2025 SaaS Budgeting Report
One line item that is set to be particularly challenging in your budgeting cycle this year is SaaS spend. While software tools are integral to driving a company’s resilience, growth, and profitability, they can quietly erode your bottom line.
Software spend has soared to an eye-watering $8,800 per employee per annum (up by 27.5% YoY) and SaaS inflation currently stands at an alarming 12.5%, far outpacing US headline inflation. Businesses are also grappling with changing SaaS pricing models, which are shifting from ‘usage-based’ to ‘user-based’ and even ‘outcome-based’ due to rapid AI adoption.
Stickiest SaaS Tools
The tools that finance and procurement leaders can be most confident in for 2025.
There are an array of vendors to choose from in the $200 billion SaaS market, but some software tools are consistently depended upon.
Understanding which SaaS tools the market deems most reliable allows you to include them in your budget with confidence.
Focus then shifts to how to control their costs, such as planning for renewal negotiations early, and avoiding any price uplifts built into the contract.
Lessons for 2025 budgeting
Changes to the top renewing SaaS tools between Q3 2024 and Q3 2023 reveal deeper insights into operational priorities:
NetSuite reigns supreme
Netsuite’s continued leadership position is likely down to its versatility in managing core business functions, as explained by Matt Barnard, VP of Finance at Vertice:
“In 2024, businesses entered a phase of stack overhaul, with suites being favoured over point solutions”
Increased investment in security
The fact that 2 of the top 5 stickiest apps are in the security category highlights an important lesson for CFOs: deep investment in security is expected and is no longer the ‘optional insurance policy’.
Slack edges ahead in the collaboration race
Slack appears to be claiming a dominant position as it expands its customer base.
Collaboration tools are either loved or hated, but Slack’s slick functionality and ease-of-use appear to have given it the edge.
More focus on business intelligence
The rising prominence of Looker demonstrates to the growing importance of building a data-driven culture. That it forms part of the Google Cloud platform will have propelled its capabilities and market reach.
Highest number of cancellations
Where CFOs and procurement leaders need to be extra wary in 2025 SaaS stacks
Cancellation patterns are revealing key areas where finance leaders ought to place greatest budgeting scrutiny.
Lessons for 2025 budgeting Sales tools are on the chopping block
Sales tools are often marketed as "silver bullets" to fix stagnant sales growth.
However, their effectiveness usually depends on having solid underlying processes, clean data, and sufficient resources in place. Without these foundations, they struggle to deliver results.
“It's essential to collaborate closely with your CRO to assess whether the organization is truly ready for new sales tools. By identifying and addressing the gaps in your sales operations before making an investment, you'll ensure a more strategic, long-term decision that maximizes value.”
Matt Barnard, VP Finance, Vertice
Most underutilized categories
The SaaS categories that are prime for right-sizing in 2025
In budgeting season, it’s easy to fall into the trap of evaluating a tech stack based on how much it costs and the perceived ROI. But so many businesses don’t factor in utilization rates, which reveal how much a tool is actually being used.
Our data suggests that organizations are under-utilizing their SaaS applications by an average of 33%, meaning that based on typical app numbers and spend, companies with over 600 employees could be wasting close to $1 million on underused licenses and features.
Most duplicated Categories
SaaS categories with the most potential for consolidation
With department heads being given increased autonomy to purchase software, it’s becoming more common for organizations to adopt a number of tools that fulfill the same function - creating not just overspend and wastage, but also security and compliance issues.
The 2025 budgeting process is an opportunity to take stock of the tools you're paying for and their capabilities.
With SaaS vendors seeking to become one-stop-shops, their functionality is invariably broadening, and may overlap with other tools.
Key takeaways
The crucial, concise information finance and procurement leaders need for 2025
1. The stickiest tools indicate the safest bets for 2025 SaaS investment
When your department heads are seeking their renewal in 2025, the question is less about whether to proceed (though this needs to be checked too) and more about how.
Make sure your contract is built to accommodate the true future path for your business - for instance how your user numbers may change during the contract term, or how seasonality affects your usage of the tool, or even simply whether the contract includes only the functionality you will truly require.
2. Prioritize the ‘hotspots’ for SaaS overspend.
Data from 2024 shows that Marketing is a category that could benefit from some serious fine-tuning, but that’s certainly not the only department.
Dedicate time in your budgeting sessions with every team to understanding SaaS usage, headcount changes, contractual features and future projects, and make sure the SaaS requests are realistic.
3.Understand each department’s goals.
Partner with each department leader to understand their strategic aims, the obstacles to success, and how each tool contributes to this purpose.
Achieving this means you can make more sound financial decisions and align investment into technology with departmental / company goals.
4. Start your SaaS audit now.
The earlier you start, the more likely you are to achieve significant savings.
Map out renewal dates for each vendor, and work with procurement and department leaders to start auditing their SaaS needs.
5. Get ahead of ‘Wild West’ AI adoption.
All too often, easy adoption + hype = underutilization. Which means wasted spend.
Companies whose planning or data infrastructures are not fully prepared to use AI tools to their fullest may see prices soar and free plans disappear before they have seen any benefit.
Don’t let your teams be drawn into contracts before they are truly ready to adopt.
6. Data is key.
To budget effectively, CFOs need to understand what each tool is being used for and how much it's being used.
Regular analysis of tech stack utilization helps identify the need for more suitable solutions and reduces SaaS bloat.
7. Watch out for pricing model changes.
With a trend shift from user-based pricing models to usage-based pricing models, it’ll be more important than ever to have a firm handle on tools’ costs, contract terms, and crucially how usage is determined.
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