Enterprise SaaS Undergoes 'Great Reorg' as AI Fuels Shift to Vertical 'Systems of Action'

The enterprise software landscape is experiencing a fundamental architectural shift, dubbed "The Great Reorg," as artificial intelligence (AI) drives a move from traditional horizontal "systems of record" to specialized vertical "systems of action." This transformation, highlighted by venture capitalist Trace Cohen, signals a profound change in how businesses leverage software for operational efficiency and decision-making. AI is increasingly reshaping the enterprise stack from the outside in, prompting a reevaluation of established SaaS models.

For nearly two decades, horizontal SaaS giants like Salesforce, ServiceNow, and Workday served as essential systems of record, managing structured data, compliance, and reporting across various business functions. These platforms were designed to help human operators coordinate workflows. However, AI's emergence introduces capabilities that directly challenge this model, enabling systems to process unstructured data, reason, make decisions, and execute tasks autonomously.

The rise of vertical AI platforms marks a new era where software is built from the ground up to automate specific, industry-centric tasks. These "systems of action" embed deep domain knowledge and operational execution, ingesting complex data to automate workflows end-to-end. According to Cohen, "Vertical AI platforms built from the ground up to automate real work inside an industry, not just display it," are now becoming the operational engine for enterprises.

This shift is not a "rip and replace" scenario for existing SaaS, but rather a reorganization where enterprises will operate a dual architecture. Horizontal platforms will maintain their role for governance and structured data, while vertical AI layers will handle intelligence, automation, and industry-specific workflows. This allows for significant efficiency gains, with some workflows seeing 10-30x improvements, particularly in areas like healthcare, logistics, and financial services.

The economic implications are substantial, with a projected shift from traditional "per-seat" licensing to consumption-based or outcome-based pricing models. Companies like Salesforce, with its Agentforce AI platform, are already seeing significant traction in this new paradigm. This evolution creates opportunities for AI-native startups and compels incumbent SaaS providers to deeply integrate AI, rethink their business models, and invest in organizational transformation to remain competitive in the rapidly evolving AI-first enterprise world.