Question 1

What percentage of companies have replaced SaaS tools with custom software in 2026?

Accepted Answer

According to Retool's 2026 Build vs. Buy Report — based on a survey of 817 enterprise builders across engineering, operations, IT, and finance — 35% of respondents had already replaced the functionality of at least one commercial SaaS tool with a custom internal software build. Another 78% said they plan to build more custom internal tools in 2026. The survey covered companies ranging from well-funded startups to Fortune 500 enterprises. The report was released on February 17, 2026, and titled 'The Build vs. Buy Shift: How Vibe Coding and Shadow IT Have Reshaped Enterprise Software.' The figure represents completed replacement decisions, not hypothetical intent — meaning the build vs. buy shift is already underway at material scale, not a forecast of future behavior.

Question 2

Why are enterprises choosing to build custom tools instead of buying SaaS in 2026?

Accepted Answer

The primary driver is a 10x reduction in the cost of building custom internal software due to AI-assisted development tools. Two years ago, a custom internal tool might have required weeks of senior engineering time and cost $50,000 to $150,000 to build and deploy. Today, the same tool can be prototyped in days and deployed for $5,000 to $20,000, with ongoing maintenance costs also significantly reduced by AI coding assistants. At the same time, enterprise SaaS pricing has increased 8% year-over-year to an average of $55.7 million annually per organization. When build cost falls by 10x and SaaS cost rises, the economic break-even point for building versus buying moves from 2-3 years to 6-12 months. The organizations making replacement decisions have already done this math.

Question 3

Which SaaS categories are most at risk from the enterprise build revolt?

Accepted Answer

The Retool 2026 Build vs. Buy Report identifies specific SaaS categories where replacement decisions are most concentrated: workflow automations (35% of respondents have already replaced), internal admin tools (33%), BI and analytics tools (29%), CRM tools (25%), project management software (23%), and customer support tools (21%). The pattern across these categories is consistent: they are product categories built for the median customer's workflow, where the cost of adapting the product to your specific requirements often exceeds the cost of building something purpose-built. SaaS products with genuine network effects, regulatory compliance infrastructure, or deep ecosystem integration are less exposed. Generic middleware and workflow automation tools are most vulnerable.

Question 4

What is shadow IT and why is it growing rapidly in 2026?

Accepted Answer

Shadow IT refers to software built or deployed by employees outside of official IT oversight or approval. Retool's 2026 survey found that 60% of respondents built software outside IT oversight in the past 12 months, with 25% doing so frequently. The current wave of shadow IT is structurally different from previous waves because AI-assisted development has enabled non-engineers to build production software. Marketing operations managers, data analysts, and finance teams are building and deploying custom tools that access internal data and run business-critical workflows without security review or documentation. Enterprise governance frameworks built for a world where building production software required specialized skills have not been updated for a world where an operations lead with an AI coding tool can deploy a working data integration in a day.

Question 5

How much does it cost to build a custom internal tool with AI assistance in 2026?

Accepted Answer

With AI-assisted development tools, the cost of building a custom internal tool has dropped substantially from pre-AI baselines. Retool's 2026 report suggests that roughly half of respondents who built production software with AI assistance save six or more hours per week per team member on tasks the tool now handles. Industry estimates put the cost of a typical custom internal tool — a data integration script, a dashboard, an internal admin interface — at $5,000 to $20,000 in initial build cost using a skilled developer with AI coding assistance. Maintenance costs have also declined, as AI tools assist with debugging and refactoring. The SaaS cost being displaced in most replacement decisions is a $15,000 to $60,000 annual subscription, making the break-even period 6 to 18 months rather than the 2 to 3 years that was typical when custom build costs were higher.

Question 6

How should SaaS companies respond to the enterprise build trend?

Accepted Answer

SaaS vendors facing the build revolt need to honestly assess which competitive moats remain defensible. The products least exposed are those providing value through architectural complexity that genuinely cannot be replicated quickly: two decades of encoded enterprise process (Salesforce), regulatory compliance infrastructure embedded in the product (financial and healthcare SaaS), or network effects from being the system of record for mission-critical workflows. The most exposed products are those providing value primarily through API aggregation, generic workflow automation, or dashboard visualization — capabilities that AI-assisted development has made straightforward to replicate. The strategic response is not price reduction — build costs have fallen too far — but rather deepening the moat: more workflow integration, more ecosystem depth, and more regulatory or data infrastructure that would be genuinely expensive to replicate. Price-based responses alone will not be sufficient.