The Rise of “Service-as-Software”
“I’m not a businessman; I’m a business, man.”
The pace of technological progress often surprises us, not in its existence, but in its speed. Few concepts illustrate this better than the rise of “Service-as-Software” - a fundamental shift in how software delivers value.
Unlike traditional Software-as-a-Service (SaaS), which empowers users to achieve their own outcomes, Service-as-Software is a new term used to refer to businesses that use AI to automate traditional service businesses. Tasks that once required human labor (recruiting, sales, customer support, accounting, etc) can now be handled by AI workflows, operating with the efficiency of software while maintaining the appearance of a professional service.
As we enter 2025, Service-as-Software is poised to reshape entire industries. In my view, it’s one of the most obvious, yet underappreciated, opportunities for entrepreneurs to create immense value in a short period of time. Those who embrace its potential will have the opportunity to redefine markets.
What Makes “Service-as-Software” Different?
Outcome-Oriented
Service businesses are the oldest type of business. Customers don’t pay for tools but for results. Why buy a tool to help me with marketing if I can just outsource it to a specialized firm?
Autonomous Execution
Advances in LLMs and orchastration platforms now enable these service businesses to autonomously execute. 2025 will be the year that professional service firms start replacing highly specialized talent with highly specialized end-to-end workflows.
Service Experience. Software Margins.
To the customer, it feels like a professional service: results delivered with little effort on their part. Behind the scenes, it operates as software, relying on AI models and workflow automation to achieve the desired outcomes.
Venture-backed Acquisitions
This year you’ll start seeing a lot more startups using venture funding to acquire legacy service providers with the intent to leverage their customers and distribution while automating their entire service delivery behind the scenes.
The Market Potential
Service-as-Software is not merely an extension of SaaS. At it’s core, it’s a reimagination of professional services as scalable, software-driven solutions. Recruiting, sales, accounting, property management, and countless other industries stand to be reshaped.
For example:
Traditional SaaS: A CRM tool helps your sales team track leads and close deals more efficiently.
Service-as-Software: A fully outsourced inside sales team that will deliver qualified leads on a pay-per-lead model, and that is cheaper and more scalable than hiring your own sales team.
The opportunity is massive. The Service-as-Software model will open up a $4.6 trillion opportunity for startups across traditional service sectors.
Why Now?
The timing of this shift is no coincidence. Several factors have converged to make Service-as-Software possible:
Maturing AI Capabilities
Frontier AI models have advanced far beyond simple language tasks, enabling nuanced judgment and decision-making across complex workflows as well as advanced function calling, image recognition, real-time voice interactions, computer use, etc.
Market Demand for Efficiency
Businesses are under pressure to cut costs and increase productivity. Service-as-Software aligns perfectly with these needs, offering tangible outcomes at a fraction of traditional costs.
Acquisition Strategies
As Joe Schmidt notes in his post, “Romanticizing Inorganic Growth,” AI startups will increasingly acquire or partner with traditional service businesses, transforming them into high-margin, scalable operations. This hybrid approach allows startups to leverage existing customer bases while layering on AI-driven efficiencies. The Information has also highlighted this new trend, noting that VCs are adopting private equity–style roll-up strategies, consolidating legacy service firms into AI-powered entities.
What I’m Up To…
As 2025 unfolds, this transformation will be one of the most significant opportunities for startups, established businesses, and investors alike. At Fieldcrest Ventures, we’re focused on building the future of Service-as-Software businesses from the ground up.
Fieldcrest is a startup venture builder committed to incubating innovative businesses that take advantage of this shift, while also supporting our existing portfolio companies in rethinking their models and leveraging AI to its full potential.
Our approach centers on three priorities:
Incubating New Service-as-Software Startups
We’re developing ventures that embed AI at their core to disrupt legacy service industries. By building companies that deliver outcomes, not tools, we’re aiming to lead this next wave of innovation.Accelerating Portfolio Company Transformation
Many businesses in my portfolio have deep expertise in traditional SaaS or tech-enabled services, and I’m personally working with them to explore how they can evolve their models. Whether that’s integrating AI workflows or transitioning to outcome-based pricing, we’re ensuring they’re equipped to stay ahead of the curve.Leveraging Strategic Acquisitions
One of the most exciting aspects of this shift is the opportunity to acquire legacy service businesses and transform them into modern Service-as-Software leaders. By layering AI-driven automation onto these existing firms, we can unlock scale, improve margins, and deliver better results to customers.
The rise of Service-as-Software is a once-in-a-generation opportunity to build industry defining businesses.
For founders, operators, and investors, the question is clear: how will you position yourself for this transformation? Whether you’re building a new startup, rethinking an established model, or exploring strategic acquisitions, the possibilities are immense.
Let’s build something!
