{"id":35248,"date":"2025-01-18T17:53:09","date_gmt":"2025-01-18T17:53:09","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/marketing\/despite-financial-pressure-or-because-of-it-tech-stacks-are-actually-expanding-again-chief-marketing-technologist\/"},"modified":"2025-01-18T17:53:09","modified_gmt":"2025-01-18T17:53:09","slug":"despite-financial-pressure-or-because-of-it-tech-stacks-are-actually-expanding-again-chief-marketing-technologist","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=35248","title":{"rendered":"Despite financial pressure \u2014 or because of it? \u2014 tech stacks are actually expanding again \u2013 Chief Marketing Technologist"},"content":{"rendered":"


\n<\/p>\n

\n
\"SaaS\"SaaS<\/a><\/figure>\n

If you predicted that tech stacks would shrink in 2024, it was probably a good bet.<\/p>\n

After all, the trend line had been headed in that direction. The average number of apps in companies\u2019 stacks shrank in both 2022 and 2023, albeit by only a modest amount, less than 10% on average. But economic times were tight last year, and CFOs were on the warpath to cut SaaS waste. And, of course, there\u2019s the ongoing 10-year narrative that the whole SaaS industry, martech especially, has been ripe for consolidation.<\/p>\n

So betting on red \u2014 shrinking SaaS stacks \u2014 would have seemed a safe wager.<\/p>\n

However, if you made that bet, I\u2019m sorry to say, you lost.<\/p>\n

The latest SaaS Management Index Report<\/a> was just released by Zylo, a leading SaaS management platform that manages over 40 million SaaS licenses and $40+ billion in SaaS spend. It\u2019s based on hard, empirical data of tracked SaaS expenses, not squishy surveys where people guess \u2014 always way off \u2014 how much SaaS they think<\/em> they have.<\/p>\n

According to the data, the average number of SaaS apps in stacks grew by 2.2%<\/strong> in 2024.<\/p>\n

Now, I know, 2.2% isn\u2019t exactly runaway growth. And there were mitigating factors \u2014 cough, AI, cough<\/em> \u2014 that countered underlying dynamics of SaaS consolidation. But hasn\u2019t that been the story now for, what, 14 years? Tech keeps consolidating\u2026 except for all the new tech that keeps flowing in.<\/p>\n

Spend on SaaS in 2024 grew even more, by 9.1%<\/strong>. This was in no small part due to many SaaS vendors raising their prices \u2014 a privilege, which buyers should note with irony, often accorded to more consolidated vendors. Be careful what you wish for. But clearly there was enough reason for companies, even under the close watch of the CFO, to not significantly shrink stack size or spend.<\/p>\n

One thing Zylo did this year, which I really appreciate, is distinguish between the mean<\/em> and median<\/em> averages of stack size and spend:<\/p>\n

\"SaaS\"SaaS<\/a><\/figure>\n

As you\u2019d might expect, the medians are lower than the means. We know some companies just have really sprawling tech stacks, which pull up the mean. The median better reflects the real \u201caverage\u201d company. That said, it\u2019s interesting to note that the medians aren\u2019t that<\/em> much lower than the means. So it\u2019s a pretty solid conclusion that sizable SaaS stacks are not outliers, but reflective of reality for most organizations.<\/p>\n

Another interesting stat: average SaaS spend per employee grew 21.9<\/strong>%.<\/p>\n

\"Average\"Average<\/a><\/figure>\n

Doing the math, if spend-per-employee grew more than 2X as much as overall SaaS spend, then the denominator \u2014 the number of employees \u2014 must be shrinking without a corresponding drop in software investments. This is most pronounced in the SMB segment of companies with 1-500 employees, which reported a whopping 44.1%<\/strong> increase in SaaS spend-per-employee.<\/p>\n

While it\u2019s too early attribute to this primarily to AI, it is the overall narrative of our time: the ratio of software to humans in business operations is increasing<\/strong>. And will increase more, and more, and more. It\u2019s showing up sooner in SMBs because this segment includes many new digital-native startups, and SMBs are generally more agile and less risk averse than enterprises. They\u2019re leveraging software to their financial advantage. And in this new wave of AI disruption, that could prove to be a pretty big advantage.<\/p>\n

