Your moat is a prison

AI doesn't need to breach the walls. It makes the castle irrelevant...

Running towards Chanonry Point….

A moat is a terrible analogy for a business to adopt. AI is about to expose that thinking.

The whole concept is defensive. You build a moat to protect what you have. It’s the opposite of creating something new. For medieval castles, that defence came at a high cost. No replenishment of food, water and supplies. All trade and communication cut off. At the same time, every person seeking safety inside swells the numbers to feed.

Successful software businesses have built moats that depend on app marketplaces, implementation partners, and developer communities. All of these make switching painful and expensive. Switching is the deep ditch that protects the SaaS castle.

Switching costs are only an effective defence against similar competitors in a stable market. AI sweeps away the whole apparatus of customisation, configurations and business rules aligned to each specific customer. Now the customer can simply tell AI how they want things done and agents will do the work for them.

Supporting these relationships while customer needs change around them turns an asset into a burden. Instead of switching costs for customers, you now have a community of people who are starving for business. Partners are losing the customisation and migration revenue the ecosystem used to generate.

That burden is only relieved as your “strategic” partners drift away. The ecosystem that made enterprise software unassailable is dissolving.

SAP, Salesforce and Workday will not disappear. They will remain locked up inside big organisations. Gathering data for AI to use. Running reports where replacement isn’t worth the effort. Invisible to users and highlighted to management only as a cost to be cut.

The moat is becoming a prison, not a protection.