Services Are the New Software: Why the AI Revolution Won’t Follow the SaaS Playbook

Is the next AI giant building software or services?

In a world racing to automate, a surprising insight is emerging: the biggest AI opportunity lies not in software, but in services.

“Those who can turn human-delivered services into software, Service-as-Software, while maintaining the human support that enables customers to undergo that transition, will build the next generation of giant companies,” writes Lotan Levkowitz, General Partner at Grove Ventures.

Forget what you thought you knew from the Software-as-a-Service (SaaS) boom. This is not SaaS 2.0, it’s a new playbook entirely.

What Is “Service-as-Software” and why now?

While SaaS transformed software consumption with low-touch onboarding and self-service interfaces, it has failed to deeply penetrate industries that thrive on trust, personalization, and ongoing support.

Enter Service-as-Software. Instead of selling just a tool, Service-as-Software companies sell a complete solution, designed to replace entire business processes that are traditionally handled by humans. Think legal, healthcare, recruiting, accounting – massive industries valued in the trillions.

“Customers don’t want to read documentation or experiment with a user interface. They want someone to solve their problem. Full stop.” Lotan Levkowitz

What are the market stats?

• Professional services (BPO) in the U.S. are worth over $2 trillion
• Healthcare services top $4 trillion
• Recruiting, accounting, legal, and insurance each generate hundreds of billions annually

Yet, these sectors remain largely untouched by true digital transformation, not because of lack of demand, but due to operational complexity.

The real barrier to disruption isn’t technology, it’s execution

Why haven’t these service-heavy industries been “SaaS-ified”?

Because they’re not DIY.

They demand:

• Deep understanding of user workflows
• Hands-on implementation
• Long-term support
• Custom solution architecture

“Startups entering these sectors with a generic off-the-shelf product often hit roadblocks: never-ending sales cycles, pilots that don’t convert, and customers that don’t close.”

Ironically, the “least digital” industries are now the richest ground for building the next wave of tech titans.

Read the full article by Lotan Levkowitz on CTech: Services are the next software: Why the AI revolution will look different than you think