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, though HubSpot has become a popular second choice for SMEs in particular. For project management, Atlassian leads for enterprise companies, although Workday is still challenging this, despite a small drop in popularity in recent months.
IT infrastructure:
In IT infrastructure, Snowflake is favored by both SMEs and enterprise companies for scalable data warehousing, while Oracle holds steady with enterprises, appealing to their preference for established ‘all-in-one’ platforms.
Collaboration and Customer Service tools:
SMEs lean toward Slack and Zendesk for affordable communication - both internally and with customers. Enterprise companies lean into the features offered by Salesforce and Microsoft, again led by the management ease, presumed reliability and procurement ease of large all-in-one platforms offering multiple solutions.
Payment solutions
Industries requiring online payment solutions (e.g. ecommerce) seem to be more prevalent in the SME layer, meaning Stripe appears in the Top 10. With top-rated customer services, wide feature sets, broad compatibility and an easily integrated API, Stripe’s ease of use and fairly straightforward pricing structure (pay as you go plus a flat fee) makes it an extremely popular choice for SMEs.
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.
NetSuite was the most well-utilized SaaS tool in Q4 2024, capitalizing on its success as the most renewed SaaS tool in October 2024. This clearly indicates that it’s a tool that can be well-integrated, is easy to use and can be relied upon to perform the intended tasks. It may also indicate that when it comes to renewal, the contracts can be rightsized and designed to flex comfortably with headcount growth, rather than requiring over-commitment at the outset.
Figma’s continued inclusion towards the top of the table indicates a maintained appetite for tools that enable real-time collaboration and creativity, especially for those working in remote or hybrid settings - and its dominance over its competition.
Gong and Looker’s popularity highlight an increased recent push towards more data analysis and business intelligence, as purchased licences are now suddenly being more fully utilized. It seems that many businesses feel that data-led efficiency and decision-making will be how they make the most of the current, uncertain economic environment.
On The Rise
Open AI is unsurprisingly the fastest growing SaaS vendor, as departments and businesses scramble to integrate AI capabilities into their tech stacks, features and even day-to-day tasks.
Tools that help businesses harness their data, such as Splunk, LeanData and dbt Cloud, are enjoying a surge in interest too. Companies are undoubtedly aiming to become more strategic and data-led - whether through deeper data analysis, making more data available to the business, or the introduction of AI - creating a clear and probably longterm wave for these vendors to potentially ride.
Privacy tools like OneTrust have also seen a stark rise in popularity. Perhaps given high-profile security breaches in 2024, companies are prioritizing data privacy, data control and regulatory compliance, driven by the risk of reputational damage, fines or downtime, over and above traditional security solutions.
SaaS Insights
SaaS Inflation vs. Market Inflation (Oct'23 to Dec'24)
SaaS inflation rate
This means a business that spent $1,000,000 per annum on SaaS in Q4 2023 can now expect to pay an additional $114,000 for the exact same tech stack - with no extra features, seats, capabilities or services.
Whilst the data indicates a decreasing pattern in the last three months of 2024 (down to 14.0% when comparing Oct 24 to Oct 23), we have seen this false dawn before - see August to October 2024. It’s yet to be seen whether this is significant or a continuation of a ‘peaks and troughs’ trend.
Regardless, what makes this even more galling is that this is 4.4x the current US annual CPI inflation - which has also dropped significantly in the past 12 months (down from 3.4% in December 2023 to 2.7% in December 2024, a 20% decrease).
The surge in inflation has varied across product categories: Hosting software has seen the most rapid price increases with an inflation rate of 17.9%. This is followed by sales (16.6%) and project management (16.1%).
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December 2024 saw SaaS prices surge by an average of 11.4% when compared to December 2023, outpacing the U.S. inflation rate by over four times.
23% of SaaS contracts impacted by shrinkflation
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SaaS shrinkflation
By the end of 2024, over a quarter (27%) of the contracts we renewed for our customers around the world had been affected by “SaaS shrinkflation” - where vendors charge the same price for reduced functionality.
Worryingly, SaaS shrinkflation is difficult to spot and is increasing, having grown by 17.5% from 2024. 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," where vendors quietly reduce features while keeping prices steady.
SaaS Spend Per Employee (Q3'23 to Q4'24)
SaaS Spend Per Employee
On average in Q4 2024, each employee cost $8,900 in SaaS spend, compared to an average of $8,700 across the whole of 2024 and $6,900 in 2023 - a 30% increase. In the month of December 2024 the figure even hit the $9,000 mark for the first time on record. The sharp rise 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 14.0% in October 2024 and a Q4 2024 average of 12.9%.
- Headcount cuts - Over 150,000 tech jobs were cut in 2024, but companies can’t immediately pay less on SaaS tools as they are locked into annual contracts, often based on a 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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Driven by rising SaaS prices and headcount reductions, businesses are facing record-breaking software costs per employee - up 30% in 2 years.
SaaS by Pricing Type (Oct'23 to Jan'25)
SaaS Pricing Models
Whilst the transition has been slower than some experts predicted, we are beginning to see a pattern emerging. Between Q4 2023 and Q4 2024, seat-based pricing decreased by 8%, with usage-based and hybrid pricing models growing in popularity (5% and 3% increases respectively).
