The Budget Killer No One Talks About: SaaS Renewals

SaaS renewals are silently consuming your software budget.

Recent data reveals that up to 92% of the average organisation's SaaS spend is now allocated to renewals, leaving a mere 8% for new tools. For finance leaders, this shift signals a major blind spot, one that could be quietly eroding margins if left unaddressed.

The Financial Impact

• Rising Costs: The average SaaS spend per employee has increased to $8,700 in 2024, up from $7,900 the previous year. Multiply that across a 500-person company and you’re looking at over $4 million in annual spend.

• Time-Consuming Renewals: Renewals now take 50% longer to negotiate than new purchases, 37 days on average compared to 25. Yet most are still treated as admin tasks instead of commercial negotiations.

• Wasted Spend: Companies waste an average of $21 million per year on unused SaaS licenses. This isn’t just an IT issue, it's a finance issue.

Why Finance Needs to Lead

Procurement teams are often the first line of defence in software renewals, bringing valuable vendor knowledge and contract insight. But without finance’s involvement, some of the broader commercial context, like budgeting priorities, ROI alignment, and long-term cost impact, can be overlooked.

• Are the tools still needed?

• Are usage and value aligned?

• Is the renewal price commercially justifiable?

Too often, finance steps in after a contract is signed. But with renewals representing the majority of spend, finance must have a seat at the table before vendor conversations begin.

Benchmarking Is Not Enough

It’s tempting to rely on benchmarks to validate pricing, but benchmarking only tells you what someone paid, not how they got there. Without context on:

• Deal timing

• Commercial pressure

• Usage thresholds

• Vendor negotiation patterns

You’re negotiating in the dark.

This is where human-led strategy matters. We’ve helped finance teams achieve an average of 29% savings not by switching tools or removing features, but by understanding the negotiation dynamics and applying pressure where it counts.

What Finance Can Do Today

1. Audit usage early - Don't wait until renewal notices hit. Know your value.

2. Map upcoming renewals - Prioritise by contract size and vendor difficulty.

3. Engage cross-functionally - IT, procurement, and finance must align.

4. Ask for help - If you don’t have internal bandwidth, consider external support.

Final Thoughts

SaaS renewals aren't just an IT formality, they’re a financial event. One that, if handled strategically, can drive substantial cost savings without operational compromise.

Finance leaders who lean in early, question the status quo, and apply pressure where it counts will be the ones who reclaim control of their software spend in 2025 and beyond.