The Rising Tide of SaaS Costs
In today’s economy, the cost of everything has gone up—from gas to groceries to admission to the happiest place on earth. Unfortunately, this economic environment has also impacted SaaS costs. The good news? You can rein it in with SaaS Management. The 2025 SaaS Management Index uncovers why SaaS costs are rising, the smartest ways to cut financial and security risks, and why now is the time to begin a SaaS Management program. Download the report for insights to benchmark yourself against peers, build a compelling business case for SaaS Management, and optimize for the future.
INSIGHT #1
Average SaaS Spend and App Count Increase for the First Time Since 2021
In 2024, we saw a 9.3% year-over-year increase in average SaaS spending, the first increase in three years. Today, the average company spends $49M annually, or $4,830 per employee. What’s notable is that the rise in average spend is outpacing portfolio growth, which increased by a mere 2.2% to 275 applications on average.
Experts predict the growth of SaaS spending won’t slow down anytime soon. Gartner forecasts worldwide spending on SaaS to reach $299B in 2025, up from $250.8B in 2024, for a 19.2% year-over-year increase.
What’s going on?
In short, vendor prices are going up. As SaaS companies face slower growth—the median now below 20% per SaaStr—they’re under pressure to find new revenue streams. Many are turning to premium add-ons, AI features, and new pricing models, especially consumption-based pricing.
“Faced with high inflation, pervasive marketing, oversold expectations and sometimes rogue behaviours, organizations need to take back control on their SaaS spending—and more broadly their cloud costs. The scope of FinOps has expanded to include SaaS, merging the techniques of FinOps with Software Asset Management to achieve greater transparency and visibility, which is essential to achieve greater value.”
Cloud Economist & FinOps Professional, Capgemini Invent
“It’s important to have visibility and understand the scale and composition of your tech stack. You have to have the ground truth before you can actually start to develop a strategy. Zylo’s SaaS Management Index has the real empirical data of what companies need to know to manage their software.”
Founder, Chief Martec
INSIGHT #2
Surging AI Spending Brings Conversation of Efficiency vs Risk to the Forefront
Over the last 12-18 months, individuals and companies alike put their money where their mouth was when it came to AI. Spending on AI-native tools—apps specifically designed and powered by artificial intelligence, with AI serving as their core functionality—saw a staggering 75.2% year-over-year increase. In addition, ChatGPT went from the #14 most expensed app by employees to the #2.
AI continues to increase in popularity with no signs of stopping. While it has its advantages, such as increased innovation and efficiency, CIOs would be remiss to ignore the security and financial implications.
For one, many AI apps can handle sensitive data, raising concerns about data privacy and the needs for governance. In fact, 89.4% of the IT leaders we surveyed have concerns about the security risks associated with AI tools.
As AI continues to evolve quickly, so do the associated risks. Organizations must be vigilant about emerging challenges, like the potential for data breaches and need for transparency in data handling.
In addition, AI proliferation could also accelerate vendor lock-in, contributing to long-term increases in SaaS costs. The rapid adoption of AI solutions often ties organizations to specific platforms, making it difficult and costly to switch vendors. Over time, vendors could capitalize on this dependency, leaving organizations with limited bargaining power and fewer cost-saving options.
“The spending surge of over 75% per enterprise year over year on AI-native apps makes the AI explosion very tangible, and it’s only going to go up further in the years ahead. This tectonic shift in cloud technology, paired with the related changes in pricing and contract structures, makes it all the more important that organizations adopt a comprehensive SaaS Spend Management strategy.”
Partner, Bessemer Venture Partners
“Customers are fed up with the legacy SaaS pricing of the past: buying seats they don’t need, getting locked into long-term commitments, and seeing SaaS become shelfware. Wasn’t SaaS supposed to solve our shelfware problem? The next generation of AI disruptors are rethinking monetization to (finally) connect price with the work delivered by AI and the outcomes this unlocks.”
Co-founder & Operating Partner, Tremont
“Organizations of all sizes must embrace SaaS Management by investing in team resources, tools, and processes to not only control expenses but also capitalize on opportunities for innovation. SaaS Management becomes mission critical as AI permeates the software landscape and pricing models shift away from seat-based pricing to consumption- and outcome-based approaches.”
Co-founder & Managing Partner, High Alphs
INSIGHT #3
IT Leaders Risk Complacency with Diminishing Software Ownership
Year over year, IT teams are owning less and less software, relegating a majority of responsibility to lines of business—specific groups, divisions, or departments within the company. Last year was no different, with IT owning a mere 26.1% of SaaS spend and 15.9% of apps, compared to 70% of spend and 50.5% of apps owned by lines of business.
Because IT no longer has full visibility, software spending grows unhindered, making it difficult to holistically and effectively reduce costs and risks. And those risks will get exponentially worse, too.
IT is now responsible for just 26.1% of SaaS spend
and 15.9% of applications
If you don’t have a SaaS Management program in place, SaaS sprawl will take over your environment like ants at a picnic. With an average of 7.6 applications entering the tech environment each month, software portfolios could see growth upwards of 33.2%! The cumulative costs increase as your portfolio grows.
Decentralized purchasing is here to stay. Savvy IT leaders won’t let their diminishing software ownership be a reason to be complacent.
After all, IT remains ultimately accountable for all applications—ensuring security, mitigating risks, maintaining governance, and optimizing the employee experience. The challenge will be to do what’s best for the tech environment and business—while balancing user experience and the needs of employees.
“As SaaS spending skyrockets, achieving business value from these On-Demand technology investments has become essential. This requires a holistic approach—and courageous decisions—to challenge the status quo. Leaders need to assess and know their situation, act and set up a sustainable management model—leveraging SaaS data—to deliver solid financial benefits.”
Executive Vice President, Capgemini Invent
“I’m always a big fan of Zylo’s SaaS Management Index. The report provides really hard data in a sophisticated upper end of the IT enterprise market. With insights from more than $40 billion in SaaS spend—real data from Zylo customers—it offers a unique perspective that you just can’t get from the typical CIO survey.”
Founder, Cloud Ratings
Get Insights to Control SaaS Costs and Risks
SaaS presents an enormous challenge today for companies of all sizes—from sprawling applications and security risks to rising vendor costs and license complexities.
The 2025 SaaS Management Index highlights key SaaS trends and insights to help IT, Software Asset Management, and Procurement leaders like you sift through the noise and understand the impact of effective SaaS Management.
Get a copy of the report for insights into:
- Industry-leading insights on SaaS risks, usage, and spending
- Essential data points to benchmark against your peers
- Three proactive measures you can take to control rising SaaS costs and risks
- Predictions for 2025 and beyond