The SaaS Bubble Is Bursting. Here's What That Means for Your Business.

Published by Sol Solutions Consulting | February 2026

If you've been paying attention to the stock market over the past few weeks, you've probably noticed something unusual happening in the software sector. The biggest names in enterprise software, companies like Salesforce, Workday, Adobe, and HubSpot, have seen their stock prices plummet. The iShares Expanded Tech-Software Sector ETF (IGV), which tracks the North American software industry, has dropped over 20% since the start of 2026. Analysts are calling it the "SaaSpocalypse." Bloomberg, CNBC, and Bain & Company have all published deep analyses on the trend.

But here's the thing: this isn't just a Wall Street story. It's a signal. And if you're running a small or mid-size business, it's a signal worth paying attention to.

What's actually happening

For the past two decades, the software industry has operated on a simple model: build a platform, charge per seat, and grow by adding more users. It worked beautifully. SaaS companies grew fast, raised billions, and convinced businesses of every size that they needed enterprise-grade software to compete.

The problem is that "enterprise-grade" usually came with enterprise-grade pricing, enterprise-grade complexity, and enterprise-grade headaches.

Now the market is telling us something the rest of us have felt for a while. The model is cracking. AI is getting good enough to handle tasks that previously required dedicated software platforms and the teams to operate them. CIOs are consolidating vendors, not adding more. Budgets that used to go toward software licenses are being redirected toward AI tools and infrastructure. Hedge funds have shorted over $24 billion in software stocks this year alone. The era of "best of breed" point solutions, where businesses collect a dozen subscriptions that don't talk to each other, is ending.

Why this matters if you're not on Wall Street

You might be thinking, "I don't own Salesforce stock. Why should I care?"

Because the same forces driving the selloff are creating an opportunity for businesses like yours.

For years, small and mid-size companies have been stuck in an awkward middle ground. You needed better systems than what spreadsheets could provide, but the available options were designed for companies 10x your size and priced accordingly. You looked at the big platforms, got quotes that made your eyes water, realized you'd only use 15% of the features, and went back to doing things the way you always had.

That gap between "spreadsheets aren't cutting it" and "we can't afford the enterprise stuff" has been one of the biggest unspoken problems in business operations for decades.

What's changing now is that the tools, the talent, and the cost structure exist to build something in between. Custom solutions that do exactly what you need, integrate with the tools you already use, and cost a fraction of what the big platforms charge.

The rise of right-sized solutions

The SaaS selloff isn't happening because businesses suddenly stopped needing software. They still need to track jobs, manage customers, generate reports, and make data-driven decisions. What's changing is how those needs get met.

Instead of buying a massive platform and trying to bend your processes to fit it, the new approach is the opposite: start with how your business actually works and build the tools around that.

Think about it from a manufacturer's perspective. You don't need a $200,000 ERP system. You need a quoting tool that matches your actual process. You need a dashboard that shows the three metrics you actually check every morning. You need your job tracking to talk to your invoicing without someone re-entering data. You need reporting that takes minutes to generate instead of half a day.

None of that requires a Fortune 500 software platform. It requires someone who understands your operations and can build tools that fit.

What the smart money is doing

While Wall Street panics about the future of traditional software, something interesting is happening on the ground. Businesses are starting to invest in their own systems.

Not building everything from scratch. Not hiring full engineering teams. But working with consultants and developers who can take modern tools (including AI) and build targeted, custom solutions that solve specific problems.

The economics have shifted dramatically. What used to cost six figures and take a year to implement can now be built in weeks for a fraction of the price. AI has made development faster. Cloud infrastructure has made hosting cheaper. And the talent pool of people who can build these solutions has grown significantly.

The businesses that move on this early are going to have a serious advantage. While their competitors are still paying per seat for platforms they barely use, they'll be running on systems built specifically for how they operate.

What to look for in a partner

If you're considering this path, here are a few things to keep in mind.

Start with the problem, not the technology. Any good partner should want to understand your operations before they start talking about tools. If someone leads with their platform or their tech stack before they've asked how your business actually runs, that's a red flag.

Right-size the solution. The whole point is to avoid the bloated enterprise approach. Your solution should solve the problems you actually have, not the problems you might theoretically have in five years. You can always build on it later.

Demand ownership. Whatever gets built should be yours. Not locked behind someone else's subscription. Not dependent on a single vendor's platform continuing to exist. If you're going to invest in custom systems, make sure you own what comes out of it.

Measure real ROI. The value should be obvious within weeks, not months. Hours saved per week. Errors eliminated. Decisions made faster. If the impact isn't tangible and measurable, something is wrong.

The bottom line

The SaaS selloff is more than a market correction. It's a signal that the old way of buying software, paying premium prices for bloated platforms designed for companies much larger than yours, is losing its grip.

For small and mid-size businesses, this is an opening. The tools are better, the costs are lower, and the gap between what you need and what's available has never been smaller.

The question isn't whether to invest in better systems. It's whether to do it now while the window is open, or wait until your competitors have already moved.

Sol Solutions Consulting helps small and mid-size businesses build custom data and workflow solutions that fit how they actually operate. If you're curious about what a right-sized approach might look like for your business, reach out for a free assessment.