Introduction
In February 2026, the US AI development company Anthropic announced a major update to Claude 3. Immediately afterwards, the share prices of SaaS companies plummeted. This came as a huge surprise to business leaders who had believed that ‘even in the age of AI, software budgets alone would still be safe’.
Behind this shift lies not merely a ‘product shortcoming’, but the fact that the business model itself has undergone a fundamental transformation. In this article, we will explain in simple terms why this is being referred to as the ‘death of SaaS’ and what implications this has for Japanese companies. By the time you have finished reading, we hope you will have gained a fresh perspective on your own business and the nature of employment.
The True Nature of the ‘Death of SaaS’, Where AI Is Replacing Even Labour Costs
There is one key point I wish to emphasise in this article. It is that the existence of AI agents has made it possible to allocate funds not only from the software budget but also from the ‘personnel budget’.
This is an extremely groundbreaking change. Normally, when companies invest in technology, around 99 per cent of their budget falls under the broad category of ‘labour costs’. By comparison, budgets for software and cloud services account for only about one-hundredth of that total. However, once AI agents reach a level where they can replace human labour, it will become possible to ‘shift payments from labour costs to AI’. This is the essence of the phenomenon known as ‘the death of SaaS’.
Specifically, the following changes are taking place:
①Widening disparities in growth rates
US chip manufacturers (NVIDIA) and cloud service providers are maintaining revenue growth rates of over 20 per cent
LLM developers (OpenAI, Anthropic) are at a similar level
Meanwhile, the revenue growth rates of typical SaaS companies are below 20 per cent, failing to meet investors’ expectations
② A shift in the investors’ perspective
What exactly are the ‘questions on investors’ minds’? There is still no clear answer to the question: ‘How can the company achieve growth in the age of AI?’ Consequently, share prices are falling. This is not merely a temporary phenomenon; it indicates that the business model itself is undergoing a transformation.
③ The rise of industry-specific apps
Of particular note is the new category of ‘industry-specific apps’ utilising AI agents. These companies have recorded sales growth of more than tenfold in a single year, and their growth strategy is clear.
5 Ways AI Is Transforming Business
In this article, we explain the specific mechanisms behind the ongoing ‘death of SaaS’ from five different perspectives. By understanding each of these mechanisms, you will gain insights that you can apply to your own business and recruitment strategies.
Point 1: The agency of AI = the rate at which it replaces human jobs
Many business leaders share the view that ‘AI agents are likely to replace human jobs sooner than we might imagine’. This is not merely a matter of ‘improving efficiency’, but an evolution towards a level where parts of business operations can be fully automated. For example, even specialised tasks such as legal and financial work can now be handled by the latest AI systems, such as Claude 3.
Point 2: A fundamental shift in KPIs – reduced working hours as an evaluation criterion
The most interesting part is the section on ‘corporate performance indicators’. Whilst SaaS companies have traditionally adopted billing models such as ‘X amount per user per month’, it is a surprising fact that AI agent companies use the amount of human working time saved as their KPI.
This represents a fundamental shift in business philosophy. Whilst traditional software was based on the ‘pay-as-you-go’ model, AI agents view ‘value’ as the extent to which they can replace human labour.
Point 3: Changes in sales methods – towards hourly rates and task-based billing
Specific sales models have also undergone significant changes.
Previously: Fixed monthly fee (SaaS model)
Currently: Initially provided on a monthly basis → Subsequently billed for tasks completed by the AI
In the future: Hourly rate or project-based billing
This evolution indicates a shift towards a business model similar to ‘staffing agencies’. It represents a new set of values that sets it apart from traditional software sales.
Point 4: A shift in mindset among Japanese companies – set to gain momentum from the second half of 2025
Japanese business leaders’ perceptions of AI are also beginning to change. From the second half of 2025 onwards, we are seeing a number of large corporations where the CEO personally announces the introduction of AI, allocates a budget for it and appoints an executive to oversee the initiative. The number of companies taking ‘concrete action’ is rising rapidly, and the pace of change is accelerating.
