Nvidia CEO Jensen Huang argues it’s the “most illogical thing in the world” to believe AI will kill SaaS, and says the markets “got it wrong” in sending SaaS stocks tumbling. Why “illogical”? Because, as analyst Benedict Evans stresses, the fact that everyone can now easily spin up code actually doesn’t solve any SaaS problems, because creating code and tools is the easy part: “The hard part is knowing that you need a tool for this in the first place and then knowing what the tool should do.”

If that’s true, then what Shopify is doing with Sidekick is potentially revolutionary by embracing and extending the traditional SaaS model.

In December, Shopify introduced custom app generation through Sidekick. A merchant (Shopify customer) describes a tool, and Sidekick writes the code, using Shopify’s interface components and connecting to its Admin API. It’s a cool option and has been very popular. Shopify says merchants created almost 4,000 custom apps in the first three weeks following the release.

This isn’t surprising: Shopify is delivering the customization customers have long wanted from enterprise SaaS while ensuring they still enjoy the comfort of ongoing support and platform stability.

I suspect we’ll see more enterprise SaaS like this, despite silly predictions that AI would kill SaaS. Cheaper code gives customers a way to fix the things they dislike about an application without replacing everything they do like. For a vendor willing to accommodate that, AI could make its product considerably more useful and, hence, much “stickier.”

The feature that never ships

Cloudflare’s Jeremy Morrell discusses this in an excellent essay on extensible software. “In the past year, your users have suddenly acquired the ability to speak code into existence,” he writes, allowing for “markets of one.” His argument is that software should let customers put that ability to work, building additions around an established core.

Morrell has a commercial interest here, which he discloses: He works at Cloudflare and thinks its infrastructure is well suited to running those additions. He’s not wrong. But it’s the general opportunity to match customizability with stability that matters so much.

There are really (really) good reasons why vendors haven’t allowed customizability of their core products. Enterprise software companies limit deep customization to prevent high maintenance costs, security risks, and broken system updates. Oh, and to prevent their products from becoming convoluted bloatware. No matter how much you may want feature X, that feature would likely be irrelevant to almost everyone else, so adding it would complicate the product for the majority. No one wants that.

Customers have long paid consultants to customize software or they’ve hired developers to do it themselves (all while taking care not to violate their vendor licenses). Morrell points to Salesforce, which has spent years letting businesses build their own logic into its platform. In other words, AI didn’t invent extensibility. No, AI just makes it incredibly cheap. There’s a meaningful opportunity here for customers who can describe the change they need but have never been able to get it built. Some will save money on software or customizations they previously bought, while others will finally get software that nobody could profitably sell them.

Following the money

This change, however welcome for enterprises, won’t be comfortable for developers selling a narrow reporting tool or a small workflow improvement. Their customers may decide that an LLM-generated extension is good enough. An AI-built customization needn’t match every feature of the commercial product. It only has to do the job that the customer was paying for.

The platform underneath that extension has a different calculation. Every useful tool built against its data and APIs gives the customer another reason to stay. AI can make an individual feature less valuable to sell while making the product that hosts it more valuable to own. (Yet another reason to tsk-tsk foolish eulogies for SaaS companies.)

Ultimately, this should benefit anyone who both knows the business and can build more efficiently for that business. Benedict Evans makes this point in his newsletter, arguing that cheaper coding doesn’t solve the problem of discovering what software ought to do or persuading an organization to use it. A useful idea that spans several departments still needs those departments to agree. Even excellent code can’t sign off on a new way of running accounts payable.

Evans also describes how improvised tools eventually become important enough to need formal ownership and support. Anyone betting that companies will happily maintain everything they can generate should spend some time with the person who inherited the last departmental spreadsheet. Silicon Valley folks with little knowledge of real-world enterprises might think enterprises will vibe code all their software now, but they won’t. That’s not how software works because it’s not how people work.

This cuts both ways for established software vendors. Customers may continue to need their expertise while becoming less willing to accept a product’s limitations. A vendor that makes customization easy can benefit from that impatience, while one that blocks it has given the customer a new reason to investigate alternatives. The difficult decisions will come when customization interferes with what the vendor already sells.

