""Software procurement has become exceedingly complex, and companies are struggling to reduce spending in an increasingly fragmented landscape. Shifts in the industry - including a surge of new vendors, the rise of open source solutions, the transition from on-premises software to SaaS, new pricing models, frequently changing product offerings, and consolidation among vendors - are all raising the degree of difficulty," it said."
"Its analysis of Gartner's figures shows IT spending has grown 6 percent between 2019 and 2025 to reach about $5 trillion. However, the proportion of the total outlay spent on software has ballooned from 13 percent in 2024 to 21 percent in 2024, and much of that is down to software as a service, the BCG said. In a new paper, the global management consultancy said the shift is making life tough for those in charge of buying software."
"The trend this calls for a new approach to software buying that could slow spending, the consutling gropu adds, but also "reduce complexity in the technology landscape, lower technical debt, and free up cash to reinvest in high-impact areas, such as data, AI, and automation." As well as SaaS, vendors have been introducing commercial models such as consumption-based pricing, rather than per seat or per employee. "Many companies are struggling to track consumption across the enterprise, increasing the risk of cost overruns. These pricing shifts make traditional, flat-rate negotiations obsolete while increasing the risk of 'shelfware' - software that remains underutilized," BCG said."
IT spending rose about 6 percent between 2019 and 2025 to roughly $5 trillion, while software's share of that spend surged from 13 percent to 21 percent, driven largely by SaaS. Procurement complexity is escalating due to more vendors, open-source options, migration from on-premises to SaaS, shifting product lines, new pricing approaches, and vendor consolidation. Consumption-based pricing creates tracking challenges and heightens cost-overrun and underutilization risks. Overemphasis on contract compliance can distract from strategic goals. A redesigned software-buying approach can slow spending, reduce technical debt and landscape complexity, and free funds for data, AI, and automation investments.
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