Services-as-Software is the Biggest Secret in AI for Entrepreneurs

The true potential of AI isn’t in the race to create the best large language models (LLMs). Facebook’s decision to release MetaAI for free has underscored a critical shift: the money to be made won't be in LLMs. While tech giants like Google, OpenAI, and Facebook are battling it out with Gemini, ChatGPT, and MetaAI respectively, the next big move lies further ahead. Instead, there's a golden opportunity in models that make use of these LLMs as direct-to-customer services. And one approach in particular is about to make big waves as it hits the scene: Services-as-Software.

First introduced by Joanne Chen (Foundation Capital) earlier this year when she coined the term, Services-as-Software represents a paradigm shift in how we think about and utilize software.

Thanks to LLMs, SaaS is about to take a passenger seat to Services-as-Software. Imagine a world where all of those SaaS applications had their own drivers. The best drivers. They always get you where you’re going, safely, and they always look both ways, and they get you there in record time. That’s the magic of Services-as-Software and its about to make traditional SaaS look antiquated.  This new model isn’t selling software; it’s selling the work itself, automated and efficient.

The Future of Work with Role-Based AI

Unlike traditional SaaS, which provides tools to enhance productivity, Role-Based AI takes over the entire job functions that run the SaaS applications. When you buy a SaaS application like QuickBooks, HubSpot, Salesforce, or EHRs, you’re essentially getting a tool that boosts your productivity, but you still have to do the work. You need people to manage and operate these tools, which means hiring, training, and overseeing employees.

With Services-as-Software, we take this to the next level by mimicking the entire role using AI technology. Instead of just buying a tool, you’re buying an AI Agent that performs the entire job function as if you had hired a person. This means the AI Agent operates the SaaS application for you, handling all the tasks that a human would, but with greater efficiency and without the need for breaks, training, or management.

This is crucial because customers are currently expending huge resources hiring, training, and managing people to run SaaS software such as QuickBooks, HubSpot, Salesforce, and EHRs. In some sectors, the user "seats" are expensive and, with AI Agents or AI Assistants, this becomes unnecessary. In the future, businesses will spend less money training AI to use those software tools for them. This shift will result in less frustration, less time spent on training and managing human employees, and a cleaner, more precise organizational chart.

Imagine AI Agents handling customer service inquiries, processing data entry tasks, or managing administrative duties. This isn’t just about making tasks easier; it’s about automating them entirely. With Role-Based AI, businesses can achieve increased productivity, significant cost savings, and operational efficiency. These AI Agents work tirelessly, never taking breaks or vacations, and they operate with unparalleled precision. This shift not only optimizes workflows but also frees up human employees to focus on more strategic, high-value activities.

This shift is transforming more than just workflows — its transforming business models as we know them.

Transforming Business Models — for Good.

We are entering a new era of business scalability. While the business models we know today require hiring more people to handle increased workloads, the advent of AI Agents eliminates this need. Businesses can now scale operations without proportional increases in human resources. This means faster growth, reduced overhead costs, and a leaner, more efficient operation.

Flexibility is another key advantage. AI Agents can be quickly adapted to meet changing business needs. Whether it's adjusting to seasonal demand or scaling up for a new project, Services-as-Software provides the agility that modern businesses require.

Consider a company that leverages Services-as-Software for its customer service operations. Instead of hiring and training dozens of employees, the company deploys AI Agents to handle inquiries. These agents can be scaled up or down based on demand, ensuring optimal resource utilization without the complications of managing a large workforce.

The success we’re currently seeing with AI Agents at Thoughtful AI is astronomical. Customers are reducing their operational costs by 30-80%, and increasing customer satisfaction ratings by 35-55%. They’re not only enhancing their efficiency but also enabling their human staff to concentrate on developing new products and services, driving innovation within the companies.

For businesses willing to be on the leading edge of technology, leveraging AI for a competitive edge is crucial. Companies that adopt Services-as-Software early can gain long-term advantages, such as increased efficiency, reduced costs, and the ability to scale rapidly without the constraints of human resource limitations. This edge can be a decisive factor in staying ahead of the competition.

Opportunities for Entrepreneurs to Strike It Big

The market potential for Services-as-Software is enormous. The projected $5 trillion market size highlights the opportunity for entrepreneurs to tap into this rapidly growing field. High-growth sectors and early-stage companies are ripe for innovation, and the shift towards AI-driven solutions provides a fertile ground for new ventures.

There’s an opportunity for entrepreneurs to develop and sell niche AI solutions tailored to specific roles within industries. By focusing on creating specialized AI agents, they can carve out unique positions in the market, just as Thoughtful AI has with healthcare RCM. This approach not only meets the specific needs of businesses but also ensures that these AI solutions deliver maximum value.

Massive Market Potential for Entrepreneurs

The Services-as-Software market is projected to reach $5 trillion, representing an immense opportunity for entrepreneurs. The potential for high growth and substantial returns makes this field incredibly attractive. Entrepreneurs should focus on developing innovative AI Agents that can seamlessly integrate into various business operations.

By identifying high-growth sectors and early-stage opportunities, entrepreneurs can position themselves at the forefront of this revolution. Creating specialized AI Agents that address specific industry needs will be crucial in capturing market share. The ability to offer scalable, efficient, and cost-effective solutions will set successful entrepreneurs apart from their competitors.

Building a Successful Services-as-Software Business

To build a successful Services-as-Software business, it’s essential to identify key roles that can be automated using AI. Focusing on roles with high repetition and volume for AI automation is a strategic starting point. Developing unique solutions with specialized capabilities and intellectual property will provide a competitive edge.

A well-thought-out go-to-market strategy is also crucial. Entrepreneurs should emphasize the tangible benefits of their AI solutions, such as cost savings, increased efficiency, and scalability. Building strong relationships with early adopters and gathering feedback to refine offerings will be instrumental in achieving long-term success.

While the opportunities are vast, entrepreneurs must navigate several challenges when adopting Services-as-Software. One critical aspect is the human-in-the-loop requirement. Despite the advanced capabilities of AI, human oversight is essential for training and managing these systems. Ensuring that AI Agents perform accurately and effectively often involves continuous human intervention to handle exceptions and refine processes.

Data security is another significant concern. Protecting sensitive information in AI-driven workflows is paramount, especially in industries like healthcare where data privacy is critical. Entrepreneurs must implement robust security measures to safeguard data and maintain compliance with regulatory standards.

Market adoption also presents challenges. Educating potential users about the benefits of Services-as-Software and overcoming skepticism are vital steps in gaining traction. Entrepreneurs need to demonstrate the tangible advantages of AI solutions and build trust with their customers to drive widespread adoption.

Remember, even the smartest AI can’t fix a broken trust. Keep your AI Agents in check and your customers in the loop. It’s not just about replacing humans; it’s about elevating what humans can achieve with the right tools.

Closing Thoughts

The transformative potential of Services-as-Software is immense. This model not only streamlines operations and reduces costs but also fundamentally changes how work is performed. By focusing on developing and implementing Role-Based AI, businesses can achieve unprecedented levels of efficiency and productivity.

Entrepreneurs have a unique opportunity to lead this revolution. By embracing the Services-as-Software model and leveraging AI to its fullest potential, they can create innovative solutions that address critical business needs. The future of work is here, and those who adapt and innovate will be at the forefront of this exciting transformation.

The time to act is now. Explore the possibilities of Services-as-Software, invest in AI-driven solutions, and be part of the next big wave in technology.