I wrote in 2022 about Microsoft’s complicated relationship with open source, and how a company’s broad commitment to openness can collide with a division’s revenue targets. The same tension applies here. A CEO can be excited about letting customers build anything. The executive responsible for selling the premium reporting package may be less enthusiastic. Resolving that disagreement will determine what customers actually get to build, however capable the AI becomes.

Getting comfortable

Customers have their own calculations to make. An application shaped around the way your company works can be wonderful, but it can also be a pain to leave.

There are limits to what Shopify’s generated apps can do today. They are admin tools, not storefront or checkout extensions. Shopify also tells merchants to test them before installation because they can change customer-facing data. A generated app can be wrong, and running it inside a familiar product doesn’t relieve the merchant of checking its work.

Shopify lets merchants inspect and edit the generated code and restore an earlier version. That’s useful, but code written for Shopify’s Admin API still depends on Shopify. Having the source doesn’t give you another company ready to run it unchanged.

AI might eventually make moving those extensions easier, too. But recreating a screen is one thing; reproducing the behavior it relies on throughout a business is a considerably bigger undertaking. That includes the assumptions about records and transactions that the custom code gets to take for granted while it runs on the original platform.

None of this makes customization a bad deal. Customers can gain more control over their daily work while, somewhat ironically, becoming more dependent on a supplier. For SaaS vendors, that’s a good commercial reason to let customers finish the bits their developers will never get around to building, even when it costs them an add-on sale (and potentially some support headaches, depending on how they’re architected for extensibility). The customer is doing work that makes the underlying product more valuable.

AI, in short, has the potential to make SaaS dramatically more valuable, not extinct.

Cloud computing has always been about survival. When you’re building systems at scale, you need to think about resource planning, capacity, and adaptability when demand spikes. The survivalist mindset in cloud architecture is about building systems that can weather unexpected storms, whether that’s sudden traffic spikes or the need to scale AI inference across a global user base. During the past decade, serverless computing has been the go-to architecture for this kind of resilience, abstracting away the underlying infrastructure so you can focus on the application itself. Now, AI has arrived in that serverless world, and it’s changing how we think about deploying intelligence at scale.

The concept is straightforward enough. Instead of provisioning GPU instances, managing model deployments, and sizing your inference infrastructure, you call an API, send your data, and get back a response. The provider handles the rest; the model runs somewhere in their cloud, scales automatically, and you pay per token or per request. Services like Amazon Bedrock, Azure OpenAI Service, and Google Cloud Vertex AI have made this the norm rather than the exception. You get access to foundation models from Anthropic, OpenAI, Meta, and Google through managed APIs that abstract away everything from hardware selection to auto-scaling logic. It’s elegant in its simplicity, and for many use cases, it’s exactly what you need.

The scalability advantage

The benefits of this approach are substantial, and they’re worth examining carefully. The most obvious is that you don’t have to spend time sizing infrastructure. Sizing AI infrastructure is notoriously difficult. GPU instances are expensive, and getting the right number to handle your peak load without overprovisioning during quiet periods requires expertise most organizations lack. Serverless AI offloads that problem entirely. You describe what you need, the service provisions it behind the scenes, and you are billed for what you use. The system scales up when you need it and scales back down when you don’t. There’s no idle capacity, no waiting for instances to spin up, no late-night calls to your infrastructure team when a model needs to handle a sudden traffic surge.

If done correctly, this can be a godsend for applications that consistently scale up and down. Retail is the canonical example. During the holiday season, a retailer might see AI-powered recommendation engines handle 10 times their normal load. In January, that demand drops dramatically. A serverless approach means you’re not paying for GPU infrastructure sitting idle during the slow months. The same logic applies to seasonal businesses, event-driven applications, or any workload with unpredictable traffic patterns. You get elasticity without complexity.

The hidden costs of pay-per-use

The drawbacks need to be considered as well, and this is where many architects get into trouble. Since you don’t have direct control over scaling and descaling processes and storage resources, the cost is going to go up and down as your infrastructure needs vary. In many cases with highly variable scaling systems, this can be a benefit. We’re not overprovisioning or underprovisioning, and we’re not dealing with the impact of idle services and overpaying for infrastructure that we never use. The bills move with your actual usage, which sounds ideal until you realize that usage-based billing doesn’t always mean lower costs.

