Application Software
This sector develops specialized programs designed for end-users to perform specific tasks, ranging from enterprise resource planning (ERP) systems to creative design tools.
Why it exists
Application software exists to automate specific business and consumer functions—finance, sales, design, communication, operations.
Why it’s necessary
Software replaces labor, compresses cycles, and scales human output with near-zero marginal cost.
Key components
SaaS platforms
User experience & interface design
APIs and integrations
Subscription billing systems
How to evaluate businesses
Key metrics include ARR growth, net revenue retention, churn, CAC:LTV ratio, gross margin, and expansion within existing accounts. The best firms show high retention, strong ecosystem stickiness, and pricing power without feature bloat.
How the industry could be improved
Outcome-based pricing instead of seat-based pricing, embedded AI copilots, deeper vertical-specific customization, and radical simplification of bloated feature sets.