5 minutes
Adam Barty
As AI-native business applications redefine enterprise software with their core focus on artificial intelligence, businesses must rethink their strategies to leverage these adaptive technologies and maintain a competitive edge.
Microsoft CEO Satya Nadella recently declared that traditional software applications might soon "collapse" in the face of AI-native systems. He believes that the backbone of most business applications, structured data operations wrapped in logic, is about to be completely disrupted by AI. Many will disregard his statement as typical tech industry hyperbole, but they would be wrong to do so. We are already seeing examples of this evolution across larger organisations and the pace of change is accelerating.
This isn’t just about adding smarter chatbots to dashboards. It’s about a ground-up reimagination of what business software is, how it’s built, and who or what operates it. Welcome to the age of AI-native business applications - software designed from first principles with artificial intelligence at its core. As these applications mature, they will redefine enterprise architectures, reshape operational models, and ultimately change the way people work.
The business logic is all going to these AI agents, and these agents…are going to update multiple databases and all the logic will be in the AI tier.
Satya Nadella, CEO of Microsoft
AI-native business applications are not traditional SaaS platforms with a sprinkle of AI. They are conceived and built with AI as the foundation. Conventional business apps have long relied on fixed workflows and rigid data structures. Their logic is hardcoded; their interfaces are predictable. In contrast, AI-native systems are adaptive, flexible and not just a way to automate existing tasks and workflows; instead they will reimagine them.
Nadella put it bluntly: most business applications are little more than CRUD (create, read, update, delete) databases dressed up with business logic. If AI can be taught that logic, it can execute those operations more flexibly and intelligently, meaning the application as we know it begins to lose its relevance. In his words, once business logic migrates to being managed by the AI layer, "the very notion that applications even exist" may collapse. What he envisions is not merely smarter applications, but a complete inversion of today’s software model - where AI agents interact directly with underlying databases and APIs, bypassing traditional SaaS interfaces altogether. The intelligence lives in the AI layer, not in the app. The SaaS platform becomes, at most, a data source or a service endpoint.
The implications are significant. Instead of interacting with distinct apps (eg. your CRM, your ERP, your analytics dashboards) users may soon interface with an AI Agent that interprets intent and takes action across multiple systems. The AI doesn’t discriminate between backend systems. It retrieves information, writes updates, triggers processes and delivers insights regardless of where the data resides. This is what Nadella calls the rise of "multi-repo CRUD" AI agents.
From an enterprise architecture perspective, this means moving away from fragmented, application-centric ecosystems. What emerges is a composable, data-centric foundation where AI orchestrates workflows dynamically. Businesses will no longer be forced to adapt to software constraints. Software will adapt to the business.
In practice, this marks a decisive shift from the burdensome reality of endlessly customising SaaS platforms - think Salesforce configurations that grow more complex with each change in process or policy. Instead, AI-native systems promise flexibility at the core. Businesses will establish how they want to work in an ideal world, and then train their AI-powered applications to align accordingly. The software becomes truly bespoke - not through time consuming configuration, fiddly add-ons and plug-ins or customised code layers - but through dynamic, intent-driven behaviour carried out by an AI Agent. This ability to tailor digital operations precisely to business needs will quickly become a source of competitive advantage. Those early adopters that master AI-native design will not only be able to operate more efficiently, but will more importantly be empowered to tailor the way they operate and customise the services they deliver without traditional software constraints.
Australian business leaders need to think about what this might mean for their business. If AI-native business applications become the interface through which work is done, the underlying systems must be open, interoperable, and well-governed. Data must be accessible, unified, and secure. Infrastructure must support distributed intelligence, not just centralised computing. And critically, business logic must become portable, no longer embedded in the guts of monolithic apps.
The workplace will start to feel different, too. Today, a knowledge worker might spend hours each week navigating menus, exporting data, preparing reports, or manually coordinating processes across platforms. In an AI-native environment, these activities are increasingly delegated to intelligent agents. Employees issue commands in natural language; the system understands the context and delivers the output. It’s not about speeding up existing workflows. It’s about reimaging and redistributing them.
This will raise strategic questions. What skills do we need when much of the process work is automated? How do we govern and audit AI decisions? Where does accountability sit when an agent acts autonomously? And perhaps most pressing: what do we need to do today to prepare for this shift?
Because while AI-native systems won’t replace SaaS overnight, the direction of travel is clear. The SaaS era, defined by centralised platforms and fixed interfaces, is giving way to something more fluid, intelligent, and context-aware. The value layer is migrating from the application to the AI. For enterprises willing to rethink their architectures and data strategies, the rewards are enormous.
The place to start is by leaning into this change. That means moving past passive experimentation and actively exploring where AI can create leverage in your business. Encourage your teams to begin bootstrapping internal AI agent solutions, even at small scale. This early exploration builds capability and surfaces opportunities unique to your operations. Importantly, AI agents tailored to your workflows and data environments won’t be bought off-the-shelf like a SaaS product - they will be designed and built in-house, with support from AI consultancies that understand both the technology and the strategic goals. It’s this co-creation model (internal ownership, external expertise) that will set tomorrow’s digital leaders apart from those still locked into yesterday’s platforms.
The risks associated with waiting to see what happens in this space aren’t just about suffering from lower efficiencies against your competitors - it’s about being trapped in a software paradigm that no longer fits the way business in 5 years’ time actually gets done.
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