Zylo is a Saas expense management platform that provides a significant amount of data and insight into B2B spending. They produce the SaaS Management Index report every year. The latest one is out. It’s built on real data (over $750 billion in SaaS spending and over 40 million licenses under management), not a survey asking people what they want. think They spend.
This year’s report is our most helpful report yet. It’s not because the numbers have changed dramatically; why In the age of AI, those things have changed.
The important things are:
1. SaaS spending increased 8% to $11,530 per employee. While the number of apps remains unchanged
The average organization using Zyklo currently has $55.7 million per year On SaaS. But the problem is that the size of the portfolio has barely changed (305 apps on average, down 0.1%).
So where does the money go?
AI function. Consumption pricing. Vendor prices increase. Do not install new apps online.
No more pressure from sprawl. It comes from existing vendors charging extra for new AI layers they didn’t budget for on top of what they already have.
2. 78% of IT leaders are affected by unexpected AI or consumption charges
Please read it again. Nearly four in five IT leaders have experienced a surprise bill related to AI capabilities or usage-based pricing in the past year.
and 61% had to do so. cut the project Because of that.
This is the new reality of SaaS economics. You sign the contract, and somewhere in the mid-term the vendor adds AI capabilities at a consumption price you weren’t expecting. Or a spike in usage results in overage charges that no one expected.
Budgeting has become even more difficult.
3. ChatGPT is now the #1 most expensive application
Shadow AI is real and it’s showing up in corporate credit cards.
Expense-based SaaS purchases are on the rise 267% compared to previous year. ChatGPT is at the top of the list of expensive apps, and OpenAI API is in fifth place. Eight of the top 50 most expensive applications are AI-native.
Employees are adopting AI tools faster than governance can keep up. The question is not whether to allow it, but how to visualize what is already happening.
4. AI native spending more than doubled (108% increase)
Spending on AI-native applications (tools where AI is at the core of the product, such as ChatGPT, Claude, and Perplexity) increased 108% year over year.
Large companies (10,000+ employees) 393% growth With AI native spending.
The Artificial Intelligence category recorded the fastest growth across Zylo’s dataset at 181%. Application development came in second with 81%.
This is no longer an early adopter. This is enterprise AI hitting major budget lines.
5. Business units now control 81% of SaaS spending
IT’s share of SaaS spending has fallen to just 15%, its lowest level ever.
Business units own 81% of spending and more than half of all applications. Individual employees deploy approximately one-third of apps.
Gone are the days when IT controlled the software stack. The new challenge is non-gatekeeping governance. That means being able to give your team the tools they need while maintaining visibility into what’s actually being used.
6. License waste still amounts to $19.8 million per company. Therefore, further pressure on renewal is expected.
Despite a 13% improvement in utilization (from 47% to 54%), the average organization still $19.8 million in wasted licenses.
Unused licenses remain one of the largest and most recoverable sources of SaaS costs.
The only moment to fix this is an update. You cannot change the contract midway through. This means that if your renewal is completed without a license audit, you will be wasting an additional year.
7. GenAI is now the top redundant app category
For eight years, Zylo has been tracking redundant applications where multiple tools are doing the same job. Typically suspects include project management (10 apps on average), team collaboration (10 apps), and online training (14 apps).
Now, Generative AI has joined the list. 7 redundant apps per company.
The team is experimenting with different AI tools without visibility into what other AI tools are using. Low switching costs make this even worse. When you’re not tied down to anything, it’s easier to try different options.
Renewal is a time of integration and standardization.
8. Multi-year contracts are back (68% increase) – but they don’t save you much money
Multi-year contracts increased from 23% to 38% of total contracts, an increase of 68%.
But what’s interesting is that the benefits of saving have basically disappeared.
- 12-month contract: average savings of 16%
- 24-month contract: average savings of 14%
- 36-month contract: average savings of 13%
Organizations do not sign multi-year contracts for discounts. that’s what they do it for predictability. Once AI capabilities and usage-based pricing introduce some volatility, fixing base terms starts to look attractive, even without discounts.
9. 60% of IT leaders don’t know about all the GenAI tools in use
Additionally, 77% discovered that AI-powered features and applications were operating without their IT department’s knowledge.
This isn’t just a cost issue; it’s also a security issue. 43% of IT leaders cite leakage of sensitive data as their top concern with AI. 93% express some level of concern about AI-related risks.
The challenge is not specifically AI visibility. It’s visibility in SaaS in general. You can’t manage AI risk without managing SaaS risk when AI capabilities are built into your entire app.
10. Renewals are still the only time you can actually save money.
The average company runs 211 updates per year— Almost one per business day.
Updates account for 87% of total SaaS spending. Only 13% made new purchases.
However, only 38% of IT leaders believe updates are a significant opportunity to reduce costs.
Money is lost due to this disconnection. Outside of consumption-based pricing, updates are important. only You can right-size licenses, renegotiate terms, eliminate redundant tools, or retire them altogether.
If you miss that period, you’ll be locked up for another year.
What this means for founders
If you’re building a B2B company, understand that your buyers are dealing with:
- Unexpected bills with AI capabilities and consumption pricing
- Continued pressure to integrate redundant tools
- Intense scrutiny on renewals (the only moment you can reduce spending)
- Shadow AI adoption cannot be fully tracked
AI budgets have increased significantly, +108%. However…the number of apps is flat. This means that the AI-native vendors that are gaining traction are winning, and collectively, other vendors are losing.
Which camp are you in?