If your AI applications use a static number of resources over time, serverless services will typically cost you more. When you’re running inference at a steady rate around the clock, you’re often better off provisioning dedicated infrastructure and negotiating a fixed rate. The per-token pricing that makes serverless attractive for variable workloads becomes a premium you pay for flexibility you don’t actually need. More importantly, you’re never going to really leverage the benefits of serverless technology, because the infrastructure used in these AI processes will be relatively static over long periods. The cold starts, the scaling latency, the lack of control over instance types—none of those downsides are ever offset because you never use the upsides.

Fit architecture to use case

This is a horses-for-courses situation, and you need to think carefully about whether you want to leverage this technology. Even though serverless has been around for quite a long time in the cloud world, I’m not sure most enterprise architects and AI architects fully grasp how to deploy serverless-based AI. The technology is new enough that the patterns are still forming, and cloud providers’ documentation generally emphasizes ease of use without adequately covering scenarios where it falls short. The result is organizations defaulting to serverless AI for every use case, driven by the same “serverless is always better” thinking that plagued early cloud adoption.

Serverless AI is an architectural option like anything else. You need to be very careful with it, matching the right business problems to the technology. Variable, unpredictable workloads with strong seasonal patterns are ideal candidates. Static, steady-state inference workloads are probably not. The decision should be rooted in understanding your traffic patterns, cost constraints, and operational requirements, not from assuming that serverless is inherently better than provisioning your own infrastructure. The survivalist’s thinking applies here as it does everywhere in cloud architecture: The best tool is the one that fits the job, not the one that sounds the most exciting.

The consulting firms told us this would be different. They arrived with slick slide decks, expensive vendor packages, and promises to revolutionize how we do business. Their message was clear: Digital transformation was no longer optional; it was existential. Companies that failed to adapt would be left behind and crushed by more agile competitors with cloud-native architecture and data-driven strategies.

That was back in 2020, when Boston Consulting Group released research showing that 70% of digital transformations failed to meet their objectives. The consulting industry rushed to publish its frameworks, maturity models, and proprietary methodologies. Enterprise IT organizations spent millions on these programs, hoping to finally bridge the gap between technological capability and business value.

Several years on, I can say that little has changed. If anything, the issue has worsened.

The damage that was done

Most digital transformations didn’t just fail to deliver ROI; they actively damaged the organizations that undertook them. Technical debt accumulated as companies deployed monolithic cloud platforms that were neither modular nor scalable. Business misalignment became endemic as transformations focused on technology for its own sake rather than on solving actual business problems. Organizations found themselves locked into expensive vendor relationships that failed to deliver on their promises.

I’ve spoken with dozens of enterprise CIOs and CTOs over the past several years, and the stories are remarkably consistent. Transformations that were supposed to take six months stretched to two years. Budgets estimated at a few million exploded to six, eight, even twelve times the original projection. The consulting firms had excellent PowerPoint skills, but when it came to implementation, the results were consistently disappointing.

The damage wasn’t just financial. Organizations lost confidence in their IT capabilities. Talented people left because they were tired of being managed by consultants who couldn’t code their way out of a paper bag. Business stakeholders grew cynical about technology initiatives, having been burned too often by projects that promised transformation but delivered chaos.

Why the consulting models failed

Let’s be direct about what happened. The consulting industry discovered that digital transformation was highly profitable. They could sell their methodologies, vendor partnerships, and “best practices” frameworks, and charge premium fees for implementation support. The problem was that these frameworks were largely one-size-fits-all approaches disguised as bespoke solutions.

A major global bank doesn’t have the same requirements as a regional healthcare provider, yet both were sold the same transformation playbook. The consulting firms had invested too heavily in their methodologies to admit that the real answer might be to start with business requirements and work backward toward technology. Instead, they assembled prepackaged solutions optimized for vendor partnerships rather than clients’ actual needs.

