Sophia Philippou on why AI changes Build vs Buy for SaaS, where the moat moves when features are easy to copy, and why the value proposition must evolve.
Sophia Philippou, Perpetuate
For a long time, SaaS companies could build differentiation into the product.
Build better features. Create a better user experience. Solve the problem more effectively than the alternatives. Give Sales a strong demo and a competitive feature matrix, and there was a reasonably clear argument for why a customer should choose you.
AI is starting to disrupt that equation.
Code is becoming commoditised. Features are becoming faster and cheaper to replicate. AI-native competitors are entering established software categories with smaller teams and different cost structures. And perhaps most importantly, the perceived barrier to building software internally has fallen.
Increasingly, the competition isn't just another SaaS platform.
It's: "Could we build this ourselves?"
That creates a much bigger question for SaaS businesses:
If your product features are no longer your strongest source of differentiation, what actually makes you worth buying?
Historically, building internally meant a substantial investment in engineering capability, infrastructure, maintenance and time.
AI hasn't eliminated those costs, but it has changed the perception of them.
An executive can now look at a software product and reasonably ask their technology team: Could we build something like this ourselves using AI?
And the answer may increasingly be: probably.
But "can we build it?" and "should we build it?" are two very different questions.
This is where SaaS companies need a much stronger commercial argument.
The case for buying can no longer simply be that your platform has more features than something the customer could build themselves.
It needs to demonstrate why buying creates greater business value.
What is the total cost of ownership of maintaining an internal solution? What internal capability gets diverted to building it? How long until it delivers value? Who maintains it when the underlying technology changes? What operational or compliance risks does the business inherit? And what does your company know about solving this problem that the customer's internal team doesn't?
Suddenly, Build vs Buy isn't primarily a product comparison.
It's an economic argument.
This doesn't mean Product becomes less important.
Arguably, it makes genuine product strategy even more important.
But the defensible advantage may increasingly sit beyond individual features.
It might be proprietary data accumulated over years. Deep integrations embedded into customer workflows. Domain expertise that shapes how the product solves the problem. Customer intelligence. Trust. Implementation capability. Ecosystem. Distribution. Switching costs. Network effects. Speed to value.
Or perhaps the moat is the combination of several of these things.
The challenge is identifying which advantages genuinely matter to your Ideal Customer Profile.
Because there is another uncomfortable reality here:
Something can be genuinely differentiated without being meaningfully valuable to the customer.
Your moat only matters commercially if the buyer understands it, values it and believes it will create a better outcome.
This is where I think many established SaaS businesses have work to do.
A value proposition that worked three years ago may still be sitting on the website, in the pitch deck and throughout Sales enablement, despite the competitive environment around it changing significantly.
Your product has changed.
Your competitors have changed.
AI has changed what customers believe is possible.
New entrants have changed expectations around price and speed.
And the alternatives available to the buyer have changed.
Yet the fundamental answer to "Why should I buy from you?" may not have evolved at the same pace.
Value propositions shouldn't become positioning exercises that are revisited every few years.
They need to remain connected to the market.
What does our ICP care about now? What alternatives are they genuinely considering? Why do we win? Why do we lose? What do customers value that competitors struggle to replicate? And which parts of our differentiation actually influence the buying decision?
If those answers change, the value proposition needs to change with them.
The best product may still matter enormously. But in a market where features are easier to replicate, alternatives are multiplying and buyers increasingly believe they can build for themselves, product alone may not win. The SaaS businesses that win will be the ones that can clearly articulate why they are different, why that difference matters, and why buying from them creates greater value than the alternatives.
Rebuilding a value proposition is Product Marketing work, and the Product Marketers who can actually do it own positioning, ICP and pricing rather than collateral. They can tell you why you win and why you lose. If that capability isn't in the business yet, it may be the next hire worth making.
Sophia Philippou leads Perpetuate's SaaS Marketing practice and its Product practice.