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ARTICLE · 01 JULY 2026

Generative AI Will Not Replace Traditional Software – But Must Merge With It

AlixPartners Asia LLC
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The software industry faces a critical strategic choice as generative AI capabilities advance: should enterprise systems be replaced by large language models, or is there a more nuanced path forward? This analysis examines why the probabilistic nature of LLMs makes them fundamentally unsuited to replace deterministic enterprise software, and proposes an integration strategy that combines the strengths of both approaches.

United KingdomStrategy
Rob Hornby
Rob Hornby
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The release of a legal workflow plugin to Anthropic’s Claude Cowork product last month erased roughly $285bn from software equities before a partial recovery. Even before this, predictions of the “death of SaaS” abounded as progress on agentic AI reached a new inflection point. In Citrini’s now viral research report scenario, “a competent developer working with Claude Code or Codex could now replicate the core functionality of a mid-market SaaS product in weeks”.

Surely the writing is on the chat interface for traditional software?

I don’t think so.

My position has little to do with frontier lab strategy or the daily gyrations of the market. It’s a technical argument about the fundamental nature of large language models.

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