What you need to know

• Despite increasing spending on Software as a Service (SaaS), utilisation rates are declining, with 52.7 per cent of purchased licenses going unused, resulting in an average annual waste of $21 million per organisation, according to data from the Zylo licence management platform.
• The average number of SaaS applications has only grown by 2.2 per cent in 2024, indicating a stagnation in SaaS consolidation efforts, even as spending increased by 9.1 per cent.
• Many organisations negotiate enterprise licenses that allow access to apps for entire teams or companies, but underutilisation remains common. This approach can obscure the financial waste incurred
• Overall SaaS utilisation rates have decreased to 47.3 per cent, highlighting a concerning trend amidst increasingly complex licensing models.
• Companies with over 10,000 employees waste approximately $127.3 million on unused licenses annually, but they see a modest improvement in utilisation rates, climbing to 45 per ce in 2024.
• The cost of unused licenses has surged from $18 million to $21 million per organisation in just one year, attributed to poor renewal management and the complexity of SaaS ecosystems.
• Zylo is not alone in its findings. Multiple other source report similarly poor utilisation performance.

Andy Lark’s assessment that the answer to every SaaS problem is more SaaS, and that licences are breeding like rabbits remains as true as ever.

Two years have passed since he made those comments and in the intervening period CFOs have come to know every IT dollar spent by marketing on a first-name basis. Yet despite this, SaaS utilisation is actually getting worse, even as SaaS spending is increasing!

The numbers on utilisation are stark according to the 2025 SaaS Management Index by licence management platform Zylo, which analysed the data in its own platform: 52.7 per cent of purchased SaaS licenses go unused, equating to $21M in wasted spending annually per organisation on average. Worse yet, utilisation rates are declining, highlighting an industry-wide challenge that shows no signs of abating.

That’s even though spending on Saas continues to grow, as Chiefmartec's Scott Brinker noted in his analysis of the report.

In a Chiefmartec blog he noted: “According to the data, the average number of SaaS apps in stacks grew by 2.2 per cent in 2024.

“Now, I know, 2.2 per cent isn’t exactly runaway growth. And there were mitigating factors — cough, AI, cough — that countered the underlying dynamics of SaaS consolidation. But hasn’t that been the story now for, what, 14 years? Tech keeps consolidating… except for all the new tech that keeps flowing in, “ Brinker wrote.

“Spend on SaaS in 2024 grew even more, by 9.1 per cent. This was in no small part due to many SaaS vendors raising their prices — 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.”

Speaking to Mi3 last week about utilisation, he took a nuanced perspective, "I do think the way Zylo thinks of 'utilisation' is the most accurate — use vs. non-use of a license. It's objective, black-and-white."

"That being said, I'm slightly skeptical on the extrapolation of how much financial 'waste' that actually represents. The reason is that it's not unusual for companies to negotiate enterprise licensing deals, where everyone in a team, department, or the whole company is given access to an app.

"However, not everyone ends up using those apps. But that's often baked into the negotiations for the price of the enterprise license. And the option for anyone to use the license, if they need it, has non-zero value."

A Growing Problem

SaaS utilisation rates have dropped to 47.3 per cent, a 4 per cent decline from last year, underscoring a problematic trend that feels baked in even as licensing models grow more complex. The rise of AI-driven tools and hybrid pricing models, such as consumption-based plans, is further muddying the waters for IT and procurement teams.

There is good news for bigger companies though. In that part of the market, their obsessive focus on tech spend is paying dividends at least on the utilisation issue.

According to the report's authors, “While license waste has increased as a whole, it has stayed relatively flat for companies with 10,000 or more employees. On average, these businesses waste $127.3M on unused licenses each year, which is up just slightly from $126.9M in 2023. Part of this is due to stronger than average utilisation rates, though there’s still potential for improvement. These larger organisations achieved 45 per cent utilisation in 2024, compared to 41.9 per cent in 2023, for an 8 per cent year-over-year increase.”

For smaller organisations, the picture is even bleaker. Without the resources or governance frameworks of their larger counterparts, these companies struggle to rein in license waste, often paying for tools that gather dust. Larger enterprises, meanwhile, have managed to improve slightly, with utilisation climbing from 41.9 per cent in 2023 to 45 per cent in 2024—a modest 8 per cent increase year-over-year.

Financial Toll

The financial implications of this underutilisation are significant. In just one year, the cost of unused licenses has jumped from $18M to $21M annually per organisation, driven by a mix of poorly managed renewals, misaligned purchasing, and the inherent complexity of SaaS ecosystems, according to Zylo.

While larger companies can leverage dedicated resources to their licenses, the same cannot be said for smaller firms, where SaaS sprawl and shadow IT often compound the problem.

From Band-Aid to Best Practice

Some organisations are tackling the problem head-on. For instance, ModMed, an electronic health record provider, has implemented programmatic license management to address underutilisation. By monitoring usage and automating reclamation processes, the company has achieved a 75.3 per cent utilisation rate, putting in on par with its peers. Over the past year, ModMed has saved nearly $1M through targeted workflows, proving that proactive SaaS management can deliver tangible results. It also proved a boon for the reputation of its digital team in the US with Trenton Cycholl, VP of IT and Digital Business equating managing software utilisation with Whack-A-Mole. "After we sent our first licence reclamation emails I got a thank you from executives. They know we are keeping our eye on the ball, and it tells them we have a governed tech environment.

More evidence

The Zylo report is not alone—its findings are echoed by a chorus of other analyses, each painting an equally troubling picture of SaaS waste. Across the board, underutilisation is proving to be a pervasive and costly issue, with millions of dollars effectively left on the table.

• Productiv's Analysis provides one of the more extreme examples: a review of nearly 100 million SaaS licenses over three years found that  40 per cent of licenses are unused. This sheer scale of inefficiency underscores how widespread the problem has become across industries, not just within the Fortune 500.
• Meanwhile, Vertice's 2025 SaaS Budgeting Insights reveal that the average organisation under-utilises its SaaS applications by 33 per cent, equating to substantial financial waste that could otherwise be reinvested in growth or innovation initiatives. Vertice estimates that for companies with over 600 employees, this equates to wasting $1 million a year on underused licenses and features.
• Adding to this evidence is earlier data from Nexthink, which highlights that half of all software licenses go unused by employees, representing billions in lost potential. Nexthink also warns against adopting a 'ready, fire, aim' knee jerk response to the problem. According to Yassine Zaied, Chief Strategy and Marketing Officer at Nexthink, “Shutting down licenses in a random or uninformed manner can lead to higher costs in the medium term. Only when IT has access to all the information about who is using what, what is not used, what is still performing and what needs to be repaired or replaced, can it see and take advantage of greater efficiencies in a sustainable and recurring manner.

The picture that emerges from these reports is one of organisations still failing to close the gap between SaaS purchases and actual usage. Whether the root cause is a lack of governance, decentralised purchasing, or the ever-increasing complexity of AI and hybrid pricing models, the outcome is the same: money squandered on tools that add no value.