AI’s promise persists, but SaaS vendors await tangible revenue gains

While emerging technology AI and generative AI (GenAI) has been widely discussed, it has yet to translate into significant revenue growth for SaaS vendors. This is partly due to customers’ skepticism surrounding the technology and a persistent desire to limit IT spending. Despite this, vendors across all cloud segments have continued to invest heavily, through R&D and capital expenditures, showing a strong willingness to make substantial upfront investments for long-term gains. As a result, AI development strategies have progressed according to previously established road maps, a trend TBR expects to continue through 2025.
 
For SaaS vendors, the long-term opportunity lies in the ability to upsell GenAI solutions integrated directly into their existing workflows. While all major SaaS providers have made such solutions generally available, revenue from GenAI tools has not been enough to offset the slowing top-line growth many vendors are experiencing. Issues like cost, reliability, data governance and use-case validation remain obstacles to broader adoption, preventing the technology from becoming the growth driver vendors had hoped. Nevertheless, enterprise SaaS vendors continue to hold an optimistic long-term outlook, with many believing the technology will become a strategic necessary. This has prompted vendors to stay committed to their previously established AI road maps.
 

 

SaaS vendors will shrug off growing GenAI disillusionment, focusing on the long term by prioritizing GenAI agents within their development strategies

In the latter half of 2024, cutting-edge GenAI tools evolved from copilots that could perform a single task based on natural language prompts to agents capable of handling multiple tasks, paving the way for greater automation. This was a logical progression and an important step in vendors’ efforts to automate workflows.
 

Click the image below to watch this recent TBR Insights Live session, Cloud Market 2025: How GenAI Will Shape the Future

 
Now that agents are available, expanding their capabilities has become the next priority, with vendors allocating more internal resources to develop prebuilt agents specialized in specific tasks. To complement internal development, codevelopment around GenAI agents will become a common initiative in SaaS leaders’ partnership strategies, as they look externally to fill domain expertise gaps.
 
Whether through internal development or ecosystem collaboration, TBR expects a proliferation of GenAI agents in the coming year. However, we remain skeptical about whether this will be enough to make GenAI a significant growth driver. Barriers to adoption, particularly the need for data modernization within enterprises, will likely persist as key challenges to broader GenAI adoption. Nevertheless, vendors will continue to push their development pipelines to stay ahead of competitors in the GenAI arms race.

Learn more

Download 2025 Predictions special report: Cloud Market Share in 2025: GenAI Spurs Growth but Does Not Promise Vendors Long-term Gains
 
Watch TBR Insights Live session on demand: Cloud Market 2025: How GenAI Will Shape the Future