Trending Apps
Across SME, Mid-Market and Enterprise
While tools like Salesforce and Slack are frequently relied upon across business sizes, our data shows that generally SMEs often value adaptable, user-friendly tools that support rapid growth and are more willing to adopt new innovative ‘challenger’ vendors, whereas larger enterprises are favoring established, scalable solutions to support advanced functionality and integration.
CRM & project management:
Salesforce remains the dominant CRM across all segments, solidifying its reputation as the preferred choice for businesses of any size. For project management, Atlassian leads, although Monday and Smartsheet are gaining traction with SMEs for their flexibility and ease of use.
Security & IT infrastructure:
Okta is the security frontrunner as companies prioritize robust security measures. Among SMEs, 1Password is also popular for its cost-effectiveness and simplicity. In IT infrastructure, Snowflake is favored by SMEs for scalable data warehousing, while Oracle holds steady with enterprises, appealing to their preference for established ‘all-in-one’ platforms.
Marketing & collaboration tools:
SMEs lean toward Mixpanel and Amplitude for data-driven marketing, while enterprises invest in SendGrid. Slack remains essential across both groups, but SMEs increasingly turn to Zoom and Calendly for affordable communication, while enterprises often rely on Cisco Webex for integrated solutions.
HR solutions:
The HR category shows the greatest divide, with SMEs choosing BambooHR for its straightforward, flexible subscription model, and enterprises opting for SAP for its comprehensive capabilities and seamless integration.
Popular SaaS Apps
A key indicator of ROI is a high utilization rate, signaling that a tool is relied upon, trusted and likely delivering consistent value.
While Zoom’s inclusion in the top 5 will be of little surprise, Figma’s climb to the top spot, along with Miro and Adobe entering the top 5, signals a strong appetite for tools that enable real-time collaboration and creativity - particularly for teams that are navigating remote or hybrid work environments.
The addition of Airtable and Miro into the top ranks also suggests a growing preference for adaptable, multi-functional tools.
On The Rise
AI leads the way:
From automating content creation to enabling smarter customer support, the dominant position of OpenAI (65% growth YoY) reflects a widespread commitment to using AI to improve business processes.
OpenAI’s sustained growth suggests that the adoption of AI tools is only expected to accelerate.
Security investment surges:
The rising popularity of security platforms like Vanta, Kandji and Drata highlights companies’ increasing focus on robust security, as businesses prioritize frontline security and compliance.
Customer experience takes center stage:
UserTesting (previously UserZoom) has entered the top 10 for the first time, signaling a strong interest in understanding and improving the customer journey.
SaaS Insights
SaaS Inflation vs. Market Inflation (Oct'23 to Oct'24)
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SaaS inflation rate
This means a business that spent $1,000,000 per annum on SaaS in 2023 can now expect to pay an additional $130,200 for the exact same tech stack - with no extra features, seats, capabilities or services.
What makes this even more galling is that US annual CPI inflation has dropped significantly in the past 12 months (down from 3.7% last September to 2.4% in September 2024, a 35% decrease). This means the rate of SaaS inflation is over four times the rate of headline inflation.
The surge in inflation has varied across product categories: IT infrastructure has seen the most rapid price increases with an inflation rate of 17.2%. This is followed by sales (16.7%) and project management (15.7%).
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October 2024 saw SaaS prices surge by 13.2% year-over-year, outpacing the U.S. inflation rate by over four times.
23% of SaaS contracts impacted by shrinkflation
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SaaS shrinkflation
This means that you’re getting less value from your tech stack overall, even if you’re paying the same price.
Worryingly, SaaS shrinkflation is difficult to spot. Vendors use various opaque techniques, including “bundling,” “unbundling,” and “currency harmonization.” If you see these terms used by vendors when negotiating, make sure to question them intensely.
