Software-as-a-service (SaaS) costs are rising even as application counts remain relatively flat in Zylo's 2026 benchmark. Organizations in Zylo's 2026 benchmark averaged 305 SaaS applications, while Zylo estimates approximately $19.8 million annually in spending on unused or underused licenses across its benchmarked organizations. As software subscriptions become more complex, many businesses struggle to track what they own, who uses it, and whether it delivers value.
Building custom business software that consolidates multiple tools into a single system can offer an alternative. Platforms like Hercules let non-technical teams create CRMs, ERPs, and operational applications without hiring developers. Kingdom Construction replaced four separate software vendors with one Hercules-built system and reports saving $30,000 annually.
Key takeaways
- SaaS portfolios remain large: Organizations in Zylo's 2026 benchmark managed an average of 305 SaaS applications, despite a slight year-over-year decline in portfolio size.
- SaaS spending keeps rising: Average SaaS spending in Zylo's benchmark reached $55.7 million annually, up 8% year over year even as application counts remained relatively flat.
- Custom software can reduce duplicate subscriptions: Kingdom Construction reports saving $30,000 annually after replacing four software vendors with one Hercules-built system.
- Non-technical teams can build operational systems: MMA Plumbing built a 46-module operating system without traditional development teams, avoiding an agency quote of at least €250,000.
- Consolidation requires cost planning: Hercules can help businesses replace disconnected tools, but subscription and usage costs, testing, and ongoing maintenance still need to be considered.
1. Organizations in Zylo's 2026 benchmark average 305 SaaS applications
According to the 2026 SaaS Management Index, organizations in Zylo's dataset manage an average of 305 SaaS applications. This number has stabilized recently, with application counts declining 0.07% year over year. Large application portfolios can make it harder for IT teams to maintain visibility, enforce policies, and identify redundant tools.
2. Large enterprises averaged 696 SaaS applications in Zylo's 2026 benchmark
Company size directly correlates with SaaS portfolio complexity. In Zylo's 2026 benchmark, enterprises with more than 10,000 employees averaged 696 SaaS applications. Organizations with 501 to 2,500 employees averaged 263 SaaS applications. At this scale, tracking usage, managing renewals, and eliminating duplicates can require dedicated staff or processes.
3. Mid-market SaaS portfolios grew 41% in BetterCloud's 2026 survey
BetterCloud's 2026 survey found that average mid-market SaaS portfolios increased from 116 to 164 applications in one year, a 41% increase. This increase shows how quickly SaaS portfolios grew among mid-market organizations in BetterCloud's surveyed population.
4. AI-powered SaaS applications account for 22% of surveyed portfolios
AI-powered SaaS applications, including AI-native tools and applications with AI features, now represent 22% of surveyed portfolios in BetterCloud's 2026 research. This rapid adoption of AI-powered tools adds new complexity to SaaS management as organizations evaluate unfamiliar vendors and emerging capabilities.
MMA Plumbing faced tool fragmentation before consolidating. The company replaced Exact and Visma with a 46-module operating system built on Hercules. Its founder reports that development agencies quoted at least €250,000 for similar functionality.
5. Organizations in Zylo's benchmark spend an average of $55.7 million annually on SaaS
Organizations in Zylo's 2026 benchmark spent an average of $55.7 million annually on SaaS, an 8% year-over-year increase. This is a benchmark for Zylo's measured portfolios, not an estimate for all businesses. SaaS represents a major budget line item for the organizations included in the research.
6. Total SaaS spending increased 8% year over year despite flat portfolios
Application counts have stabilized, but spending has not. Total SaaS spend increased 8% year over year even as portfolio sizes remained flat. This disconnect comes from price increases at renewal, consumption-based billing, and new AI features that carry premium pricing.
7. Organizations waste an estimated $19.8 million annually on unused SaaS licenses
Zylo's 2026 data estimates that organizations in its benchmark waste approximately $19.8 million annually on unused or underutilized SaaS licenses. License utilization improved from 47% to 54%, a gain of 7 percentage points, but substantial waste remains.
8. 61% of organizations cut projects due to unplanned SaaS costs
SaaS sprawl can constrain what businesses invest in elsewhere. In Zylo's 2026 research, 61% of organizations reported cutting projects or initiatives because of unplanned SaaS cost increases. Unexpected subscription charges can force businesses to postpone other spending.
