Paper Number

ICIS2026-3827

Paper Type

Completed

Abstract

AI coding agents lower the cost of organization-specific software adaptation for both organizations and vendors, yet equal access need not produce symmetric sourcing effects. We model how residual control shapes adaptation investment when organization-specific changes cannot be fully specified in advance. Vendor control induces underinvestment that lowers joint value, and repricing cannot recover the lost surplus. Internal development therefore expands selectively, especially when adaptation matters more and governance burdens are lower. When the vendor offers low-assurance and assurance-certified options, higher agent capability reduces low-assurance demand and raises the assurance-certified share of remaining customers. Imperfect internal delegation weakens this shift, while better vendor-side specification and contracting can attenuate or locally reverse it. The model shows when symmetric access to agentic AI yields asymmetric sourcing responses across software categories.

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Dec 14th, 12:00 AM

Adaptation, Assurance, and Control: How Agentic AI Reshapes SaaS Markets

AI coding agents lower the cost of organization-specific software adaptation for both organizations and vendors, yet equal access need not produce symmetric sourcing effects. We model how residual control shapes adaptation investment when organization-specific changes cannot be fully specified in advance. Vendor control induces underinvestment that lowers joint value, and repricing cannot recover the lost surplus. Internal development therefore expands selectively, especially when adaptation matters more and governance burdens are lower. When the vendor offers low-assurance and assurance-certified options, higher agent capability reduces low-assurance demand and raises the assurance-certified share of remaining customers. Imperfect internal delegation weakens this shift, while better vendor-side specification and contracting can attenuate or locally reverse it. The model shows when symmetric access to agentic AI yields asymmetric sourcing responses across software categories.