Over the last decade, Software as a Service (SaaS), has experienced exponential growth jumping from $27.3 billion to upwards of $399 billion in funding.
What started as a niche way to deliver software online such as DropBox and Salesforce, has since grown to be a “tool for everything” by becoming the default model for businesses to help resolve problems across communications, design, HR, accounting and beyond. Fueled by low interest rates, a global pivot to remote work and the digitization transformation, demand and valuation for SaaS companies has skyrocketed.
However, growth is tapering off. With only 34% of businesses showing successful software adoption via the buying and implementation process, the majority of organizations are grappling with an overflow of tech tools that more often work against each other, than together, and buyers are fatigued by dragged out sales processes. In turn, sellers are realizing that while these processes have worked in the past, they now lack effectiveness.
Now, buyers expect transparency, promptness, and proof of value before they ever give reps the time of day. Additionally, 66% of businesses experience unexpected disruption or regret post-purchase. As tech leaders are prioritizing tighter budgets amidst economic uncertainty, turning the focus from rapid adoption to rationalization is key to mitigate any further post-purchase regret.
But this isn’t a signal of a bubble bursting, it’s a signal of metamorphosis: SaaS is growing up. We are exiting the era of rapid, unchecked expansion, and entering one focused on consolidating, adapting, and innovating in smarter and more efficient ways.
SaaS Overload Is Forcing a Reset
SaaS promises to simplify work, removing the tension of manual set up processes and licensing requirements. However, in many organizations SaaS has done the opposite, with companies sifting through anywhere from 300 to 1,000+ software applications to carry out operations, according to a 2023 Salesforce survey. Only about 30% of these applications are integrated together, leaving the remaining 70% disconnected and overlapping.
Companies cannot remain efficient when they are constantly learning and adding another dashboard, another log in, and essential company data remains surfing across tens if not hundreds of platforms. Operational inefficiencies shine through, but relationships are strained just the same. Buyers are overwhelmed, skeptical and increasingly unwilling to engage with sellers who are adding more noise over clarity and solutions.
Leadership is realizing that this “SaaS sprawl” is not sustainable for the longevity of their brands. Zylo’s SaaS Management Index found that on average, organizations waste ~$17 million per year on unused or redundant SaaS licenses. From CFOs to IT leaders, across the board teams are shifting their prioritization to quality over quantity tech: wanting fewer tools, more enforced integration, and clearer visibility into potential ROI to combat money actively being wasted.
Previously wanting all the “best of” products on the market, companies no longer see a benefit to flaunting the latest and greatest if it does not mean those tools will unify workflows and deliver measurable outcomes. For SaaS vendors, this means a fundamental change in mindset. Growth can no longer depend on adding features to chase the latest wants and needs of investors and trends. The future belongs to platforms that help customers simplify, not multiply.
The Shift Toward Usage-Based SaaS Commerce Pricing
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Is the Juice Worth the Squeeze? AI’s Role in Proving Value
Under today’s economic pressure, budgets are tightening and teams are taking a hard look at every contract, service and product being utilized by team members. With companies cutting software spend anywhere from 10-30%, no longer is the question “what does this software do?” but “why do we need this software?” Consider every renewal conversation now as a performance review. Buyers expect sellers to prove their seat at the table with hard data, not flashy talking points and lofty promises. As cheaper options surface, whether freemium offerings, open-source alternatives or bundled options for larger teams, competition is at an all-time high, and sellers who fail to articulate value in the buyer’s terms are being replaced by those who can.
Imagine a smaller SaaS team that’s spent years dedicated to perfecting their project management tool. Overnight, a newer, flashy app launches offering similar features for free. Simultaneously, a productivity suite used by Fortune 500s rolls out a built-in version at no extra cost. Suddenly, what once felt like a niche product becomes just another option against countless tools. Better yet, AI has the ability to create a “good enough” service to optimize enough time and activity to get by. The team isn’t just competing on functionality, they’re fighting for attention, relevance, and proof that their product delivers value worth paying for.
LLM solutions are a great way to automate repetitive tasks, such as sorting clients into an internal data base, or sifting through raw data for key insights. For mission-critical work requiring secure validation and proof, human intervention will continue to see through the last mile of a deal. AI isn’t a threat to SaaS but a catalyst for transformation to a leaner, more sustainable ecosystem of products that deliver clear, lasting impact.
AI can take on the heavy lifting by personalizing outreach, surfacing insights, and automating routine follow-ups, leaving room for humans to continue to focus on what buyers crave in this new era: relationships and trust.
For buyers and sellers alike, proving differentiated value is no longer optional, it’s about survival. Every dollar must be justified, and every feature must tie directly to a measurable outcome, otherwise many niche or single-function vendors will not survive. Leaning on emerging technologies like AI to amplify professional tools is key for teams to build smarter SaaS ecosystems.
The Future of SaaS Success Revolves Around the Buyer
In an oversaturated market with what seems like endless options to manage workflows, data, and teams, the ability to understand the buyer will differentiate SaaS providers showing value versus adding on top the stack.
Buyers don’t want dragged sales cycles and gated demos. They want to be able to get their hands on a service early on, testing it out for themselves before making an informed decision. For sellers, this means guiding rather than persuading, showing rather than telling. The best salespeople are becoming consultants, strategists and trusted advisors, helping buyers to navigate the complexity instead of adding to it.
Operating with a buyer first mindset requires empathy and commitment to seeing through a sale. This is something only humans can portray. Having data driven insights powered by AI, in partnership with a human to see through the last mile, is the next generation of SaaS success.
As we enter the adulthood of SaaS, buyers’ mindsets are changing, so the sales pros need to change with them. The future of SaaS belongs to sellers who treat every interaction as a chance to deepen understanding, reduce friction, and strengthen the partnership between technology and its users.