For businesses looking to reduce SaaS dependency, building custom software offers an alternative. Petony Transportes consolidated its operations into a single ERP built on Hercules, avoiding a $230,000 agency quote and gaining more control over its software workflows.
9. Business teams account for 81% of SaaS spending
SaaS purchasing has become decentralized. Zylo's 2026 research reports that line-of-business owners are responsible for approximately 81% of SaaS spending, showing how purchasing decisions have shifted away from centralized IT oversight. Decentralized purchasing can create visibility gaps when finance, marketing, sales, and operations teams do not follow shared IT approval processes.
10. Only 56% of SaaS applications have IT approval
Shadow IT refers to software adopted without official approval. It remains a common governance concern. BetterCloud's 2026 survey found that 56% of applications in use had IT approval, leaving a substantial share outside formal IT oversight. Employees sign up for free trials, expense small subscriptions, or use personal accounts for work purposes. Each unsanctioned application represents a potential security gap.
11. 21% of organizations discovered unsanctioned SaaS or AI tools in the past year
BetterCloud's 2026 survey found gaps in organizations' visibility into their SaaS applications. In the survey, 21% of organizations reported discovering previously unsanctioned SaaS or AI tools during the previous 12 months. Operating with incomplete information makes it difficult to identify redundancies, manage costs, or enforce security policies.
12. 20% of organizations discovered public sharing of sensitive data
Shadow IT creates financial and security concerns. BetterCloud's 2026 survey found that 20% of organizations detected sensitive corporate data being shared publicly during the previous 12 months. Unapproved applications can make sensitive information harder to monitor and protect.
For organizations concerned about data security, building internal tools with a platform like Hercules can provide more control. The Business plan supports configurable scheduled database backups and single sign-on for apps using Hercules Auth 2.0. Businesses should configure authentication and access permissions for each application.
13. In BetterCloud's 2026 survey, 18% of respondents reported discovering data leaks originating from AI tools or chatbots
AI adoption introduces new security considerations. In BetterCloud's 2026 survey, 18% of respondents reported discovering data leaks originating from AI tools or chatbots. As AI-powered applications proliferate, monitoring their data handling becomes essential.
14. Zylo reports average renewal savings of 5%–10% per application
Active SaaS management can reduce costs. Zylo reports seeing average savings of 5%–10% per application through its renewal management practices. These savings can come from eliminating unused licenses, negotiating better terms, and consolidating redundant tools.
15. Organizations manage an average of 211 SaaS renewals annually
Zylo's 2026 data estimates that organizations manage an average of 211 SaaS renewals a year, creating a significant workload for tracking contracts and negotiating terms. Managing hundreds of applications with different contract cycles is operationally difficult without dedicated tools or processes.
16. 53% of IT teams consolidated redundant SaaS apps in 2024
More than half of surveyed IT teams reported addressing redundancy in 2024. In BetterCloud's 2024 report, 53% of IT teams reported consolidating redundant SaaS applications. BetterCloud's 2025 report found that 33% of organizations consolidated redundant apps or accounts. These findings come from different annual survey populations and should not be treated as directly comparable measurements of the same organizations.
17. SaaS portfolios grew 11% year over year in BetterCloud's 2026 survey
BetterCloud's 2026 survey found that average SaaS portfolio size increased 11% year over year following two years of consolidation. This finding reflects BetterCloud's survey population and differs from Zylo's dataset. The increase suggests that earlier consolidation efforts have not prevented SaaS portfolios from expanding within BetterCloud's surveyed population.
Building custom software is one path forward. Helixon Law built more than 40 applications using Hercules, including a proposal system that replaced disconnected tools and, according to the founder's estimate, improved close rates by 30%.
18. AI-native SaaS spending increased 108% year over year
AI-native SaaS spending is increasing sharply in Zylo's benchmark. Spending on AI-native SaaS applications increased 108% year over year. This dramatic growth reflects organizations adopting AI capabilities while evaluating unfamiliar vendors and pricing models.
19. AI was the fastest-growing application category, expanding by 181%
AI was the fastest-growing application category in 2025, with the number of applications in that category increasing by 181%. This expansion rate outpaced other software categories in Zylo's dataset and demonstrates how quickly AI applications are entering business software portfolios.
