AI as the New Foundation: Transforming Business Software

Enterprise software development is shifting to an AI foundation, and it’s critical for businesses to embrace this transformation. 

May 19, 2025 | By Ramesh Koovelimadhom

The business software landscape is on the brink of a revolutionary shift. As technology trends away from traditional Software as a Service (SaaS) and Commercial Off-the-Shelf (COTS) solutions, artificial intelligence emerges as the new foundation for many enterprise applications. 

This transformation promises to reshape how businesses operate and compete in the digital age. Preparing your enterprise for the use of AI in business software development is essential for staying ahead of the competition—and futureproofing your organization.

The End of Packaged Applications

For decades, businesses have relied on enterprise resource planning (ERP) and customer relationship management (CRM) systems as the backbone of their operations. However, these packaged applications no longer offer the strongest competitive advantage. In fact, the best implementations often require minimal customization.

The reasons for this shift are twofold:

1. Resistance to change in business processes
2. Addition of unnecessary custom requirements

With a simpler, minimally customized foundation, enterprises can embrace AI business automation to enhance data analysis, optimize workflows and more.

AI as the New Business Foundation

Microsoft CEO Satya Nadella’s prediction of AI agents replacing SaaS and application foundations is not as far-fetched as it may at first sound. In reality, this transition is already underway and will accelerate in the coming months and years.

Some of the key advantages of using AI foundations in enterprise software development include:

• Flexibility: AI agents can collaborate toward goals through value networks, not just predefined steps.
• Data-driven decisions: The operational accuracy of data becomes crucial for AI decision-making.
• Enhanced collaboration: Differentiation comes from how effectively individual parts of the organization can work together.

The New Frontier: Collaboration and Integration

With AI business automation more frequently handling foundational processes, the overall enterprise focus can shift to external and internal collaboration. This presents opportunities and challenges for any organization:

• Agentic integration: coordinating AI agents across the organization
• Service-oriented AI: developing AI services that can be reused
• Digital business definition: creating a comprehensive digital representation of the business
• New user experiences: designing interfaces that support various interaction models with AI systems for different users

The Future of Enterprise Software Development

While this shift toward AI foundations potentially marks the end of commodity software development, it opens the door to a new generation of enterprise AI solutions. Developers will need to adapt their skills to:

• Build complex collaborative systems
• Design and implement AI agent networks
• Create advanced user interfaces for AI interaction
• Develop governance and guidance systems for AI agents

Embracing the AI Revolution

The transition to AI-based foundations is not the end of business software development but rather the beginning of a new era of innovation. As simpler tasks become automated, developers will be challenged to create increasingly sophisticated solutions that leverage the full power and potential of AI.

The keys to success in this new landscape will be adaptability and a willingness to continuously learn and evolve. Those who embrace this change will be at the forefront of building the next generation of AI business solutions, leaving their competition far behind.