Companies Are Cutting Software Spend

Your team lost a tool this quarter. Somebody cancelled the design app, or the note app, or the second video product nobody could tell apart from the first. It feels like the company is spending less on software. It is not. Gartner forecasts worldwide IT spending will grow 13.5% in 2026 to $6.31 trillion, with software one of the fastest-growing segments at close to 15%. The bill is going up. The cuts are real anyway, and both facts belong to the same story.

The growth is concentrated. Zylo's 2026 SaaS Management Index, built on more than 40 million licenses and $75 billion in spend under management, found spending on AI-native applications rose 108% year over year, and 393% at organisations with more than ten thousand employees. Expensed software spend rose 267%, and ChatGPT is now the single most expensed application in the dataset. That money came from somewhere.

It came from seats nobody was sitting in. The same report found organisations leave 36% of their SaaS licenses unused, against a median SaaS spend of $9,455 per employee. The industry has a word for this: shelfware. Software that was bought, paid for, and never opened. When a finance team hunts for money, shelfware is the cheapest thing in the building to cut, because nothing breaks when it goes.

There is a second pressure, and it is newer. Software used to cost a fixed amount per seat per month, which made a budget easy to write. AI features are usually consumption-based: you pay for what you use, and nobody knows in advance how much that will be. In the Zylo survey, 78% of IT leaders reported unexpected charges tied to consumption-based or AI pricing, and 61% had to cut projects because of them.

This changes who sends the cancellation email. Zylo found business units now control 81% of SaaS spend, while IT directly manages only 15%. So the tool you lost was probably not killed by a central IT policy. It was killed by your own department head, looking at a list of what her team actually opened last month, and deciding your app was not on it.

Which means you will get the question directly. When a contract comes up for renewal, somebody now has to justify it, and that somebody is often the person who uses it most. The vendor's own usage report is already on the table. Vague answers lose. "The team likes it" is not an argument. "Nine of us are in it daily" is.

So keep three sentences ready before anyone asks. Who uses it, how often, and what breaks without it. Say the seat count out loud: "We pay for twenty seats and nine are active, so cut back to ten and I will not miss them." Offering the cut yourself is how you keep the part you need. The person who can sign off on a smaller number is rarely the one who loses the tool.