International Journal of Scientific Research and Engineering Development

Artificial intelligence is reshaping the economics, architecture, and strategic logic of Software-as-a-Service (SaaS), moving enterprise software from standardized subscription access toward intelligent, adaptive, and outcome-oriented service delivery. This paper examines how AI transforms SaaS business models, focusing on the strategic transition of traditional independent software vendors (ISVs) toward AI-as-a-Service (AIaaS). Using a mixed-method conceptual approach that triangulates academic literature, industry evidence, and comparative transformation patterns, the study develops an integrated framework linking AI capability maturity, business model redesign, responsible AI governance, and organizational capability. Findings indicate that AI creates differentiation through automation, prediction, generative assistance, and decision support, but also introduces risks tied to inference cost, data readiness, explainability, privacy, and accountability. The paper argues that successful AIaaS transformation requires strategic alignment among customer outcomes, data architecture, model operations, revenue design, and governance maturity rather than the simple addition of AI features to an unchanged commercial model. The study contributes a diagnostic framework and a comparative typology of transformation pathways for ISVs seeking to evolve toward responsible, scalable, and economically viable AIenabled service models.

Amir Hussain, "The Impact of Artificial Intelligence on SaaS Business Models: Strategic Transformation of Traditional SaaS ISVs Toward AI-as-a-Service" International Journal of Scientific Research and Engineering Development, V9(4): Page(452-460) May-June 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.