How to keep your AI software spend to a minimum
Aimee Manning | APR 20, 2023
It doesn’t seem all that long ago that artificial intelligence (AI) was the stuff of science fiction. Today, there’s no hiding from the fact that it has well and truly infiltrated the business world.
And thanks to recent developments in generative AI, it’s only really just getting started.
But as more and more AI tools come to market — 100 were launched in a single week last month — you may be left wondering how many of these tools will realistically make their way into your organization’s ever-increasing SaaS stack?
You’ll also probably be wondering how you’ll manage the cost.
In this article, we’ve not only looked at the SaaS purchasing trends around AI software, but we’ve also detailed how you can keep your software spend to a minimum, without compromising on your chosen tools — AI included.
What’s driving the surge in AI software purchases?
AI has been quietly operating under the radar in recent years, but since the launch of ChatGPT back in November 2022, new innovations have opened up a whole world of possibilities for businesses.
Covering everything from video and content creation, to meeting transcriptions, right through to customer support software, many of these tools really do have the capabilities to significantly enhance both productivity and efficiency across an organization.
Here’s the thing though — given the current economic climate, not to mention the fact that software costs are rising at a rate that is four times greater than market inflation alone can account for, if you are going to start procuring AI software, then it’s likely that something will have to give.
That’s not to say you need to start canceling other subscriptions though. At least not yet.
What you should be doing, however, is looking at ways to minimize your existing software spend.
In other words, you need to start rightsizing your contracts.
Before we look at the steps involved in doing this, it’s worth understanding the impact AI is already having on the average SaaS stack.
The current outlook and our AI SaaS predictions
According to our data — and as detailed in our latest roundup of SaaS purchasing insights — these tools are now in high demand across our network. At the start of 2023, only 10% of companies were using AI software. By April, this number had increased to 33%.
As a result, the share of spend for this type of software increased by 500% in just three months, with AI tools now accounting for 1% of total SaaS spend in the average company.
While we’re yet to see how these standalone AI tools will fare in the coming months and years, as companies continue to scrutinize their budgets and identify opportunities to drive down indirect spend, the data indicates that an increasing number of companies believe these tools will be a valuable addition to their software portfolios.
There is of course the very real likelihood that many of these tools will get acquired and incorporated into much larger product suites. Either that, or these companies will release competitive functionality.
In fact, many industry leaders are already beginning to invest heavily in AI. Just this week, it’s been reported that Microsoft is building its own in-house custom AI processors — internally code-named Athena — and Salesforce is working on new generative AI-driven workflow tools.
Trending AI tools
So, while we expect just about every SaaS provider to eventually introduce AI capabilities, which standalone tools are currently leading the way?
AI content generation platform, Jasper, is certainly making waves amongst our user base, with share of spend for the tool up by 250% in just a few months.
And it’s no real surprise, given its cost – pricing starts from just $24 per month for the Starter plan. For exclusive pricing and discounting insights, take a look at our dedicated Jasper pricing page.
Founded in October 2020, AI voice generator, Murf, is another tool that’s seen a surge in popularity.
By enabling users to generate human-like voiceovers for videos and slideshows in 15 different languages, the platform is making high-quality voiceovers accessible to businesses and content creators.
Like Jasper, Murf is pretty transparent with its pricing – in fact, it’s among the minority of SaaS companies providing clear costs for its enterprise-level package.
According to our data, the company does have a relatively low parity rating though, which means there’s a lack of consistency between the prices that users are actually paying. You can view Murf’s pricing insights here.
Another tool worth being aware of is Fireflies.ai. With functionality that allows companies to record, transcribe and analyze voice communications, it’s quickly become a game-changer for many organizations – we’ve seen the share of spend for this tool quickly increase by 200%.
And when it comes to its pricing, it too is pretty transparent. At least up until its enterprise-level plan. Plus, it also offers a free version that allows for 800 minutes of storage and can transcribe into more than 30 languages.
Generative AI hasn’t just sent shockwaves through the creative writing industry, it’s also starting to change the face of video creation.
With more than a million users worldwide, AI video platform, Lumen5, is another tool on our watch list.
While Bizzabo has operated as an events experience platform for over a decade, it’s only more recently that it’s introduced AI capabilities, offering users features such as automatic meeting scheduling and smart event recommendations.
It therefore comes as no surprise that we’ve seen the share of spend for this tool increase by 300%.
While it’s the only vendor listed here that doesn’t provide pricing information on its site, we have just published an article that outlines how you can find out the cost of Bizzabo – and better still, secure a discount.
How to keep your AI software spend to a minimum
The use of AI software may be on the rise, but so is the pressure that finance leaders are under to keep spending to a minimum.
So, what’s the solution? How can you optimize your spend without compromising on your desired toolset?
Here’s a concerning fact – companies are overpaying for their SaaS tools by an average of 26%. Which means that in many cases, it’s far higher than this.
The problem is, you won’t necessarily know if you’re overpaying.
This is because of the widespread lack of pricing transparency in SaaS. While four of the five AI tools listed above do clearly list their prices, across the wider software industry only 45% of vendors publish their costs. Which means that for the majority of tools, users are required to engage in multiple sales conversations to access and compare pricing.
Even then though, they have no frame of reference as to what other companies are actually paying for a similar subscription, leaving them with very little purchasing power.
But what if this didn’t have to be the case?
In short, it doesn’t. At least not with a SaaS purchasing platform.
Consider license utilization
With 33% of SaaS licenses either barely used or not used at all by the intended employees, many companies are wasting hundreds of thousands of dollars — sometimes more – every year on SaaS.
What’s more, 16% of users are on a higher tier plan than is needed based on their usage requirements, again, contributing to wasted SaaS spend.
For many organizations, there’s no way of knowing this though.
But given the rate at which AI software is being procured, it’s a problem that is likely to get worse. Having a system in place that allows you to keep track of your software licenses is key to avoiding this and ultimately key to keeping your costs down.
Be cautious of auto-renewal and price uplift clauses
Many AI tools seem to be pretty reasonably priced. But with 88% of SaaS companies including auto-renewal clauses in their contracts, there’s the very real risk that prices could soar at the end of your initial contract. Especially if it also includes a price uplift clause, which many do.
Trying to keep on top of potentially hundreds of software applications is no easy feat. In fact, as you add more and more tools to your software stack, there’s the very real risk of missing renewal deadlines and termination windows.
Having a reliable approach to renewal management is therefore crucial. Not only for avoiding costly price increases – especially for unwanted software – but for also saving time.
Avoid feature overlap
As we’ve already mentioned, many SaaS providers are already beginning to embed AI into their product, and our guess is that the majority will follow suit.
But with so many new AI tools being procured, having full visibility of your software stack will be key to avoiding feature overlap down the line. In other words, avoiding paying for multiple tools that provide the same functionality.
Secure the best price and contract terms on any AI tool
The growth of the average SaaS stack is showing no signs of slowing down. The problem is, neither is the cost of each tool.
It’s therefore crucial that you’re doing all you can to keep your spend to a minimum.
At Vertice, we can help.
With access to the pricing and discounting data for more than 13,000 software vendors worldwide, we can find out what other companies are paying, and use our SaaS purchasing expertise to secure you the best possible deal on any contract.
See for yourself how much you could be saving on your annual spend with a free SaaS stack audit, or alternatively search through our extensive database to get exclusive pricing intel for thousands of global vendors.