In 2024, as companies redirected resources toward AI initiatives, we saw a noticeable drop in SaaS spending.
The big switch: With generative AI democratizing access to expert tooling and shaking up the entire enterprise landscape, there has been a surge in vendor switching in search of faster adaptability and flexibility. But as companies scramble to maintain their market positions amidst disruption, the real challenge lies in navigating the downshift in stack management.
Speed of adoption: Companies are enthusiastically redirecting their budgets towards AI investments, leaving traditional SaaS spending in the dust.
- McKinsey found that that the biggest international enterprises spent close to $15 billion on Gen AI solutions in 2023 alone, representing roughly 2 percent of the market.
- However, this shift is not without its pitfalls, as organizations grapple with the complexities of managing sprawling SaaS portfolios while striving to maintain efficiency and security through automation.
Leveling out the market: Torii is a SaaS management platform that assists IT professionals in discovering, managing, and optimizing their organization's SaaS applications. The platform features AI-driven app discovery and automated IT workflows to streamline help reduce expenses, and has worked with popular companies like HiBob, Article, Omnipresent, and Payoneer.
"In 2024, as companies redirected resources toward AI initiatives, we saw a noticeable drop in SaaS spending," says Uri Haramati, Torii's Founder & CEO. But even outside of the (relatively) recent arrival of AI tooling, SaaS has had a rocky ride since the age of growth-at-all-costs in 2020/2021 and the subsequent age of austerity that followed.
- "Many companies have responded by tightening their policies for adopting new software, especially in high-cost teams," says Haramati.
- Nearly all businesses now enforce strict software adoption policies and demand measurable impact from each and every tool in their sales, marketing, and operations stacks.
Full circle: Perhaps ironically, it all comes full circle back to automation. Companies like Torii use AI to automate the majority of tech spend management. Haramati touts that automating licenses based on employee roles and status is the key to minimizing waste and ensuring access aligns with needs. "[Our] automations continuously optimize the SaaS stack by managing app usage, license assignments, and renewals, creating a consistent approach to cost control." So as AI threatens to eat traditional SaaS models through sheer utility, it's also helping accelerate their gradual phase-out.
