Software-as-a-Service (SaaS) has become one of the most significant and least governed areas of enterprise technology spend. What began as a faster, more flexible way to consume software has evolved into a complex web of fragmented ownership, overlapping tools, underused licenses, opaque pricing, hidden add-ons, and vendor-led renewals.
For Chief Information Officers (CIOs), this is no longer a procurement issue. It is a strategic control issue.
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The CIO disadvantage
The uncomfortable truth is that many SaaS vendors now understand the enterprise’s usage, dependency, renewal risk, and pricing elasticity better than the enterprise itself. That imbalance is costing enterprises money, flexibility, and control. Most CIOs and their procurement teams are losing leverage because vendors enter the conversation with better intelligence and actively leverage their user lock-in.
The key disadvantages that CIOs are grappling with include:
SaaS ownership is fragmented. Information Technology (IT), Finance & Accounting – Everest Group Research Portal, procurement, legal, security, and business teams each own different parts of the SaaS picture. But no one has a complete, real-time view of the factors below leading to a structural disadvantage.
- Usage: Is usage being tracked properly, or is it exceeding entitlements and creating overages?
- Spend: Is spend aligned with actual consumption, or is the enterprise paying for unused licenses, premium tiers, and hidden add-ons?
- Contracts: Are key terms, price protection clauses, true-ups, auto-renewal clauses, termination clauses, and related terms being tracked before renewal pressure begins?
- Renewals: Are upcoming renewals being planned proactively, or are teams reacting late when vendor leverage is already high?
- Risks: Are security, compliance, commercial, and operational risks being assessed together, or are they managed in silos?
- Business value: Is each SaaS platform delivering measurable value?
Consequently, CIOs often know how much they are paying, but not whether the software is being used well, priced fairly, or creating enough value to justify the next renewal.
SaaS pricing and commercial models are becoming increasingly difficult to track. The transition from seat- to usage-based or hybrid models makes it difficult for enterprises to track usage, forecast spend, and challenge commercial terms.
Vendors exploit this gap:
- They control renewal timelines and create urgency around decision-making
- They frame the product as business-critical, making switching appear more disruptive and riskier than it may be
- They introduce new feature and Stock Keeping Unit (SKU) bundles and propose opaque bundle-level pricing
- They use incomplete usage data available to enterprises to defend current pricing, resist reductions, and keep the renewal conversation on their terms
The result: The enterprise loses negotiation leverage and ends up in a SaaS lock in situation.
SaaS lock-in is no longer just technical
SaaS lock-in is often treated as a technology problem as platforms become embedded in workflows, integrations, data models, and user behavior. In reality, the lock-in is a commercial and operating model problem.
Deeper lock-in comes from poor usage and spend visibility, weak pricing and contractual benchmarks, fragmented accountability, lack of ownership and central license governance body and late-stage renewal decisions.
When CIOs cannot quantify underutilization, redundant functionality, shelfware, price variance, or business value, they cannot credibly challenge the vendor. When procurement enters late, alternatives are theoretical. When business owners are not accountable for adoption and Return on Investment (RoI), consumption continues unchecked.
The enterprise keeps paying because switching feels risky and costly. It accepts price increases because alternatives are not ready. It renews bundles because usage data is incomplete.
The real issue is not that SaaS vendors have leverage. It is that enterprises often give it to them.
AI as the leverage engine
If used effectively, AI can offer three value levers:
- Artificial Intelligence (AI) as negotiation leverage: Every large SaaS vendor will try to become the preferred AI partner for the enterprise. Rather than accepting AI add-ons or SKUs as they are, enterprises should ask vendors how they can help optimize existing spend by eliminating license wastage
- AI as a source of intelligence on demand: AI tools or AI-enabled Software Asset Management (SAM) tools, such as Flexera and ServiceNow IT Asset Management (ITAM), can support better forecasting by analyzing existing usage and entitlements
- AI as an ongoing management tool (control tower): The next evolution in SaaS management is a control tower that moves beyond dashboards to drive executive action. By continuously monitoring spend, usage, contracts, renewals, risk, benchmarks, and value through AI tools, it helps CIOs identify vendors that need intervention, contracts that carry risk, tools that are redundant, users who are over-licensed, AI add-ons with weak adoption, and renewal decisions that require escalation. It also creates cross-functional accountability, allowing CIOs to manage SaaS with the discipline expected of any strategic enterprise investment
But the larger value of AI is not automation. It is leverage. AI helps CIOs walk into vendor discussions with evidence: actual usage, entitlement gaps, adoption patterns, benchmark variance, contractual exposure, business dependency, and viable scenarios. The conversation shifts from asking for a better discount to presenting a data-backed commercial reset.
The impact: shift from negotiating from pressure to negotiating from power.
The shift CIOs must make
CIOs need to move from SaaS administration to SaaS value governance. That means managing SaaS as a strategic portfolio, not as a series of disconnected renewals. Every major SaaS platform should have a clear business owner, usage baseline, value case, benchmark position, renewal strategy, and risk profile.
CIOs can create momentum effectively by following a 120-day execution plan, as the exhibit below shows.
Exhibit: CIOs’ 120-day execution plan
Final thoughts: the vendor has a playbook, CIOs need one too
SaaS vendors will continue to optimize pricing, packaging, bundles, renewals, AI add-ons, and expansion paths. The CIO’s job is to ensure the enterprise does not fund that playbook without discipline.
Taking back control of SaaS requires visibility, benchmarks, accountability, negotiation discipline, benchmarks, and AI-enabled intelligence. CIOs who act now will reduce waste, rebuild commercial leverage, improve risk control, and increase RoI from one of the fastest-growing areas of technology spend.
If you found this blog interesting, check out Everest Group’s viewpoint Managing AI Consumption Costs in Enterprise IT Systems, which provides perspective on AI costs originated by or embedded in Enterprise SaaS systems.
To take the conversation forward, please contact Duttatreya Jena ([email protected]) or Ross Tisnovsky ([email protected]).