The SaaS Market and IT Procurement: A $350 Billion Opportunity or a Continued Shoving Around the Executive Table?

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SaaS Market Trends & Challenges

  1. SaaS is booming—but at what cost?

The market is set to skyrocket, potentially reaching $1 trillion by the early 2030s—up from the current $240-$320 billion range. But this explosive growth hides a disturbing flipside.

                2. The hidden cost: unused licenses and soaring spend.

Nearly 50% of SaaS licenses go unused, while companies add an average of six new apps each month, building on an already bloated base of 269 apps. SaaS spend has reached $3,900 per employee annually.

                 3. Digital transformation: trillions to spend better.

Companies are investing heavily in digital transformation—$2.5 trillion in 2024, projected to reach $4 trillion by 2027 (according to IDC). Yet, the results are grim: 90% of projects fail to deliver measurable ROI, or 80% outright fail, according to Gartner.

                4. Unused SaaS licenses: A solution to global poverty.

Eliminating extreme poverty worldwide costs an estimated $67 billion annually($2.15/day to feed) while lifting the bar to $3.65/day costs around $324 billion. Meanwhile, wasted SaaS licenses cost $150 billion and could rise to $500 billion by 2032 if unattended.

                5. The SaaS market’s profit problem.

The median EBITDA margin in SaaS is just 7%, with profit margins at -1%. In response, 73% of SaaS vendors raised prices in 2023, outpacing CPI by 2-3x. While many vendors explore new pricing frameworks like consumption-based models, 57% still keep prices hidden.

                6. The shift from "IT procurement" to "digital procurement."

"IT procurement" no longer fits the bill: 48% of apps and 69% of software spending are now driven by business units, not IT.

Let's think and calculate what procurement has to offer on all these fronts:

  • $75 billion if we convert 1/2 of unused licenses into a valuable payload.
  • $250 billion if we influence and support only 10% of digital transformation projects to enable value and profitability. With these two actions alone, procurement can eliminate global poverty.
  • $18 billion if we cut the software inflation by half.
  • $3 billion if we only help our IT colleagues, reducing the Shadow IT spend from 3% to 2%.
  • $6 billion (2% of the SaaS spend) if we cut multichannel spend and app redundancy.
Over $350 billion overall—this is what procurement can bring to the global economy only on the IT front and only in 2025.
By the way, we're not the "IT procurement" anymore. We're the "digital procurement for the business." Still need to work on rebranding.

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More information on this and other exciting topics can be found in "The Technology Procurement Handbook." It represents 23 years of experience, billions of dollars worth of successful sourcing projects, and 1000s hours spent on research, analysis, and content creation for the most demanding professional readers.





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