**US and UK**: The 2025 Spendflo report reveals a 23% rise in SaaS tools driven by AI adoption, growing SaaS budgets, and shifting procurement towards strategic, AI-enabled vendor management. Challenges persist in contract renewals, emphasising the need for intelligent, data-driven procurement practices to optimise costs and ROI.
In 2025, the landscape of Software-as-a-Service (SaaS) utilisation continues to evolve, characterised no longer by indiscriminate growth but by the integration of intelligence. Spanning analyses from tens of thousands of SaaS contracts and surveys including finance and procurement leaders across the US and UK, Spendflo’s State of SaaS Procurement 2025 report highlights a significant shift towards AI-driven tools and strategic vendor management.
The report reveals that organisations have increased their average number of SaaS tools by 23% since the previous year. However, this increase is largely attributed to the adoption of tools embedded with artificial intelligence, rather than mere expansion of software across departments. Buyers now prioritise solutions that seamlessly integrate with existing systems, automate routine tasks, and feature predictive capabilities. This aligns with broader industry trends; IDC forecasts global spending on AI-centric systems to exceed $300 billion by 2026, with a substantial portion channelled into enterprise software categories.
Furthermore, it is not solely the rise of AI-native platforms driving this transformation. Traditional SaaS vendors are upgrading their products with AI copilots and automation layers, enhancing tools’ capabilities beyond basic functionalities. This reinvention is fundamental to the growth seen in contemporary tech stacks, reflecting a move away from redundancy towards strategic, intelligence-fueled software portfolios.
Financial investment in SaaS is also on an upward trajectory, with cloud-based software now comprising over 30% of total IT budgets among surveyed companies. Remarkably, 45% of organisations spend in excess of $500,000 annually on SaaS, and 10% allocate more than $5 million. With escalating expenditure, however, comes increased scrutiny. Chief Financial Officers (CFOs) now demand comprehensive demonstration of return on investment (ROI) tied to software procurement decisions. In this regard, AI serves a dual purpose, facilitating deeper insight into software utilisation, value correlation, and enabling proactive adjustments prior to contract renewals.
Despite advancements in integrating AI into procurement processes, challenges persist, especially during renewal phases. The report underscores that 45% of finance leaders identify vendor price increases as a significant challenge in renewal negotiations, while 40% struggle to obtain improved contract terms despite considering alternative suppliers. Additionally, 30% concede to missing renewal notifications, leading to automatic contract extensions and avoidable costs. This indicates a gap in post-purchase contract management where AI’s potential remains underutilised. Improving this could involve deploying AI to monitor usage patterns, flag potential risks, and assist in formulating negotiation strategies well ahead of renewal deadlines.
The influence of AI extends beyond the tools being purchased; it is reshaping procurement methodologies themselves. Increasingly, procurement teams use AI-powered platforms that perform functions such as license utilisation analysis, real-time price benchmarking, legal language summarisation, and negotiation term recommendations. Within the surveyed cohort, 35% of procurement leaders are investing in dedicated AI solutions, while 29% integrate AI capabilities within existing SaaS management platforms. These trends are anticipated to accelerate in response to heightened demands for cost optimisation.
This evolution is transforming procurement roles from gatekeepers to strategic enablers, with AI serving as an adjunct to human judgment rather than a replacement. According to data referenced from McKinsey, organisations successfully incorporating AI into core business operations can realise profitability enhancements reaching 20%.
In practical terms, the findings suggest several strategic priorities for procurement functions. These include instituting routine, quarterly renewal planning; raising AI literacy among teams beyond basic operational familiarity; transitioning to data-driven procurement decisions; and consolidating vendor information into intelligent, unified platforms.
The report concludes that intelligent procurement practices are becoming essential rather than optional. AI’s role extends across the SaaS lifecycle, affecting discovery, evaluation, utilisation and renewal. Organisations adapting to these shifts are poised to improve license management, anticipate contract conditions, and negotiate from informed positions. Conversely, those resistant to embracing AI may encounter difficulties in justifying their software expenses, managing renewals effectively, and keeping pace with competitors leveraging AI-enhanced workflows.
Overall, the future of SaaS procurement resides not in acquiring more tools but in acquiring smarter, more capable solutions.
Source: Noah Wire Services
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