Sales software now accounts for over a quarter of total SaaS spend

Between Q1 and Q2 of 2023, we have seen the share of spend for sales software applications increase from 21% to 28%. This means that these tools now account for over a quarter of total software spend – not far off a third.

So, while organizations in general are becoming increasingly selective about the contents of their SaaS stacks, with data indicating that many are opting to cut back on marketing and HR tools – a possible result of reduced headcount and budget cuts – this increased share of spend for sales software signifies the importance of these tools in helping businesses sustain growth and scale.

Despite this, license utilization remains a huge challenge. Not only do sales tools account for substantially more spend than any other type of tool used within the average business, but they remain the least utilized by far. According to our data, just under half of all licenses are either barely used or not used at all by the intended employees.

While there has been marginal improvement since Q1, with utilization rates up from 48% to 51%, the fact that overall share of spend has increased means this is potentially an even bigger problem than it previously was and is an area of increasingly wasted spend.

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SaaS vendors offered higher discounts in Q2

According to our data, the average discount offered by SaaS vendors has increased across the majority of software categories since Q1. This could well be the result of companies becoming more frugal with their budgets in light of soaring inflation rates.

While the data specifically found that the average discounts offered by vendors in sectors such as CRM, identity access management and software development had the most notable increases, no category increased its average discounting more than the sales intelligence software sector.

Despite having previously offered generous average savings of 36%, vendors in this space have since increased this to a substantial 43%. This essentially means that businesses purchasing or renewing a sales intelligence tool are paying not far off half the list pricing on average. In many cases, even less.

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Leading SaaS vendors

With the highest volume of new purchases and renewals across our user base, Salesforce remains the leading SaaS vendor for the fourth month running.

Claiming positions two and three this month are new entrants, application performance monitoring provider, Grafana Labs, and CRM platform Kustomer. While this pushes Google and Microsoft down the rankings, they’re not the only vendors to have fallen. Auth0 and Snowflake dropped to sixth and eighth place, while LinkedIn, MongoDB and LaunchDarkly dropped out of the top 10 altogether.

Interestingly, communications tool Slack features for the first time and business software suite, NetSuite, has made a reappearance.

Vendor of the month: Grafana Labs

Open source analytics and monitoring solution, Grafana Labs, soared into second place this month in terms of the number of new purchases and renewals we’ve seen across our user base. This puts the company ahead of the likes of Google, Microsoft, and even last month’s vendor of the month, Snowflake.

Just last year, the company passed more than one million active users and secured a $240 million Series D round of funding, so it comes as no surprise that the company is becoming a firm favorite.

Category of the month: Application Performance Monitoring

The Application Performance Monitoring sector has seen huge growth in recent years and it’s showing no signs of slowing down, with Gartner expecting the market to reach an estimated $8.9 billion by 2026.

In fact, our own data backs this up, having found that this type of software now accounts for 13% of total SaaS spend, up from 11% in Q1.

While Grafana Labs had the highest number of transactions in June across our user base, second only to Salesforce, market leader Datadog wasn’t far behind in fourth place. This further highlights just how crucial application performance monitoring software is as a solution across companies of all sizes and industries.

As with any SaaS tool though, there are often savings to be had, with list prices rarely set in stone. Additional data shows that the average discount offered by companies in this sector is 21%.

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