Brad van Leeuwen, Co-Founder and COO- Cledara has built a business helping 1,000 customers in over 30 countries manage their SaaS expenses. This provides Brad with a very unique insight into the state of the total spend in SaaS and the most recent SaaS purchasing trends.

During today's episode, we cover four primary topics with Brad:

• State of SaaS Spend Management
• The Impact of AI Native Software on SaaS
• The Top AI Native Companies
• The Impact on AI on Sales and Marketing

The first point Brad shared is that buyers are focused on increasing the relationships with their current vendors and the number of new SaaS solutions purchased has decreased by 50% over the last two years. In addition, existing buyers are looking to renew for longer periods and are looking to extend the agreement term in consideration of lower pricing. Thirdly, buyers are being much more discerning in what products they keep, and which they do not renew which increases the churn rate many SaaS vendors are experiencing.

One data point Cledara captures is the SaaS momentum index which measures if companies are spending more or less on SaaS in the current year versus the previous year. For the 1H-24 the Index has stayed level at around 100 which means most buyers are not increasing their spend on SaaS products. This is confirmed by the lower growth guidance that many public SaaS companies are providing to the market.

Is SaaS consolidation of point solutions happening in companies? The data says yes, companies are looking to consolidate multiple SaaS solutions into larger platforms, except native AI products which are leaning heavily towards point solutions.

Next, we asked Brad how "AI purchasing" trends are evolving. Brad says the headlines are that companies are buying lots of different AI products, but when looking at what teams are really buying it starts with Marketing which is allocating 5% of their software purchases to AI. Sales is allocating about 1.3% of their budget to AI tools, but this is increasing quickly having increased from .3% in January 2024.

Who is the primary decision maker when buying AI products? Based upon a survey of over 300 company CFOs, AI software is viewed as experimentation, and no tangible ROI has been delivered yet. At the same time, Cledara data shows that user adoption is increasing dramatically being primarily driven by individual contributors which is not seen by the CFO.

What are some of the most popular native AI solutions being purchased in 2024? Brad highlighted that Cledara customers are adopting 30-40 new vendors per month across their 1,000+ customers. Once the first customer adopts a particular AI native solution, Brad sees the virality happening very quickly across the customer base...but the issue is churn is happening almost as fast as new solution adoption.

AI spend now comprises about 3.5% - 4% of total software spend to AI point solutions, which includes ChatGPT/OpenAI.

What is the primary benefit of AI solutions? Brad highlighted that many of the tools bring everyone in a department up to the same level of capabilities. The challenge is when users are forced to increase their productivity/effectiveness beyond the baseline created by everyone using similar tools.

Brad highlighted how he used ChatGPT to write an article on the top 100 AI solutions in less than 60 minutes, on a task that would have traditionally taken days. Finally, we asked Brad his perspective on how AI solutions can decrease the staff required to produce the same level of output. Brad believes that the increase in productivity delivered by using AI tools will not primarily lead to a decrease in the amount of employees - rather it will result in more output from the current staff leading to faster revenue growth or growth efficiency.

If you are interested in how total SaaS spend is being impacted by the emergence of AI point solutions and/or how AI will impact productivity as measured by increased efficiency and effectiveness - this episode is a great listen!

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