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SaaS software costs to increase up to 20% by 2025, says Gartner

Another Gartner prediction – and this one is a doozy.   

According to Gartner projections, the combined effect of inflation, competitive labor markets, and environmental sustainability requirements will lead to 15% to 20% higher SaaS costs by 2025. 

“Although there may be some justification for pricing uplifts due to increased expenses or currency fluctuations, some IT vendors may be opportunistically looking to grow profitability,” Hannah Decker, principal analyst and one of the report’s authors, said in an email to CIO Dive.

From the same article, software spending will rise at a compounded annual growth rate of 10.3% through this year, according to a Forrester report.

Why do we care?

A 20% increase in 3 years to SaaS isn’t necessarily something that most businesses budgeted for.  I’m not saying it’s unreasonable… although it might be… I’m just noting that when customers sign up for service, they generally anticipate a lot less of an increase.

I’m often dismissive of cloud cost control products, and perhaps I need to rethink my stance.    To be sure, planning for this now is essential.   If IT can outpace the cost with increased revenue, the problem does go away.    

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