software AM market analysis — 2026-08-29

Enterprise software spending is tilting away from per-seat licences and toward API and workflow-based consumption, as AI capability moves deeper into production systems rather than sitting alongside them as an add-on tool. That shift brings a fresh set of operational demands: agent-based software now needs explicit handling of authentication, payment authorisation and audit logging before autonomous systems can be trusted with real transactions. The PagerDuty workforce reduction sits inside this same story. Cutting headcount while attributing part of the work to AI can support near-term margins, but it does not by itself demonstrate that a company is growing. Investors and customers are more likely to ask whether the underlying business is expanding its product footprint and customer base, not only trimming costs. Recurring-revenue software models still depend on continuous investment in development, infrastructure and support, so efficiency gains from AI need to be paired with evidence of durable revenue growth rather than treated as a substitute for it. Taken together, the sector’s near-term narrative is less about whether AI is being adopted, which is now assumed, and more about whether that adoption converts into sustainable monetisation and governed, auditable deployment.