AI’s Transformation of SaaS Development and Procurement

AI coding tools are emerging as a transformational force in the SaaS market and software procurement decision making for enterprises.

We as software buyers are finding Gen AI procurements taking up a much greater portion of our time and effort as the tools become core to the IT function’s tech stack. Like the rest of workforce coming into contact with Gen AI, it is back to basics for buyers as we adapt to the peculiarities and challenges of this new type of technology procurement.

Impact on the Market

This rapid change that software buyers are experiencing is supported by the evidence. Spend on these tools, and AI more generally, is skyrocketing.

Menlo Ventures 2024 state of generative AI survey found GitHub Copilot alone approaching a ~$300 million revenue run-rate and platforms like Cursor are experiencing explosive growth. Over 25% of new code at Google is now AI-generated. Amazon’s internal AI coding assistant is already said to have saved its developers around 4,500 years of work.

Salesforce is not hiring any new software engineers in 2025. Klarna too has declared a hiring freeze, citing these AI tools as the specific reason.

In conversations with clients, I am seeing an increasing recognition of the potency of these tools to augment their existing software suite or replace it outright in some cases. Companies with sufficient in-house talent (aided by AI coding tools) may even start going as far as creating custom applications tailored to their needs, rather than relying solely on third-party SaaS vendors.

Buyers in the SaaS space will have likely noticed SaaS providers racing to infuse generative AI into their products, adding features like automated support chatbots and code-generation aids to stay competitive. I’m surely not alone in struggling to keep up with the newest ‘AI-powered’ module or tool or platform from the market.

We may even have glimpsed the future of software procurement with a truly new type of ‘AI native’ software providers popping up. New companies such as 8090 seek to build ‘a Software Factory that hyper-automates the ability to build enterprise-grade, purpose-built software’ as a direct challenge to existing SaaS providers in the market.

AI Procurement – A New Challenge

The nature of AI tooling procurement is significantly different from traditional SaaS sourcing and presents unique technical and commercial challenges to buyers.

The emerging pattern in the market, and the one I too have experienced, is these procurements involve extensive iteration, with CIOs, data scientists, and architects all contributing to the evaluation of competing tools. Buyers need to learn how to effectively evaluate the usage-based pricing common to these procurements which introduces new budgeting challenges to the business.

The novel and tricky nature of AI tooling procurements means these exercises require careful planning and high-quality procurement expertise to deliver tangible benefits to businesses.

Contact us at 7 Steps Solutions for insight into our experience and learnings with AI procurement.

Article by Cameron Bull - Consultant at 7 Step Solutions