12 days of ITAM: Day 11 - SaaS Predictions for 2023

ITAM News & Analysis

12 days of ITAM: Day 11 - SaaS Predictions for 2023

What can we expect from the world of SaaS & SaaS Management in 2023? SaaS expert AJ Witt outlines key trends in this article.

Price rises

Not so much a prediction as a reality, as price rises have already started. We covered this in some detail in our Audits & Governance Summit, available on-demand here.

It’s important to pay attention to the impact this can have on your budgets, because your SaaS deals might only be short-term, meaning that unexpected price rises can hit within a budget year. This is particularly the case if you’re buying SaaS month-to-month. With annual deals often offering one- or two-month discounts over monthly pricing now is a good time to measure your usage and lock in a longer-term deal.

Falling investment creates pressure for startups

Whilst delivering software via SaaS is incredibly profitable for established success stories such as Salesforce and Adobe, that doesn’t apply to startups. Over the past decade a seemingly limitless supply of venture capital has funded and explosion in SaaS solutions.

However, the path to profitability is a long one, and many rounds of funding are required to get there. If those funds start to dry up, which we are starting to see, then startups will be under pressure to start delivering returns. That’s most likely to come in the form of raised prices for us as end-users.

Companies should look at the financial viability of the vendors providing what might be business-critical SaaS software, because if they go out of business then access will be lost to that software, and potentially the business data stored within it.

The first SaaS recession

Thinking back to the last financial crash in 2008/9 we saw falling software revenues across the board. The difference back then was that most software was still perpetual, on-premises deployed. Customers simply delayed software investment programs whilst they rode out the storm. This led to most of the big players posting negative revenue growth in those years only to then surf the recovery wave in 2010/11 when it was back to business as usual. It will be fascinating to see if the new world of SaaS is recession-proof as one of the attractive aspects of the model for investors is the predictable regular income it delivers.

A new focus on SaaS Management

SaaS Management is a many-splendored business practice which has much to offer to multiple stakeholders. Undoubtedly, with companies paying attention to every penny of expenditure, a renewed or perhaps even initial focus on SaaS cost management should be expected. If you’re heading into 2023 with a cost reduction target to meet, then the quickest and best way to start on that is by looking at SaaS costs.

Every renewal presents an opportunity to downsize license numbers, yielding immediate savings. This will particularly be the case if your organization is unfortunately having to make job cuts. Given the volume of SaaS in use and the fact contracts are usually monthly or annual you should have opportunities to costs every single week in 2023. That’s a great way to build momentum behind a SaaS Management program and deliver a good news story that the CIO can present to the CFO as they jointly work to rein in spiraling costs.

In many ways the last recession kickstarted a boom in SAM which was largely audit-driven. This time around, it’s time to start managing SaaS and show your organizations what ITAM can do for the bottom line.

Read some of our most recent articles about software price rises:

• “Price Harmonization,” – Microsoft price rises coming in 2023
• IBM price increases coming in 2023
• Adobe price increases: Could Ado BE any more expensive?

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