AI Agents and Open APIs
How AI Agents and Open APIs Are Unlocking New Rebundling Opportunities While much of the 2023-24 excitement surrounding AI has focused on the capabilities of foundational models, the true potential of AI lies in reconfiguring value creation across vertical value chains, not just generating average marketing content. The Vertical AI Opportunity Most AI hype has centered on horizontal B2C applications, but the real transformative power of AI is in vertical B2B industries. This article delves into the opportunities within vertical AI and explores how companies can excel in this emerging space. Short-Term and Long-Term Strategies in Vertical AI In the short term, many vertical AI players focus on developing proprietary, fine-tuned models and user experiences to gain a competitive advantage. These niche models, trained on domain-specific data, often outperform larger foundational models in latency, accuracy, and cost. As models become more fine-tuned, changes in user experience (UX) must integrate these benefits into daily workflows, creating a flywheel effect. Vertical AI companies tend to operate as full-stack providers, integrating interfaces, proprietary models, and proprietary data. This level of integration enhances their defensibility because owning the user interface allows them to continually collect and refine data, improving the model. While this approach is effective in the short term, vertical AI players must consider the broader ecosystem to ensure long-term success. The Shift from Vertical to Horizontal Though vertical AI solutions may dominate in specific niches, long-term success requires moving beyond isolated verticals. Users ultimately prefer unified experiences that minimize switching between multiple platforms. To stay competitive in the long run, vertical AI players will need to evolve into horizontal solutions that integrate across broader ecosystems. Vertical Strategies and AI-Driven Rebundling Looking at the success of vertical SaaS over the last decade provides insight into the future of vertical AI. Companies like Square, Toast, and ServiceTitan have grown by first gaining adoption in a focused use case, then rapidly expanding by rebundling adjacent capabilities. This “rebundling” process—consolidating multiple unbundled capabilities into a comprehensive, customer-centric offering—helps vertical players establish themselves as the hub. The same principle applies to vertical AI, where the end game involves going vertical to later expand horizontally. AI’s Role in Rebundling The key to long-term competitive advantage in vertical AI lies not just in addressing a single pain point but in using AI agents to rebundle workflows. AI agents serve as a new hub for rebundling, enabling vertical AI players to integrate and coordinate diverse workflows across their solutions. Rebundling Workflows with AI Business workflows are often fragmented, spread across siloed software systems. Managers currently bundle these workflows together to meet business goals by coordinating across silos. But with advances in technology, B2B workflows are being transformed by increasing interoperability and the rise of AI agents. The Rebundling Power of AI Agents Unlike traditional software that automates specific tasks, AI agents focus on achieving broader goals. This enables them to take over the goal-seeking functions traditionally managed by humans, effectively unbundling goals from specific roles and establishing a new locus for rebundling. Vertical AI Players: Winners and Losers The effectiveness of vertical AI players will depend on the sophistication of their AI agents and the level of interoperability with third-party resources. Industries that offer high interoperability and sophisticated AI agents present the most significant opportunities for value creation. The End Game: From Vertical to Horizontal Ultimately, the goal for vertical AI players is to leverage their vertical advantage to develop a horizontal hub position. By using AI agents to rebundle workflows and integrate adjacent capabilities, vertical AI companies can transition from niche providers to central players in the broader ecosystem. This path—going vertical first to then expand horizontally—will define the winners in the AI-driven future of business transformation. Like Related Posts Salesforce OEM AppExchange Expanding its reach beyond CRM, Salesforce.com has launched a new service called AppExchange OEM Edition, aimed at non-CRM service providers. 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