Top 10 Procurement Predictions for 2025

This year saw rising SaaS inflation rates, increasing SaaS shrinkflation and global layoffs push the cost of tech stacks higher than they’ve ever been. And cloud computing was not immune either, with spending reaching record heights, driven largely by the expansion of AI. 

With access to millions of data points across 16,000+ vendors worldwide and over $3.4 billion in spending information, we’ve analyzed patterns within this and combined it with industry knowledge to inform our top predictions and trends for procuring SaaS and cloud tech in 2025. 

1. SaaS inflation rates will remain high in 2025

Despite CPI inflation dropping in 2024, SaaS inflation has remained stubbornly high – reaching a record level of 13.2% YoY - and we expect to continue to see this trend continue in 2025.

It’s not all about rising prices  though. 

2. Shrinkflation will continue to keep SaaS prices high

Almost 1 in 4 contracts have also been affected by ‘shrinkflation’ in the past 12 months, where customers get less value and functionality from their SaaS stack whilst paying the same.

For 2025, we see no sign of this abating. In fact, combined with high SaaS inflation rates, we are expecting to see SaaS prices remaining concerningly high.

3. AI adoption is accelerating.

Expect to see more native AI features within your SaaS products in 2025, and more dedicated AI tools being requested.

Four of the top five fastest-growing SaaS vendors in 2024 are either AI platforms, or have integrated / native AI features within them.

This rise will continue in 2025, thanks in part to many SaaS vendors offering AI features within their platforms as ‘tests’ or free add-ons. The classic example is Google continuing to offer Gemini for free as part of its wider package. 

It’s expected however that AI tools and features will still support rather than replace human-led functions for the time being. Nick Riley, Head of Procurement at Vertice, explains:

4. Outcome-based pricing up to 4%

AI will accelerate a transformation in SaaS pricing models, pushing the industry toward usage or even outcome-based pricing - where customers pay for measurable success, such as performance improvements, cost savings or efficiency gains, not just access or usage. 

The shift in pricing models will be more gradual. Today, 49% of SaaS contracts are still priced per user, 29% on usage, and 22% are hybrid models - meaning traditional models still dominate the landscape. Of the 29% of contracts that charge based on usage, only 4% of these are outcome-based - demonstrating that we are a long way off from outcome-based pricing becoming the new normal, despite the hype. 

5. Single-suite platforms will finally overtake point solutions

Customers want simplicity and centralization from their SaaS in 2025, vendors will answer this with white-labelled point solution integrations.

Businesses have, on average, 128 live SaaS applications in 2024 - an 8.5% growth YoY.

To reduce the complexities and cost that can come with managing so many tools, many businesses are switching their procurement strategy away from best-in-class point solutions towards more multi-feature platforms. As a case in point, all-in-one finance and CRM platform NetSuite - which has been aggressively broadening its capabilities recently - has been the tool with the highest renewal rate for the last two years.

Many larger platforms may choose to integrate with the particularly successful point solutions - on a white labelled basis or otherwise - to save on development time and cost. But in 2025, the overall trend will be for a shift towards more multi-functional platforms to reduce the number of SaaS tools in use. 

6. Procurement continues shift from cost-cutting to ensuring value 

With Elon Musk appointed as the US’s "Secretary of Cost-Cutting," the conversation around bold and occasionally brutal budget slashes is likely to dominate the news agenda and the way in which businesses consider their purchases. Yet procurement leaders are shifting from cost-cutting to evaluating investments by their broader value and impact - including efficiency, performance, risk mitigation and security.

This risks becoming a point of contention in boardrooms if the importance of such evaluation is not well-communicated and proven out.  

7. Procurement workflows will finally be recognised as data workflows 

Procurement departments are seeing that despite traditional perceptions, they can be one of the most data-driven departments in the business.

The most advanced procurement teams are currently using streamlined, customizable, responsive workflows, well-integrated with the business’ wider technologies - especially project management and collaboration tools - and advanced analytics to assess and continually improve these workflows’ ongoing efficiency. As with many technologies, AI plays an every-increasing role here.

‍And it’s proving to be worth it - these businesses are achieving a 30% boost in speed to market, innovation, and efficiency. We know that in 2025, more and more procurement leaders are aiming to catch up with these early innovators.

Vertice’s Intelligent Workflows is a model of best practice for streamlined, modern and transparent  procurement workflows. Its automated and customizable sequences are a blueprint of innovation and control that is relevant to both public and private sector businesses.

8. Supplier Relationship Management finally goes ‘strategic’ 

Supplier Relationship Management will continue to evolve. With a greater determination to evaluate suppliers based on wider value rather than simply cost and SLA performance, Supplier Relationship Management will become more data-driven.

Procurement teams will rightly be expected to be using real-time internal and external data to assess a relationship’s overall health. This may include price benchmarking, usage analytics, SLA performance, duplication, risk and more.  ‍

9. AI will continue to grow in importance for cloud applications, and will drive up costs. 

Kristian Roberts, Senior Product Manager at Vertice, expects the AI “hype” in cloud computing will die down in 2025, being replaced with confidence stemming from successful use cases.

‍Whilst this trend will continue in 2025, it will also keep driving up overall cloud spend, particularly in compute and storage categories that facilitate generative AI usage. And with AWS cloud computing costs up 14% YoY in the 12 months up to October 2024, it’s something that finance and technology teams in all businesses will want to address early, given AI’s potential to create runaway usage costs.

10. Savings Plans will kill off Reserved Instances (RIs) 

Cloud providers will continue to encourage the switch to, and uptake of, Savings Plans in 2025 over RIs, cratering their market presence.

We’ve seen a dramatic shift in customer preference from RIs (high savings opportunities, but inflexible and complex to manage) to Savings Plans throughout 2024. Commitments to Savings Plans rose 7% YoY to September 2024, whilst RI commitments dropped by the same amount in the same time period.

But what is truly significant is the overall commitment level. Whilst on-demand usage makes up 51% of compute spend (the largest cost centre for cloud computing), Savings Plans commitments now have a 47% share of spend, whilst RI usage has dropped to 2% - almost non-existent.

RI usage will continue to drop in 2025 and, perhaps even by the end of the year, we will start to hear talk of providers sunsetting their RI offerings in the future.