The next few years in B2B will be defined by a major structural shift. The traditional line between service businesses and software businesses is disappearing, and AI is accelerating the collapse. In this short video, our founder Simon Penson explains why agencies, SaaS companies and B2B service firms are moving toward the same destination, and what founders should be doing now to stay competitive.
Services and SaaS are solving the same problem
For years, B2B services and B2B SaaS lived in separate lanes.
Service businesses delivered expertise, execution and human capability.
Software businesses delivered platforms, analytics and scale.
Customers no longer see that distinction.
Today’s buyers expect outcomes, end-to-end. They want the technology and the implementation. The platform and the thinking. The analytics and the action.
“Customers don’t want categories. They want complete solutions.”
AI is compressing the distance between what used to be two very different operating models. Agencies can now build SaaS-grade tools faster than ever. SaaS businesses can wrap service around their product to deliver full execution. Both sides are converging on the same value proposition: solving the entire customer problem.
This isn’t theoretical. It’s already visible across B2B markets. The question is no longer if convergence happens, it’s how fast founders adapt.
AI is lowering the barrier to hybrid business models
Historically, building software required significant capital, infrastructure and engineering depth. That barrier has collapsed.
Service businesses can now productise intellectual property, build proprietary tooling, and create SaaS-like assets without becoming venture-backed tech companies. At the same time, SaaS firms are recognising that product alone isn’t always enough. Customers increasingly demand interpretation, implementation and optimisation.
“The winners will be the software companies that learn service – and the service companies that learn software.”
The result is a hybrid model: product + service + AI working together.
For founders, this expands the total addressable market. You’re no longer constrained by your historical category. You can design around the problem you solve rather than the format you originally sold it in. But expansion without structure creates risk.
Hybrid businesses are more complex. They require intentional architecture.
Innovation without structure becomes noise
One of the biggest risks in the AI era isn’t moving too slowly. It’s chasing too many disconnected experiments.
Across the organisations we work with, the differentiator isn’t who adopts the most tools, it’s who builds a repeatable innovation system. Forward-looking businesses are formalising ownership of innovation, often through a dedicated leadership role or function.
“Innovation needs governance, KPIs and process, not just enthusiasm.”
That system typically includes:
- A roadmap aligning product, service and AI initiatives around a single customer pain
- KPIs tied to commercial impact, not novelty
- A triage framework for evaluating new technology
- Clear ownership of testing and implementation
- Feedback loops connecting innovation directly to revenue and value creation
Without this structure, AI adoption becomes fragmented. With it, innovation becomes a strategic advantage.
Why convergence creates opportunity, not just disruption
Every major shift in business models creates fear before it creates value. But convergence isn’t about replacing services with software or vice versa. It’s about integration.
The companies emerging strongest in this environment are designing businesses that combine insight, execution and technology into one coherent customer experience. They aren’t choosing sides. They’re building systems that allow both to reinforce each other.
“Convergence expands the market for founders who are willing to redesign their model.”
This is particularly relevant for agency founders, SaaS leaders and B2B service businesses looking to increase enterprise value. Hybrid models often create stronger differentiation, higher switching costs and more scalable intellectual property, all of which drive long-term value.
The key is intentional design, not accidental drift.
The founder question: is your roadmap built for convergence?
The convergence of service and software isn’t a trend to watch from the sidelines. It’s an operational decision founders need to make inside their roadmap.
- Where does software enhance your service?
- Where does service amplify your product?
- How do AI capabilities create defensible advantage?
- Who owns innovation inside your organisation?
These are structural questions, not tactical ones.
At Scaled, a growing part of our work with agency, SaaS and B2B founders is helping design hybrid operating models, prioritise innovation pipelines and build governance frameworks that allow experimentation without losing commercial discipline. The goal isn’t to chase AI, it’s to build businesses that are structurally aligned with where the market is heading.
Ready to design your next growth phase?
If you’re navigating the shift between service, software and AI, or thinking about how convergence affects your growth and exit strategy, we can help you structure the roadmap.
We work with founders to turn innovation into enterprise value.
