In the rapidly evolving world of artificial intelligence, OpenAI’s chief financial officer, Sarah Friar, has issued a stark warning about the potential upheaval facing the software-as-a-service (SaaS) sector. Drawing from her experience at companies like Square and Nextdoor, Friar highlighted how AI advancements could fundamentally alter the longstanding debate between buying off-the-shelf software and building custom solutions in-house.

According to a recent report in Business Insider, Friar emphasized that generative AI tools are empowering companies to develop their own software more efficiently, potentially eroding the market dominance of established SaaS providers. This shift, she argued, stems from AI’s ability to automate coding and customization, making “build” a more viable option for enterprises that previously relied on vendors like Salesforce or Adobe.

The ‘Buy Versus Build’ Paradigm Shift: As AI lowers barriers to entry for in-house development, traditional SaaS models face existential threats, forcing companies to rethink their value propositions in an era where customization is no longer a luxury but a baseline expectation.

Friar’s comments come amid broader industry discussions about AI’s disruptive potential. For instance, a Bain & Company analysis, as detailed in their insight piece on agentic AI, suggests that autonomous AI agents could render some SaaS functionalities obsolete by handling complex tasks without human intervention. This aligns with Friar’s view that businesses might soon prefer tailoring AI-driven tools to their specific needs rather than subscribing to generic platforms.

Moreover, RBC Capital’s examination of AI’s impact on software markets, covered in a Business Insider article, identifies potential winners like those integrating AI deeply into their offerings, while losers could include SaaS firms slow to adapt. Friar herself noted that OpenAI’s own tools, such as ChatGPT, are already enabling developers to prototype software rapidly, accelerating this trend.

Navigating Competitive Moats in the AI Era: Companies must invest in proprietary data, seamless integrations, and ethical AI practices to differentiate themselves, as generic solutions become commoditized by accessible generative technologies.

To counter these disruptions, Friar outlined strategies for building a “competitive moat,” as reported in another Business Insider piece. She stressed the importance of focusing on unique data sets, fostering strong user communities, and prioritizing security—elements that AI alone can’t easily replicate. This advice is particularly timely as OpenAI eyes ambitious revenue goals, with Friar previously indicating that $11 billion in 2025 is within reach, per a February Business Insider report.

The implications extend to cloud giants like Microsoft and Amazon, which Friar accused of “learning on our dime” in a recent Business Insider interview, hinting at OpenAI’s plans to build its own data centers. This move could reduce dependency on external infrastructure and further empower in-house AI development across industries.

From Hype to Reality: While AI promises efficiency gains, the transition may involve short-term pains, including workforce reskilling and regulatory hurdles, as enterprises balance innovation with operational stability.

Critics, however, caution against overhyping AI’s immediacy. A Business Insider analysis describes the current phase as AI’s “meh” era, following underwhelming releases like OpenAI’s GPT-5. Former OpenAI research head Bob McGrew echoed this in a June Business Insider discussion, noting that “vibe coding” prototypes still require professional engineers for robust implementation.

Looking ahead, Friar’s warnings underscore a pivotal moment for SaaS. As AI evolves—potentially with models like GPT-6, as speculated in an AInvest report—the industry must innovate or risk irrelevance. Enterprises, meanwhile, stand to gain from this empowerment, but only if they navigate the complexities of integration and ethics effectively.

The Broader Economic Ripple Effects: Beyond SaaS, AI-driven disruptions could redefine labor markets, investment strategies, and even the role of capital in a post-AGI world, challenging traditional business models at their core.

OpenAI’s own fundraising efforts, amid warnings that artificial general intelligence might render money obsolete, as noted in an August Business Insider piece, highlight the irony. Yet, with valuations soaring to $300 billion, per an Observer report on Sam Altman’s bubble concerns, the stakes are high. Industry insiders agree: adaptation isn’t optional; it’s imperative for survival in this AI-fueled transformation.