We’re seeing this happen a lot with enterprise-level renewals, where we have seen a rise in vendors reducing the amount of licenses, admin users and contacts while keeping the list price the same. It’s easier for enterprise plans to conceal shrinkflation as these plan types are often obscured on the pricing page and customized to the individual company.
Nearly 1 in 4 SaaS contracts in the past year have been impacted by "SaaS shrinkflation".
SaaS Spend Per Employee (Sep'23 to Sep'24)
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SaaS Spend Per Employee
It’s currently averaging $8,800, compared to $6,900 in 2023 and $5,760 in 2022. The sharp increase in SaaS spend per employee is down to a perfect storm of factors:
- SaaS price increases - Software inflation has been climbing steadily over the past couple of years, reaching a record high of 13.2% in October 2024.
- Headcount cuts - Over 140,000 tech jobs have been cut in 2024 so far, but companies can’t immediately pay less on SaaS tools as they are locked into annual contracts based on a certain number of users.
- The proliferation of point-SaaS - Many companies have built their tech stacks with ‘point solutions’ to solve specific problems, often resulting in a costly accumulation of tools and higher overall spend per employee.
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SaaS spend per employee per annum has reached its highest level ever - up 24% in 12 months.
SaaS by Pricing Type (Oct'23 to Oct'24)
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SaaS Pricing Models
However, our latest data suggests the transition isn’t happening as quickly as some experts have predicted, with only a modest 3% increase in usage-based pricing in 2024 compared to 2023.
“Household names like Salesforce and Snowflake have announced moves away from charging by user or seat, which has likely given the impression that the switch to usage-based pricing is happening more quickly. In reality, many vendors seem to be watching and waiting - seeing how it plays out in the long term before making drastic changes.”
It’s not surprising, then, that hybrid pricing models are slowly increasing in popularity as vendors test out different pricing strategies to cater to different products and customers.
Almost half (49%) of SaaS pricing models remain user-based.
Average SaaS Applications Per Business (Sep'23 to Sep'24)
SaaS Apps Per Business
SaaS spend often scales as businesses expand. More employees, but also more customers, products, development and simply the greater complexity from being a larger business all contribute to increased SaaS costs.
Specialized point solutions have also been popular, thanks to their objective of solving specific challenges in individual business units - leading to a dramatic increase in overall SaaS stack size.
Plus the last 12 months have seen businesses become increasingly keen to solve data infrastructure challenges, by bringing in more and more data analytics and AI tools. The latter sector has grown by 64% in popularity, the largest proportional rise in any category of tech spend.
However this growth is not solely powered by investment. Much of it stems from a lack of control over SaaS procurement, i.e. maverick spending - where individuals and teams purchase tools outside of centralized procurement processes.
Without a robust procurement strategy, finance and procurement leaders risk losing control, allowing the tech stack to expand unchecked. Gaining visibility is the first step in assessing whether your organization’s tech stack is right-sized and delivering genuine value to the business.
Business tech stacks have grown significantly, with the average company now juggling 128 SaaS tools - a leap of 8.5% since last year.
Top SaaS vendors by renewals
Stickiest SaaS tools
Observing how software renewal trends are shifting enables finance and procurement leaders to identify which product renewals and purchases to prioritize, which vendors to suggest or scrutinize, and which investments may be missing from 2025 budgets.
NetSuite remains the stickiest SaaS tool for the second consecutive year. This underscores not only its dominance in the CRM and ERP categories, but also the wider observation that multi-feature platforms are now seeing a resurgence due to their broader value and utility, and the reduced need to integrate.
Security tools like Okta and 1Password have become top choices for renewals, signaling a significant investment by organizations in frontline security. Given the challenge of getting users to comply with security processes, their high renewal rates speaks volumes about the quality of their user experience and product effectiveness.
Meanwhile, Slack has become an indispensable tool for many teams and the growing popularity of Looker highlights the increasing priority of transforming business data into accessible and actionable insights.
