Service as a Software (SaaS⁻¹)

How AI Will Enable Service as a Software and Disrupt a $10 Trillion Industry

The business world is no stranger to disruption, with each technological leap radically reshaping industries. The emergence of Large Language Models (LLMs) represents the next seismic shift, enabling the emergence of a new industry: Service as Software (for which we coined the term SaaS⁻¹). By embedding human-like intelligence into software, LLMs will transform the delivery of services across industries valued at over $10 trillion globally. Here's how we think this transformation will unfold.

Understanding SaaS⁻¹

Traditional service delivery depends heavily on human expertise. Think of industries like administration, consulting, legal services, or customer support. These sectors have long relied on professionals to provide tailored solutions, with scalability constrained by the availability and skill level of human resources.

"Service as a Software" flips this model on its head. By integrating LLMs into applications, businesses can offer intelligent, dynamic, and context-aware service delivery at scale, automating tasks previously considered too nuanced or complex for machines. Unlike conventional software, which requires pre-defined rules or logic, LLMs thrive on adaptability, handling ambiguous queries, generating creative outputs, learning from user interactions, and leveraging proprietary data.

Why LLMs Are the New Enabler

LLMs will enable SaaS⁻¹ by offering a main new capability: human-like understanding. This will enable future software to cut interfaces and human interactions and convert software into a simple input-output system. This will allow software to simulate high-touch service experiences, adapt to new domains, and scale services to millions of users simultaneously.

LLMs will also bring cost efficiency and scale to service delivery. By automating repetitive and labor-intensive tasks, businesses can reduce reliance on human labor, driving down costs and enabling broader access to services. This will also enable hyper-personalized services, tailoring experiences to individual needs dynamically.

The Economic Implications of Service as Software

The rise of Service as Software will create a ripple effect across the economy:

• Decreased Costs: Businesses will lower operating costs by automating service delivery, driving higher margins and enabling price reductions for end-users.
• Increased Accessibility: Services previously available only to elite customers due to cost or complexity will become accessible to a broader audience.
• New Business Models: Startups and enterprises will build novel business models around Service as Software, creating opportunities for innovation in underserved markets.
• Increased Productivity: This new wave of automation will boost productivity across industries, and will likely lead to the need for new roles and skillsets.

However, there will also be significant challenges around job displacement, privacy, and confidentiality of data, especially with shared services.

The $10 Trillion Opportunity

The global services sector, from professional services to customer support, represents over $10 trillion in annual value. While not all of this value is immediately addressable by LLMs and Machine Learning, even a 10% disruption equates to a $1 trillion growth in the software industry. This opportunity represents an almost 2x increase in the current global software market.

The biggest opportunities will emerge for companies that embrace this shift early, building platforms that leverage LLMs to deliver smarter, faster, and cheaper services.

The Future of Service Software

LLMs are redefining what software can do. With the advent of Service as a Software, businesses can move beyond offering static products to delivering intelligent, adaptable, and highly personalized experiences. This isn't just the next phase of software - it's the future of how we work, learn, and interact with the world.

The disruption is inevitable. The only question is: who will lead this revolution?

Rafael Gracioso Martins, Managing Partner at Outroll

_{Image: Mosaic of Minerva by Elihu Vedder, 1885. Library of Congress.}