SaaSletter - 2025 Zylo SaaS Management Index
Covering flat app counts, fewer multi-year deals, cloud marketplaces + more
2025 Zylo SaaS Management Index: 1st Takes
This edition focuses on one of my favorite software report series: the Zylo SaaS Management Index.
Regarding the report’s signal and coverage, Zylo has $40 billion of SaaS spend under management across 40 million software licenses.
Now on to *some* highlights:
While spending (in dollars) grew for the first time since Zylo’s 2021 report, app counts are effectively flat.
For software vendors and sellers, this speaks to the challenges of landing new logos.
The average SaaS spend by customer size helps illustrate the power of “Enterprise Plus” (10,000+ Employees) customers: *12x greater* than “Entry Enterprise” (500-2,500 Employees)
Building on our recent “Climbing The ACV Mountain” focused on ARR per customer benchmarks at various stages:
We graphed the Zylo data to magnify further just how much more “Enterprise Plus” customers spend:
Meanwhile, from a vendor viewpoint, landing just 1 or 2 “Enterprise Plus” logos can really accelerate the journey up the “ACV Mountain.”
2025 Zylo SaaS Management Index: Even More Takes
The decline in multi-year contracts data is notable (especially for our many, many subscribers on the buy side - maybe fine-tune your RPO estimates!). The decline was most pronounced in the 5k-10k and 10k+ employee cohorts.
I suspect this is a function of:
a) Bubble overbuying lessons learned: in many categories (like sales technology), too many seats were purchased based on growth plans and headcounts that never materialized. Now, management teams are applying that expensive lesson to each renewal cycle.
b) AI uncertainty: outside of clear AI winners, AI has created uncertainty and indecision for most “vanilla” software vendors, leading to shorter commitments. With a bit more in my “AI uncertainty” video clip.
Channels and cloud marketplaces - i.e., buying apps via AWS Marketplace under an Enterprise Discount Plan (EDP) - are very undercovered and opaque relative to their importance and growth (+50% $ spend, +87% app spend), so we found the above notable.
This vendor/app consolidation chart is an excellent downside case study (especially for our many, many private equity subscribers who make “through the cycle” charts for a living).
For highly redundant categories (like Online Training Classes, Project Management, and Team Collaboration), the 2022->2024 cost optimization cycle led to 20-30% license cuts.
With other functions (like GRC and Vulnerability Management) effectively unchanged.
These last charts speak for themselves… and might pique your interest in reading the full Zylo SaaS Management Index (41 slides) which includes excellent a) AI spend and b) app security coverage:
About Cloud Ratings
In mid 2024, we announced a research partnership with G2 - more here:
with this slide showing how our G2-enhanced Quadrants (like our recent Sales Compensation Software) release, this business of software newsletter you are reading, our podcasts, and our True ROI practice area all fit within our modern analyst firm:
As always, I appreciate your take on the data, Matt.