Point 5: Greatest impact on the sales department – potential for increased turnover
As dismissal regulations for Japanese companies are strict, it is difficult to reduce costs through operational efficiency. However, there is a strategic opportunity in that utilising AI in sales can lead to an increase in turnover. Specifically:
Sales representatives currently spend around 30 per cent of their time in sales meetings
By utilising AI to devote 70 per cent of your time to sales meetings, you can achieve dramatic results
Heading 3: Supplementary Information and Points to Note – The Reality That the ‘Death of SaaS’ Is Reaching Japan Too
In this article, we will provide some supplementary information based on key facts. The crucial point here is what changes need to be made in terms of your ‘approach to work’.
Fact 1: Japan’s highly specialised SaaS sector still has some breathing space
SaaS providers specialising in the Japanese market—such as Money Forward, freee and Sansan—are in a sector where US services have not simply been imported as they are. These companies may still have some time left. They need to adopt a strategy of ‘establishing their own unique value before being completely replaced’.
Fact 2: There is a gap of one and a half years between Silicon Valley and Japan
Currently, in the field of AI, ‘Silicon Valley is considered to be about a year and a half ahead of Japan’. There is a forecast that ‘when the AI start-ups currently attracting attention in Japan grow and come to be compared with SaaS companies, the same pattern that occurred in the US will emerge in Japan’. This offers important insights for investment decisions and business strategy.
Fact 3: The Evolution of Sales Models – From ‘Pay-as-you-go’ to ‘Performance-based’
To summarise the evolution of AI agent sales, it has gone through the following stages:
- Initial phase: Fixed monthly fee under the SaaS model (secure implementation)
- Intermediate: Monthly base fee plus additional charges per task (hybrid)
- Final: Hourly pay or performance-based remuneration (similar to temporary staffing)
Understanding this evolution is crucial when considering how to design your own business model. The shift from the traditional ‘usage’ metric to an ‘outcome’ metric has the potential to transform the very nature of business.
Fact 4: The Management Philosophy Revealed by Changes in KPIs – From ‘Cutting’ to ‘Creating’
The most significant insight is the fact that the KPIs of AI agent companies are set as ‘time saved’. This represents a fundamentally different set of values from that of conventional software (where users are charged for what they use). It is the achievement of ‘having AI take over tasks previously performed by humans’ that is the measure of success. This shift in business philosophy suggests a need to review an organisation’s goal-setting and performance appraisal systems.
Fact 5: Employment Regulations in Japanese Companies and the Strategic Value of the Sales Department
A characteristic of Japanese companies is that, due to ‘strict regulations on dismissal’, it is difficult in practice to reduce costs through operational efficiency. However, what is important here is ‘the use of AI in sales departments’. For Japanese companies, increasing profits by expanding sales is a more realistic option. A shift in management philosophy from a ‘cost-cutting mindset’ to a ‘growth mindset’ is expected.
Summary
In this article, prompted by the phrase ‘the death of SaaS’, we have explained why the current business environment is undergoing such significant change. However, the essence of this change lies not merely in technological innovation, but in a shift in the economic structure whereby ‘it has become possible to pay for AI rather than labour costs’.
In the traditional software market, usage-based billing was the norm. However, in the world of AI agents, value is derived from the fact that they can ‘take over tasks previously performed by humans’. This represents a fundamental paradigm shift in business.
From an investor’s perspective, it is also important to note that whilst chip manufacturers and large language model (LLM) developers have clear growth strategies, general-purpose applications (SaaS) are the only sector lagging behind in terms of revenue growth. Going forward, corporate management must adopt a perspective that focuses not merely on ‘software alone’, but on ‘how to integrate with AI agents’.
This suggests that, for the future of Japanese companies, it is crucial to focus on expanding sales through the use of AI in sales departments. ‘Contributing to sales through new business development, rather than cost-cutting, is a more realistic strategy given the strict regulations on redundancies.’ Furthermore, as there is still some leeway for highly specialised SaaS, now is the time to establish unique value propositions.
Finally, it is important to recognise that ‘AI is not merely a tool for improving efficiency, but a factor that can also contribute to reducing labour costs’. In corporate management going forward, it will be necessary to formulate strategies not only based on software investment, but also from the perspective of ‘what results can be achieved through the use of AI agents’.
In the face of changing times, it is time for us to re-examine our traditional ways of thinking. Let us take a fresh look at the essence of business, shifting from a ‘cost-cutting mindset’ to a ‘creative mindset’, and from ‘usage-based billing’ to ‘performance-based evaluation’. Now, more than ever, we must consider how to apply these insights to our own organisations and businesses.