The talent problem was equally severe. The consulting firms could certainly talk about digital transformation; they had excellent slides and compelling narratives. But when it came to implementation, the skill gaps were glaring. These organizations assembled solutions by following playbooks rather than understanding how the technology components actually fit together. The result was systems that were overengineered, overprovisioned, and ultimately underperforming.

Cloud computing was supposed to be the great enabler, but many organizations misunderstood and misapplied it. Organizations lifted and shifted their existing problems along with their existing architecture. Monolithic applications running on expensive virtual machines became the new normal, with organizations paying cloud costs that far exceeded their on-premises expenses, yet achieving none of the scalability benefits the cloud was supposed to deliver.

What we still need to learn

As we grapple with the next wave of technology transformation—this time centered on artificial intelligence—the lessons from digital transformation failures should be front and center. The first and most important lesson is brutally simple: Focus on business needs first. I know this sounds obvious, but I guarantee you that every failed digital transformation project lost sight of its core business requirements. They built technology for technology’s sake without understanding the problems they were trying to solve.

Too many transformations focused on individual business units rather than enterprisewide strategies. The result was a collection of systems that couldn’t work together cohesively. Isolated solutions felt like progress but actually made integration harder and created new dependencies that hadn’t existed before.

Organizations also need to invest in serious training for their people. I’m not talking about sending IT staff to vendor certification programs that teach them to pass tests on proprietary platforms. I mean fundamental architectural education that helps people understand how to assemble technology effectively.

We face a massive shortage of AI, cloud, and security architects, as well as other technical leaders who can design solutions that work. Rather than addressing this gap, organizations are placing unqualified people in these roles and hoping for the best. It’s past time to invest in education.

The case for simplicity

Here’s something that also should be obvious but clearly isn’t: You can solve the same business problem with $1 million or $20 million, depending on the sophistication of the IT organization building the solution. Both designs will work reasonably well, but one solution costs 20 times more because it is overbuilt and overengineered.

Organizations are adding AI to everything under the sun, even when simpler solutions would work just as well. They’re overprovisioning cloud resources because they lack the architectural discipline to rightsize their infrastructure. They’re building systems designed for scale they’ll never reach, complexity they don’t need, and features no one requested.

The path forward requires a minimalist approach. Build systems that are good enough for their intended purpose. Focus on requirements rather than capabilities. Resist the temptation to adopt every new technology just because it’s available.

Digital transformation didn’t fail because the technology was flawed. It failed because we forgot that technology exists to serve the business, not the other way around. To succeed with AI, we need to remember that fundamental truth. And remember the consulting industry’s tendency to sell us expensive solutions to problems we don’t have.

Entrusting mission-critical workloads in the cloud puts a lot of pressure on IT operations to build resilience into data infrastructure they don’t even own — to make sure that when an incident happens elsewhere, the lights stay on at home. Fortunately, savvy CIOs are learning they can architect their systems for resilience and high availability to keep mission-critical cloud workloads running when disaster strikes.

When designing for resilient, highly available cloud workloads it is critical to understand the details of your cloud provider’s service level agreement (SLA) and recognize that providers operate on a shared responsibility model. That means there are many things the provider is responsible for, but the workloads you’ve got running on their infrastructure are not among them. With that in mind, we’ll need to focus on three core goals essential to building and maintaining highly available, resilient cloud workloads:

1. Identify and eliminate single points of failure
2. Close or mitigate conditions leading to recovery gaps, and
3. Overcome operational complexity.

Remember, everything fails

Designing for application-level resilience and high availability is predicated on recognizing that everything fails. That’s not pessimism, but realism, and embracing this fact gives you a leg up in architecting resilient IT. Hardware breaks down, disasters occur, mistakes are made, software incompatibilities are common, and limits are exceeded that result in loss of service. There are four categories of failure that need to be taken into consideration when designing for resilience and high availability:

1. Single point of failure: As the term suggests, this describes a non-redundant device, route, or point of connectivity that results in zero fault tolerance in the event of an incident involving that choke point.
2. Excessive load: Exceeding the throughput or memory limits of a device or service can result in latency, service degradation, or failure affecting service level agreements (SLA) and service level objectives (SLO).
3. Misconfigurations and bugs: Perhaps the most common source of failure, these breakdowns often occur during installation, maintenance, and patching leading to the incorrect execution of code.
4. Shared fate: This type of failure is like non-redundant connectivity. When you rely on third-party services and there is an incident beyond your control affecting a partner, it can result in downtime or service degradation.