These popular tools are undoubtedly enhancing business operations. However, rising costs associated with these products can also chip away at the bottom line. An organized and systematic approach to software renewals is essential to avoid automatic price increases and unfavorable terms.
Renewal trends reveal a growing appetite for all-in-one platforms, security tools and data analytics.
Top SaaS categories by duplication
Tool Overload
This redundancy not only leads to overspend and waste but also introduces security and compliance risks.
Development, design, and marketing tools show the highest instances of overlap, either within the departmental stack or overlapping with other department’s investments.
For instance, SMS communications platforms being invested in by both marketing and customer success teams.
Project management and collaboration tools also have a high likelihood for duplication due to individual departments - or even teams within departments - having preferences for certain tools.
Duplication is also caused by SaaS vendors striving to increase their ‘stickiness’ by becoming one-stop shops. In fact, according to G2’s Software Buyer Behavior Report 2023, 84% of buyers would prefer a single tool that addresses multiple business needs over multiple specialized solutions.
But as vendors’ offerings expand, the frustrating side-effect is that their new functionality overlaps with other tools in the same stack.
As tech stacks continue to grow year-on-year, there are some software categories in desperate need of consolidation.
Unused SaaS Licenses (Oct'23 vs Oct'24)
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Software Wastage
We regularly see 3 main reasons behind license underuse:
- Maverick spending: Employees bypassing procurement processes to purchase their own tools, driving up costs and leading to duplicate or redundant software purchases.
- Naivety: Companies negotiating contracts whose prices exceed industry averages, driven by rushed last-minute negotiations, opaque vendor pricing, and a lack of pricing benchmarks with which to challenge it.
- Bloated contracts: Companies overprovisioning their SaaS contracts, whether in terms of capabilities and features or licenses. This is often due to over-estimated growth, or not working closely enough with the vendor to structure the contract to flexibly accommodate their growth without triggering punitive fee uplifts. This can then be exasperated at renewal if the business hasn’t been monitoring actual usage.
A staggering 39.6% of SaaS licenses are underused or completely unused, up from 33% last year.
Top SaaS categories by cancelations
Most Canceled saaS Tools
Vendors in the sales category often market themselves based on quick, substantial ROI. But in reality they heavily depend on other foundational elements, such as robust internal sales processes and quality data, to deliver results. Procurement and finance teams ought to question the existence of these - and therefore the company’s ‘readiness’ - before approving their investment.
Analytics tools now hold the second-highest cancelation rate, often due to similar obstacles. It’s common for companies to invest in analytics solutions without the necessary data infrastructure to support them, resulting in underutilized or ineffective tools. Without a clear, well-founded business case and a readiness for implementation, demonstrating ROI on these tools remains a challenge.
High cancelation rates in the IT management category suggest that tech teams, who rushed to expand their tech stacks during COVID-19, have now entered a phase of consolidation - switching to open-source software and adopting more automation to reduce their SaaS licenses.
The eCommerce category has seen a significant rise in cancelations, despite being among the “stickiest” tools. This trend highlights a growing shift toward eCommerce consolidation, as businesses increasingly prefer all-in-one platforms over multiple point solutions.
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Sales software is on the chopping block, closely followed by Analytics and IT Management tools.
Top SaaS categories by underutilization
SaaS Underutilization
Marketing now has the dubious honor of leading all departments for SaaS underutilization, climbing from 4th place in 2023 to 1st in 2024.
This sharp rise suggests three possible issues:
- Marketing teams may be expanding their tech stacks beyond their ability and skill sets to fully leverage these tools.
- Not having the necessary data and processes in place to make full use of the tools.
- Overlapping functionality with other departments’ tools as vendors expand their product capabilities.
While security tools dominate the renewal charts, increasing levels of underuse indicate that IT teams may be purchasing software with unnecessary or duplicate functionality. Or in the case of end-user security tools, IT teams may be contracting for an excessive number of users, putting the onus on finance and procurement to guide these contract negotiations to make sure the contract and fees scales neatly with the company’s headcount changes.