20. AI-native spending at large enterprises rose 393%
Large enterprises recorded particularly strong growth in AI-native SaaS spending. AI-native spend at large enterprises increased 393% year over year, reflecting how organizations with greater resources increased their investment in AI-powered tools.
21. 78% of IT leaders report unexpected charges from AI and consumption pricing
AI and consumption-based pricing models create budget unpredictability. In Zylo's research, 78% of IT leaders reported unexpected charges tied to consumption-based or AI features. Similarly, 79% of IT leaders reported SaaS renewal price increases during the previous 12 months. This cost volatility makes forecasting difficult and can force mid-year budget adjustments.
22. 60% of IT leaders lack visibility into all generative AI tools in use
The shift toward AI features has created visibility challenges. 60% of IT leaders lack visibility into all generative AI tools in use, and 77% of IT leaders discovered AI-powered features operating without IT's awareness. This gap makes it difficult to assess risk, manage costs, or enforce governance.
How Hercules helps businesses reduce SaaS sprawl
SaaS sprawl often happens because off-the-shelf software does not fit a business's exact needs. Teams subscribe to multiple tools to cover gaps, creating fragmented software stacks. Building custom software tailored to your operations offers a different approach.
The Hercules app builder helps non-technical teams create custom business applications by describing what they need.
- Consolidate multiple tools: MMA Plumbing replaced two enterprise software vendors with a 46-module operating system built on Hercules, reducing duplicate software costs and manual data transfers.
- Reduce subscription costs: Kingdom Construction reports saving $30,000 annually after replacing four software vendors with one Hercules-built system.
- Maintain control: Hercules supports custom workflows, authentication, and configurable access permissions. Commercial use requires a Business or Enterprise plan under the current terms.
- Plan for ongoing costs: Hercules subscriptions, AI Credits for development, Cloud Credits for hosting and usage, testing, integrations, and maintenance should be included when comparing costs.
These outcomes are customer-reported results, not guaranteed savings. Compare the full cost of building and running your application with the subscriptions you plan to replace.
Frequently asked questions
What is SaaS sprawl and why is it a problem for businesses?
SaaS sprawl refers to the uncontrolled growth of software subscriptions across an organization. It becomes a problem when companies lose track of what they own, pay for redundant tools, or leave licenses unused. Zylo's 2026 benchmark reports an average of 305 SaaS applications, while Zylo estimates approximately $19.8 million annually in spending on unused or underused SaaS licenses across its benchmarked organizations.
How does SaaS sprawl impact a company's budget and financial health?
SaaS sprawl creates direct waste through unused licenses and indirect costs through duplicate tools and lost productivity. Organizations in Zylo's 2026 benchmark spent an average of $55.7 million annually on SaaS, and 61% cut projects due to unplanned SaaS cost increases. Total spending increased 8% year over year even as portfolio sizes stayed flat.
What are the main security risks associated with unmanaged SaaS subscriptions?
Shadow IT refers to software adopted without IT approval. It is one of the security concerns associated with unmanaged SaaS. BetterCloud's 2026 survey found that only 56% of applications in use had IT approval. In the same survey, 18% of respondents reported discovering data leaks originating from AI tools or chatbots. Additionally, 21% of organizations discovered previously unsanctioned tools in the past year, making it difficult to identify and address vulnerabilities.
Can building custom applications help mitigate SaaS sprawl and shadow IT?
Yes. Custom applications can consolidate multiple SaaS tools into a single system that fits your workflow. Kingdom Construction replaced four software vendors with one Hercules-built application, reporting $30,000 in annual savings. MMA Plumbing replaced two enterprise software systems with a 46-module operating system. Building internally can improve IT oversight when access, permissions, integrations, and software usage are managed centrally.
What is the role of AI in effective SaaS management?
AI creates both challenges and opportunities for SaaS management. AI-native application spending increased 108% in one year, and 78% of IT leaders reported unexpected charges from AI features or consumption-based pricing. At the same time, AI-powered platforms can help organizations build custom applications that replace multiple SaaS subscriptions. Platforms like Hercules use AI to help non-technical teams create tailored business software without hiring developers.