Having identified the primary challenges to maintaining service uptime and continuity, let’s explore an approach to achieving resilience through high availability, disaster recovery, and the process of continuous improvement.

Working toward continuous improvement

High availability is often thought of as measured by “X Nines,” representing the percentage of time a service is operational over the course of a specified time frame, usually a year. Six nines of availability, for example, means that a service can be expected to run 99.9999% of the time, or 8759.99 hours out of 8760 in a year. That sounds good until a disaster happens. Then we shift to disaster recovery, or the ability to restore a service and its associated data quickly and correctly when things go wrong. Disaster recovery is often measured and evaluated by a recovery point objective (RPO), which is the maximum acceptable amount of data loss, and a recovery time objective (RTO), which is the maximum acceptable amount of time a service can be down.

By learning from our mistakes, incidents, and the ongoing process of testing, observing, and evaluating IT operations, we apply new information in the goal of continuous improvement to get peak performance out of our investments in IT. But because we’re addressing resilience and high availability in the context of workloads operating in the cloud, we should understand the shared responsibility model that most cloud service providers use. Details may differ from provider to provider, but the shared responsibility model of cloud services is your vendor’s statement of responsibility for maintaining its infrastructure and ability to deliver storage and compute capacity in a region and availability zone where you have a need. In return, you accept responsibility for the configuration, maintenance, availability and operation of the workloads you choose to run on your vendor’s cloud.

A cloud service provider will typically operate and maintain physical infrastructure in different areas around the world, with multiple availability zones in each area. Each availability zone will have one or more data centers with its own power, cooling, and other operational support. Data centers are typically located far enough from each other to minimize the chance that a natural or regional disaster will affect multiple data centers, but close enough that they can operate as a single, logical data center — thereby maximizing bandwidth and throughput, while minimizing latency. This is redundancy at scale that eliminates a single point of data center failure.

Designing for application high availability and disaster recovery

To build out or retrofit your infrastructure for application-level resilience and high availability, there are four things you must have: clustering, data replication, failover, and disaster recovery. Let’s look at each and how to architect for them.

Clustering

Clustering is the practice of connecting like and complementary systems to improve availability and reliability. Think of it as putting into practice the maxim “the whole is greater than the sum of its parts.” Traditionally, clustering was achieved using hardware, specifically storage area networks (SAN), to connect and support systems in a physical data center. However, in the cloud age, hardware-based clustering has proven to be expensive and inflexible. Software-based SANless clustering with products such as SIOS LifeKeeper delivers all the benefits of the traditional approach while also working better in cloud and hybrid environments.

SANless clusters enable the configuration of nodes based on the organization’s operational priorities and work easily for enterprises running geographically distributed data centers or cloud availability zones. Because SIOS LifeKeeper supports single-site, multi-site, cloud, or mixed environments, and affords real-time access to operational data during incidents requiring failover, it is ideal when mission-critical workloads are distributed across multiple providers. LifeKeeper clusters create redundancy and eliminate single points of failure, both of which are necessary for achieving high availability. For enterprises operating hybrid or multi-cloud infrastructure, this enables you to shift to secondary resources should your primary service experience an outage.

Data replication

IT operations and your mission-critical applications rely on data, so it’s vital to keep data in sync between nodes in real time, whether synchronously or asynchronously, depending on the application. When working to achieve high availability, it’s important to monitor the health of infrastructure elements and the applications you’re running. This ensures that downtime affecting the application and any downstream dependencies is detected so that failover and recovery to a standby node can occur automatically. When everything is in sync and data replication is happening, this ensures complete readiness; there’s no need to rebuild a database or for any manual operations. And with SANless clusters using SIOS DataKeeper, this will happen across availability zones, regions, and to or from on-premises, cloud, or multi-cloud resources in hybrid environments.