AI investment may have surged by an impressive 65% year-on-year, but its arrival into the top underutilized categories underscores the risks of rapid AI adoption. Without a well planned and pre-defined business case, as well as a solid data infrastructure, organizations risk not using these powerful, and often expensive, tools.
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Marketing tools top the list of most underutilized software tools.
Cloud Insights
Share of AWS Spend (Oct'23 vs Oct'24)
Share of spend
This is unsurprising given these services are the foundational elements for most workloads.
Despite relational databases and networking and content delivery remaining essential, their spend shares have decreased slightly. This is likely to be a simple mathematical outcome of the extreme growth seen in Analytics, Security, Containers and Compute, rather than a sign of active deprioritization.
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Compute instances gain 5% increase in share of spend.
% Increase in Average Spend on AWS per Business
AWS Spending
Despite the US remaining by far the largest cloud market, it actually saw a slight slowdown in growth - with businesses spending an average of 3% less.
Gartner forecasts that public cloud spending will exceed the 1 trillion dollar mark before the end of this decade. But what’s driving the global acceleration?
- Application modernization - as companies continue to spend their energy on modernizing their infrastructure and moving from on-premise to the cloud.
- Increasing investment in generative AI tools and infrastructure.
AWS confirmed these trends in their Q2 earnings call:
“Our AI business continues to grow dramatically with a multibillion-dollar revenue run rate despite it being such early days. During the past 18 months, AWS has launched more than twice as many machine learning and generative AI features into general availability than all of the other major cloud providers combined.”
Cloud spending continues to increase as companies scramble to develop and implement generative AI.
AWS Cloud Spend by Service
AWS spend by service
- Analytics saw the largest increase, with spending up 41% as companies focused on data-driven decision-making.
- Security, Identity, and Compliance rose 35%, reflecting heightened concerns around data protection and regulatory requirements.
- Container spend grew by 31% as businesses adopted cloud-native architectures, taking advantage of AWS’s container services to streamline development.
- Compute increased by 20%, likely due to rising demand for generative AI, which demands substantial compute power to support intensive processing tasks and model training.
For businesses, focusing on optimization in these areas can significantly impact overall AWS costs, especially as usage expands to support innovation and compliance.
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In Q3, we observed rapid growth in AWS spending across Analytics, Security, Containers, and Compute.
AWS on-demand and commitment levels by percentage
Discount pricing model trends
On-demand usage remains steady, making up 51% of compute spend, up slightly from last year.
Savings Plans tend to provide more simplicity and flexibility than Reserved Instances, despite offering lower cost saving opportunities. This makes them a particularly appealing choice for organizations with complex, multi-regional needs.
“Unlike RIs, which are specific to their nominated instance types and regions, savings plans can be repurposed or transferred to different regions and instance types as needs change. For many organizations, Savings Plans’ flexibility is more valuable than the few extra discount percentage points that Reserved Instances provide, so we’ve seen a distinct trend of customers actively moving across.”
The dip in the popularity of RIs could also be attributed to AWS’ move to disallow the transfer of discounted RIs, which temporarily pushed more enterprise organizations towards Savings Plans and On-Demand usage while they adapted their cloud cost optimization strategies.
The popularity of Reserved Instances (RIs) has dropped by 7% over the past year.
Split of AWS on-demand and commitment plans
On-demand vs. discount plans
Commitments and rightsizing are two of the main ways you can get more value from your cloud investments.
- Commitments - Discounts agreed with your cloud service provider e.g. committed spend up front, or set usage rates per application.
- Rightsizing - Ensuring the correct quantity of services, applications, and usage capabilities for your capacity.
We recommend teams aim to reduce on-demand to between 20-30% of their overall coverage, so there is huge scope for optimizations to be made.
Businesses continue to favor on-demand spending, revealing huge opportunities for cost optimization.