Sam Altman\u2019s vision of a 1-person, $1 billion company would be the extreme incarnation.<\/p>\n

But coming back to present day Earth, let\u2019s look at another major trend solidified in Zylo\u2019s report. Who owns all these apps populating the stack: IT, business units, or \u201cshadow IT\u201d (in this context is employees who buy software on their credit cards and expense it)?<\/p>\n

\"SaaS\"SaaS<\/a><\/figure>\n

The answer is pretty definitive: business units\/departments. They own the majority of apps (50.5%<\/strong>) and pay for the vast majority of spend (70%<\/strong>). This trend has been steadily growing for the past three years.<\/p>\n

That\u2019s probably not a surprise to those of you in marketing reading this. So much of the software we\u2019re using today is specific to our work. See the martech landscape<\/a>. It makes sense that we should select, pay for, operate, and be accountable for it because it\u2019s so deeply entwined in our craft and operations.<\/p>\n

IT still controls 26.1% of all software spend, albeit for a small percentage of apps (15.9%). This makes sense, as IT should own software that spans multiple business departments. That\u2019s typically a smaller number of apps, and mostly larger platforms and infrastructure. While I shy away from making predictions, my guess is that the share of spend under IT will increase over the next couple of years as more cross-org technologies gain momentum, especially at the data layer and with general-purpose AI platforms.<\/p>\n

As a percentage of apps in the stack, shadow IT remains a solid 33.6%<\/strong>. The stack police have been able to shave a point or so off every year for the past 4 years, but it\u2019s been hard to budge to any significant degree. People like their apps.<\/p>\n

However, for all but the most obsessive finance folks, shadow IT remains a rounding error of a mere 3% or 4% of software spend. The CISO may have a more legitimate beef about the security and privacy risks.<\/p>\n

Even then, if you look at the Top 10 apps that are most commonly expensed as shadow IT, they are: Udemy, ChatGPT, Canva, Kudoboard, CliftonStrengths, LinkedIn, OpenAI API, Grammarly, Adobe Acrobat, and Kahoot. With the exception of ChatGPT and OpenAI API \u2014 which should not<\/em> be left ungoverned \u2014 most of these seem relatively low risk. Ideally, they should still be governed. But there are probably bigger fish to fry.<\/p>\n

Anyway, I have barely scratched the surface of the wealth of data-validated insights about tech stacks in the Zylo report. I would highly recommend picking up a copy<\/a>.<\/p>\n

It\u2019s going to be a fascinating year ahead. Any guesses as to what tech stacks will look like by January 2026?<\/p>\n

\n
\n
\n

Get chiefmartec.com directly in your inbox!<\/h3>\n

Subscribe to my newsletter to get the latest insights on martech as soon as they hit the wire. I usually publish an article every week or two \u2014 aiming for quality over quantity.<\/p>\n<\/div>\n<\/div><\/div>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

If you predicted that tech stacks would shrink in 2024, it was probably a good bet. After all, the trend line had been headed in that direction. The average number of apps in companies\u2019 stacks shrank in both 2022 and 2023, albeit by only a modest amount, less than 10% on average. But economic times […]<\/p>\n","protected":false},"author":1,"featured_media":35249,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[98],"tags":[3576,17734,10912,8402,1483,23264,5107,23265],"dealstore":[],"offerexpiration":[],"class_list":["post-35248","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","tag-chief","tag-expanding","tag-financial","tag-marketing","tag-pressure","tag-stacks","tag-tech","tag-technologist"],"yoast_head":"\nDespite financial pressure \u2014 or because of it? \u2014 tech stacks are actually expanding again \u2013 Chief Marketing Technologist - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=35248\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Despite financial pressure \u2014 or because of it? \u2014 tech stacks are actually expanding again \u2013 Chief Marketing Technologist - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"If you predicted that tech stacks would shrink in 2024, it was probably a good bet. 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