What’s important here is that the software you use for SANless clustering be application aware. That’s SIOS LifeKeeper. Because high availability and resilience mean not just failing over to standby infrastructure resources, but for properly failing over mission-critical workloads (think SQL Server, SAP, Postgres, or industry-specific applications like Meditech), the software needs to understand how those applications work so that they can recover and restart cleanly. Otherwise, when failover occurs, there’s a good chance that workload is not going to be available, or it could be out of sync. When your software is application-aware, failover and recovery is fast and predictable with no API dependencies or last-minute provisioning.

Failover

With SIOS SANless application-aware clustering and replication in place, you can automate real-time failover and achieve the goal of high availability and resilience. Because we’ve chosen a software-based approach, failover occurs in the data plane, so there’s no need to spin up a new instance following an incident. Everything is already running, in sync, and ready. Furthermore, failover is immediate and it’s predictable. That is what you need when dealing with mission-critical workloads. Consider that many of the mission-critical applications you use were not designed to operate in the cloud, so even if your infrastructure is resilient, the application itself represents a single point of failure. Without replication, application monitoring, and real-time failover automation, you risk loss of revenue, security degradation, or worse.

Depending on the size of your enterprise and the industry in which it operates, an hour of downtime can cost $1 million or more, and 90% of organizations report costs of at least $300,000 per hour. Beyond that simple loss of revenue are soft costs associated with reputation damage, lost productivity, missed transactions, and more. Revenue protection is only part of the equation; it is about protecting the business.

Disaster recovery

Any design for high availability and resilience must also take into consideration the risk of a non-IT disaster that disrupts operations. Natural disasters like fires, earthquakes, and floods, or disasters caused by humans like the accidental severing of a trunkline or an act of sabotage conspire to bring operations to a sudden halt. Clustering, replication, and failover all play into disaster recovery, but there are additional considerations that must be addressed. For disaster recovery (DR), you’re going to want geographic distance between your primary site and your DR site to minimize the risk that a regional event doesn’t affect both. That means you’re going to want asynchronous (or near real-time) data replication.

Asynchronous replication is typically only a second or less behind synchronous replication, so it is de facto real-time, but that delay allows you to replicate across higher-latency networks and across longer distances. And because replication is happening continuously, even if you have a local failover between node one and node two, replication to the DR node doesn’t stop. Instead, when node two comes online it becomes the source of the mirror replicating to the DR site and back to node one once it is restored.

Patching and planned maintenance

Beyond the simplicity and cost advantages that come from taking a software-based approach to designing your cloud and hybrid infrastructure for high availability there is another big benefit. You are also better prepared to respond to the increased pressure on rapid implementation of software updates and security patches. No one wants to be the person responsible for taking too long to patch for a vulnerability, but every time you touch a system, you’re introducing the risk of error. That risk is greater when dealing with the cloud where you have less control over the underlying infrastructure, more abstraction, and a lot more moving parts.

In short, patches can break things as well as fix them. They have thus become a significant contributing factor as a cause of downtime. With SANless clusters you’re able to minimize that risk by enabling rolling updates, meaning you can patch a secondary server, verify that the patch didn’t break anything, and then patch the original server where the primary application is still running. If something does break on the secondary server, the primary is unaffected and you can quickly recover to the previous state while you figure out what went wrong. This simplifies the process of executing ad hoc patches and performing planned maintenance, mitigating the associated risks.

An investment in cloud and hybrid infrastructure and services doesn’t have to put IT operations at the mercy of a third party. With the right approach, you can design for high availability and resilience and keep your mission-critical workloads running in the cloud even when things outside of your control go wrong.

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New Tech Forum provides a venue for technology leaders—including vendors and other outside contributors—to explore and discuss emerging enterprise technology in unprecedented depth and breadth. The selection is subjective, based on our pick of the technologies we believe to be important and of greatest interest to InfoWorld readers. InfoWorld does not accept marketing collateral for publication and reserves the right to edit all contributed content. Send all inquiries to doug_dineley@foundryco.com.