We expect to see a similar trend in 2025, as customers continue to demand more flexibility in payment models and vendors begin to adapt to this - particularly with the shift to usage-based pricing structures.
Nick Riley, Global Head of Purchasing at Vertice, explains:
“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.
Usage-based pricing is increasing in popularity, but not as quickly as commentators may have you believe.
Average SaaS Applications Per Business (Sep'23 to Dec'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 65% 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 130 SaaS tools - 7.4% increase YoY.
Top SaaS vendors by renewals
Stickiest SaaS tools
In the last 3 months, there has been an astonishing wholesale change to the top 5 stickiest SaaS apps.
LinkedIn takes over from NetSuite as the stickiest SaaS tool going into 2025. The social media platform’s multi-faceted role in sales, marketing, recruitment and general business use gives it a popularity that can rarely be wholly matched by one single other platform.
Elsewhere, collaboration and project management tools dominate the renewals market. Miro and Atlassian, whose portfolio includes Jira, Confluence and Trello, have shot into the top five for renewals, signaling a significant renewed focus in collaboration. Given the challenge of teamwork with hybrid and remote working practices, their high renewal rates speaks volumes about the quality of their user experience and product effectiveness.
Similarly, Zoom has become an indispensable communication and video meeting tool for the same reasons, and the introduction of an AI companion will have surely enhanced its renewal rates.
Salesforce replaces NetSuite in the top five, likely thanks to top tier scalability, security and reliability - with an extensive feature set that is consistently innovated upon.
Renewal trends reveal a growing appetite for collaboration and connectivity platforms, as security and data-analytics tools are overtaken.
Top SaaS categories by duplication
Tool Overload
As department heads gain more autonomy to purchase software, it's increasingly common for organizations to find they have adopted multiple tools that overlap in their functionality.
This redundancy not only leads to overspend and waste but also introduces security and compliance risks.
Development and Marketing tools continue to have 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.
Sales tools and Security platforms also have a high likelihood for duplication. Both categories are highly competitive, which drives vendors to expand functionality in a competitive arms race. And with both categories typically having extensive departmental tech stacks, this creates a perfect storm - numerous technologies, each with overlapping capabilities.
It’s not only these categories where SaaS vendors strive to improve 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.
Sales, Security, Marketing and Development SaaS vendors are all expanding their capabilities to increase stickiness, but also creating their own redundancy.
Unused SaaS Licenses (Oct'23 vs Oct'24)
Software Wastage
We regularly see 3 main reasons behind license underuse:
- Maverick spending: An increasing number of employees are bypassing procurement processes to purchase their own tools, driving up costs and leading to duplicate or redundant software purchases.
- Naivety: Many companies are 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 often overprovision 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 45.7% of SaaS licenses were underused or completely unused in 2024.
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.
The eCommerce category has seen a significant rise in cancelations, despite also 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.
HR tools have suffered from over-saturation and platform sprawl thanks to attempts to keep pace with remote work management and the introduction of AI, resulting in more systems than are needed. These are now being culled as costs spiral, alongside large rounds of layoffs (150,000 tech jobs in 2024).
Development tools have seen a drastic increase in cancellation rates. It’s common for companies to invest in these solutions to test their capabilities and find new ways to innovate their products, but this experimentation often results in underutilized or ineffective tools. Without a clear, well-founded business case and purpose, demonstrating ROI on these tools remains a challenge.
Finally, high cancellation 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.
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Sales software remains on the chopping block, while Commerce and HR tools continue to churn.
Top SaaS categories by underutilization
SaaS Underutilization
The presence of both IT Management and Security in the top three as highly underutilized tools indicates 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. Similarly, Content Management and Project Management tools are typically contracted for on a per-user basis, which suggests prolific over-contracting in these categories.
All this puts the onus on procurement to guide these contract negotiations to make sure the contract and fees scale neatly with any headcount changes, and particularly that any renewals take the true usage rates into account.
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IT Management tools top the most underutilized software categories.
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 continues to lead AWS spend, while surging investments in Analytics, Security, and Containers reveal shifting priorities in cloud spend optimization.
% Increase in Average Spend on AWS per Business
AWS Spending
By region, Europe showed the strongest growth, with businesses spending 17% more in Q3 compared with the same quarter last year. 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
In Q3, we observed rapid growth in AWS spending across Analytics, Security, Containers, and Compute.
- 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. If your organization is struggling to control cloud spending, our Cloud Cost Optimization Guide is for you - get a workable framework to implement a proven, impactful strategy.
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Analytics, Security, Containers and Compute have seen the biggest spikes in AWS spending.
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.
Cloud cost optimization behavior is shifting away from Reserved Instances towards Savings Plan. What’s driving it?
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.
Is on-demand spend out of control at your business? Watch this insightful workshop where Mark Zaytsev, Customer Optimization & Acceleration Specialist at AWS leans on his experience in supporting 100s of AWS customers around the world to reveal how to successfully control their cloud spend without restricting performance.
Businesses continue to favor on-demand spending, revealing huge opportunities for cost optimization.
