. I'm so excited to show you this video. This 3 1/2-minute video might be the clearest depiction of what

the future of software engineering is going to look like. Now, when he's talking about business logic, he basically means taking that core data found in a database and actually doing things with it, whether it's updating a CRM record or sending out emails based on different criteria found in the database or

Anything, any single piece of software that sits on top of a database—that's what he's talking about. All of that business logic is going to be compressed into the agent. The agent will be able to accomplish anything, and all you need to do is tell it what you want.  Give me a

graph of my top five customers by revenue. Okay, now write emails to all five of those customers telling them I want to do business with them in 2025. All of this will just automatically be done where previously it would take hard-coded business logic on top of the

database. Now that's not necessary. You just tell the agent what you want, and it will either know how to accomplish it or write tools to go accomplish it on your behalf. And when I say tools, I just mean it's going to write its own code to

interact with the database, to send an email, and so on.

I want to thank the sponsor of this video, Chatbase. Chatbase is the ultimate platform for creating and managing intelligent AI agents for your business. They are designed to streamline customer support, generate leads, and enhance business operations

with integrations across websites, social platforms, and other digital tools. Chatbase helps businesses provide fast, consistent, responsive, and personalized interactions at scale, and it is powered by advanced AI models from OpenAI, Anthropic, and others. You can train these agents on your own unique data, so

they're customized for your business and know to give the right answers at the right time. And they just launched a brand new feature: AI actions. And if you watch this channel at all, you know I'm all about agents taking actions as the future of agentic workflows, so now

Chatbase allows these agents to not only respond to your customers on your behalf, but actually take real-time actions based on what they're looking for. Some of these actions include getting real-time data from their account or even allowing them to update things in their account

based on the conversation they're having with that agent. So check out Chatbase today. Thank you again to Chatbase for sponsoring this video, and now back to the video. Once the AI tier becomes the place where all the logic is, then people start replacing the

back ends. Right? We, people, you know, that's what, you know... In fact, it's interesting, as we speak, I think we are seeing pretty high rates of wins on Dynamics backends and the agent use, and we are going to go pretty aggressively and try to collapse it all

right, whether it's in customer service, whether it is in... By the way, the other fascinating thing that's increasing is just not CRM, but even our what we call finance and operations, because people want more AI-native biz apps. Right? Another thing that he clearly

says is the backend doesn't matter; the agents aren't specialized in one type of database; they really don't care. So really, it's about building the database that works most efficiently with the agent, is cheapest, is the right one for the right use case. So as an engineer or a

data provider, you really just need to figure out what's the best database to use, and then the agents do not care. And so it's going to be interesting how companies choose the database that they decide to use. That means the biz, the logic tier, can be orchestrated by AI and

AI agents, so, in other words, Copilot, agent to my business application, should be very seamless. Now, in the same way, you could even say, "Hey, why do I need Excel?"  Interestingly enough, one of the most exciting things for me is Excel with

Python is like GitHub with Copilot, right? That's essentially... So what we've done is, when you have Excel like this—by the way, this will be fun for you guys—which is, you should just bring up Excel, bring up Copilot, and start playing with

it, because it's no longer like, "Oh, you know..." It is like having a data analyst. Uh, and so it's no longer just making sense of the numbers that you have; it will do the plan for you, right? It will literally... How Get Up Copilot workspace creates the plan and

then it executes the plan. It... This is like a data analyst who is using Excel as a sort of ad-hoc visualization tool to do analysis. Scratch that. So he is saying, "Why do you even need Excel?" And he probably has thought a lot about this because, really, what is Excel? It is a

thin UI layer on top of a database. And, of course, you can add a bunch of business logic and analytics. But here's the thing: What he's describing is essentially, if AI can write Python code to analyze the data, why do you need Excel at all? And he might be right; he

probably is right. Why do you need Excel? If I need an analysis of a huge amount of data, I just say what I need. I just need to describe the end product: I need a graph, I need a chart, I need a 3D visualization—whatever it is, you just

Describe the end result. You have the core data, the raw data, and then the agent writes the Python code to actually extract the right data and put it in the right format for what you asked. Now let's keep watching, so it's got a tools—you so the co-pilot is using Excel as a

tool with all of its action space because it can generate, and it has a Python interpreter that is, in fact—and by the way, when he says Python interpreter, that just means the ability to execute Python code—in fact, a great way to reconceptualize Excel. At some

point you could say, 'Hey, I'll generate all of Excel,' uh, and that is also true. After all, there's a code interpreter, right? So therefore, you can generate anything. Um, and so yes, I think there will be disruption, but so the way we are approaching, at least our M365 stuff, is

one: build Copilot as that organizing layer UI for AI, get all agents including our own agents. You can say Excel is an agent to my Copilot; Word is an agent. It's kind of specialized canvases. Which is, I'm doing a legal document; let me

take it into Pages and then to Word and then have the Copilot go with it; uh, go into Excel and have the Copilot go with it. This is a fundamental change in how Microsoft applications work and really any software-as-a-service business. This

is a complete restructuring of the entire industry, and for somebody who has been in SaaS for so long, it is so fascinating to watch. And companies are either going to adopt it and kind of evolve with the times, or they're going to die. There is no in-between, and it's

Clear that Satya Nadella from Microsoft is thinking well ahead; he is already very invested in OpenAI. He already has the best model; he's already thinking about Copilot. Whatever you think about Copilot and its quality today, at least the structure, the architecture of how

it's going to work in the future is clear and right, in my opinion. And so that's the whole video, and it's again only 3 1/2 minutes, but clearly lays out what the future of software will look like. All he's talking about is

enterprise software, business software, but at the same time that can be applied to consumer as well. What's the difference? Where a consumer, it's just a database and you're getting a different type of interface on top of it. And so if you had an agent, why do you need the interface

at all? The future of software development, the future of application development, the future of interaction with data is going to be drastically different than it is today, and I'm so excited for it. If you enjoyed this video, please consider giving it a like and subscribe, and I'll see you in the next

Microsoft CEO’s Shocking Prediction: “Agents Will Replace ALL Software"

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** Exclusive Pinecone Partner **

Matthew Berman

The impending obsolescence of traditional business applications due to AI agents.

Satya Nadella's prediction that apps as we know them will be replaced by agents.

The shift away from SaaS and a potential decrease in developer demand.

Business applications described as CRUD databases with business logic.

SaaS viewed as a thin UI layer over a database.

The belief that the application stack will disappear with AI's direct database interaction.

The role of AI agents in handling business logic and interacting with databases.

AI agents managing multi-repo CRUD operations across multiple databases.

Business logic shifting from applications to AI agents.

Agents performing tasks directly based on user requests.

Agents dynamically generating code to interact with databases and other systems.

Impact on the software industry and Microsoft's strategy.

High win rates observed in Dynamics backends with agent use.

Increasing demand for AI-native business applications.

Focus shifting to database selection optimized for agent interaction.

Questioning the necessity of Excel in the age of AI-powered data analysis.

Microsoft's approach to integrating AI agents into its applications.

Copilot as the organizing UI layer for AI agents.

Applications like Excel and Word acting as specialized canvases for Copilot.

This represents a fundamental restructuring of the software-as-a-service industry.

The future of software development and data interaction.

The potential obsolescence of user interfaces with direct agent-database interaction.

A prediction of significant changes in software development, application development, and data interaction.