So 2025 is Good Times Again.
2024 was good, as most SaaS leaders saw growth reaccelerate toward the end of the year. And 2024 was really good in B2B AI.
2025 is already even much better. Google buying Wiz for $32 Billion is the icing on the cake. M&A has doubled. IPOs look to be picking up
But … but …
But every CFO and COO I talk to still talks about “vendor consolidation” as one of their top initiatives in 2025.
- This includes even the fastest-growing start-ups I’ve invested in, not just ones that are trying to manage the burn or manage slower growth.
- This also includes folks who have already been through several rounds of vendor consolidation. I caught up with a COO at a tech leader this week that’s already super lean. But one of the first things he still talked about was cutting a $1m/year SaaS vendor they used.
I thought we’d be kind of through this. You can’t cut your way to growth, and many SaaS and B2B buyers already cut back plenty of vendors in 2022-2024.
And clearly, CFOs are still allocating more and more budget to AI. They feel like they have to. And that often means adding new vendors.
But still, overall, cutting the number of vendors still seems to be a Top 5 initiative for many CFOs and COOs.
Vendor consolidation is clearly benefitting some. Gong has seen re-acceleraton at $300m ARR as it has built out more of platform, even as it was hurt in 2022-2023 by vendor consolidation. It got broader, and benefitted once it did as others were cut instead of them. More on that here:
HubSpot and other platform leaders have cited consolidation as a net benefit, too.
But if you’re a point solution and you’re not feeling any re-acceleration, one reason might be the product itself. But it might also be the product is great, but it just doesn’t do enough. So you’re being cut for a vendor they have that does what you do already, even if plainly not as well.
The trend isn’t behind us.
Zylo’s recent data confirms this. Even with the tremendous growth in AI, the average number of apps per customer is essentially flat. Instead, they’re spending 20% more on average at each vendor, and in many cases, consolidating spend and budget there.
More on that here:
Okta’s data is a bit more optimistic. It see the number of apps up 9% last year.
A bit more optimistic, but given the rise of AI, not necessarily in conflict with vendor consolidation:
