Businesses are paying for software nobody uses. According to Zylo's 2026 SaaS Management Index, SaaS license utilization increased from 47% in 2024 to 54% in 2025, while average annual license waste declined from $20.9 million to $19.8 million. This still leaves 46% of licenses outside the reported utilization rate.
AI-powered no-code platforms like the Hercules app builder help businesses build custom software that fits their operations. For suitable projects, this can reduce reliance on multiple off-the-shelf subscriptions, although businesses still need to account for Hercules plans and cloud usage costs.
Key takeaways
- Nearly half of SaaS licenses remain unused or underutilized: License utilization reached 54% in 2025, leaving 46% outside the reported utilization rate.
- Annual license waste averages $19.8 million in Zylo's benchmark: Organizations in Zylo's 2026 SaaS Management Index wasted an estimated $19.8 million annually on unused software licenses.
- SaaS sprawl consumes a substantial share of budgets: VendorBenchmark reports median waste of 34% of SaaS budgets across its benchmark of 500 enterprises.
- The no-code AI market is projected to grow: Grand View Research estimated the market at $5.35 billion in 2025 and projects it will reach $44.15 billion by 2033.
- Custom software can replace multiple vendors: MMA Plumbing built a 46-module operating system on Hercules, replacing multiple software vendors after receiving development agency quotes of at least €250,000.
1. License utilization rose from 47% to 54%, leaving a 46% gap
License utilization climbed from 47% in 2024 to 54% in 2025, showing improvement. However, this still leaves 46% of provisioned licenses outside the reported utilization rate. Progress is slow relative to the scale of waste.
2. License utilization was 36 percentage points below the recommended 90% level
Beyond zero-usage licenses, many more remain underutilized. Zylo reports a 54% license utilization rate, 36 percentage points below its recommended minimum of 90%. This benchmark gap does not mean that 36% of licenses have zero usage. Organizations often purchase more seats than needed to accommodate future growth that never materializes.
3. 16% of SaaS licenses were completely unused by August 2026
Fully unused software licenses accounted for 16% of licenses by August 2026, according to Vertice's third-quarter analysis. Another 46% fell into its underutilized category, defined as software with less than half of purchased seats in use. The findings draw on Vertice's managed spending data and use a different methodology from Zylo's utilization benchmark. Businesses need to track both completely inactive licenses and tools with more seats than employees need.
4. Average annual license waste reached $19.8 million in Zylo's benchmark
Zylo's 2026 analysis shows average annual license waste of $19.8 million among organizations in its benchmark, down 5.3% from $20.9 million the year before. While the trend is improving, the absolute dollar amount remains substantial. This is a benchmark based on Zylo's enterprise-focused dataset, not a spending estimate for every business.
5. 34% of SaaS budgets fund sprawl and redundant applications
Organizations in VendorBenchmark's 2025-2026 enterprise dataset had median waste of 34% of their SaaS budgets from unmanaged sprawl, unused licenses, redundant applications, and over-provisioned tiers. This finding comes from a vendor benchmark covering 500 enterprise organizations, rather than a representative sample of all businesses.
6. Average annual SaaS spending reached $55.7 million in 2026
Organizations in Zylo's 2026 SaaS Management Index spent an average of $55.7 million annually on SaaS, an 8% increase year over year. The average portfolio contained 305 applications, with application counts remaining nearly flat. These results show that organizations can face rising subscription costs even without adding substantially more software.
7. About half of installed software went unused in a 2023 analysis
A February 2023 Nexthink study found that 49.96% of installed software went unused across its analyzed customer environments. Based on licensing costs for more than 30 software tools, the study estimated approximately $45 million in monthly waste within its dataset. These are historical findings from Nexthink's analyzed environments, not a current global waste rate.
8. Organizations with 1,000 to 5,000 employees had $1.8 million in median annual SaaS waste
Organizations with 1,000 to 5,000 employees managed a median of 148 SaaS vendors with a 29% sprawl rate and $1.8 million in median annual waste. These figures come from VendorBenchmark's 2025-2026 enterprise dataset. Even mid-sized organizations can face substantial software cost leakage.
9. Organizations with 5,000 to 15,000 employees had $4.2 million in median annual SaaS waste
Organizations with 5,000 to 15,000 employees had a median of 287 SaaS vendors with a 34% sprawl rate and $4.2 million in median annual waste. As company size increases, so does the complexity of managing software subscriptions.
10. Organizations with 50,000+ employees had $22.4 million in median annual SaaS waste
The largest organizations face the biggest challenge. Enterprises with 50,000 or more employees had 840 or more SaaS vendors, a 41% sprawl rate, and $22.4 million in median annual waste in VendorBenchmark's dataset.
Custom software can reduce reliance on separate vendors. Kingdom Construction reports saving $30,000 annually after replacing four software vendors with a Hercules-built application.
11. 81% of SaaS spend is controlled by business units, not IT
The decentralization of software purchasing has accelerated. Zylo reports that 81% of SaaS spend is controlled by business units, with IT directly managing just 15%. This shift makes tracking and optimizing subscriptions more difficult. However, business-unit spending is not automatically unauthorized or classified as shadow IT.
12. Only 56% of SaaS applications had IT approval in a 2026 survey
Just 56% of SaaS applications carried IT approval, according to BetterCloud's 2026 State of SaaS report. The research surveyed 525 IT and security professionals at SaaS-first organizations. Applications operating without IT approval can create visibility gaps, duplicate spending, and additional security risks.
13. 21% of organizations discovered unauthorized SaaS or AI tools
BetterCloud's 2026 research found that 21% of surveyed organizations discovered new, unauthorized SaaS or AI tools in use during the previous 12 months. Unapproved applications can overlap with existing software and operate outside standard purchasing and security reviews. Maintaining a centralized software inventory can help businesses identify these tools before additional subscriptions accumulate.
14. 78% of IT leaders faced unexpected AI and consumption charges
When using AI tools, costs can escalate quickly. In Zylo's 2026 survey of 218 IT leaders, 78% reported unexpected charges tied to consumption-based or AI features in the previous year. Setting clear policies for reviewing costs and managing access is essential.
15. 79% of IT leaders encountered SaaS renewal price increases
SaaS renewals can create new financial pressure even when businesses keep the same applications. According to Zylo's 2026 research, 79% of surveyed IT leaders encountered price increases during SaaS renewals in the previous 12 months. Reviewing contracts before renewal dates can help organizations compare alternatives and avoid paying for unnecessary licenses or features.
16. 61% of surveyed IT leaders reported cutting projects because of unplanned SaaS costs
Unexpected subscription increases can affect other business investments. Zylo's 2026 survey found that 61% of IT leaders reported cutting projects or initiatives because of unplanned SaaS cost increases. The finding illustrates how unpredictable software spending can reduce the budget available for other priorities.
17. Spending on AI-native SaaS applications increased 108% year over year
AI software spending is growing rapidly. Zylo's 2026 SaaS Management Index found that spending on AI-native applications increased 108% year over year across its analyzed organizations. Large enterprises with more than 10,000 employees experienced even faster growth. Businesses adopting AI tools need to monitor usage-based fees and compare the costs of overlapping applications.
18. SaaS application development portfolios grew 81% in application count
Application development was the second-fastest-growing SaaS category by application count in Zylo's 2026 analysis. The number of tools in this category increased 81% during 2025. The finding reflects growth in application development software within SaaS portfolios, not adoption of no-code platforms specifically. Businesses evaluating these tools should consider whether they can consolidate development and operational workflows.
19. The no-code AI platforms market is projected to reach $44.15 billion by 2033
An alternative to managing subscription sprawl is building custom software that fits business needs. Grand View Research estimated the global no-code AI platforms market at $5.35 billion in 2025 and projects it will reach $44.15 billion by 2033, growing at a 30.2% compound annual growth rate. This forecast covers a broad range of no-code AI technologies, not just conversational app builders, and does not directly measure subscription replacement.
20. The low-code development platform market is projected to reach $376.92 billion by 2034
The global low-code development platform market was valued at $37.39 billion in 2025, according to Fortune Business Insights. The research projects the market will reach $376.92 billion by 2034, representing a 29.10% compound annual growth rate from 2026 to 2034. Low-code platforms reduce the amount of coding required to build applications, while no-code platforms allow users to create software without writing code. The two market forecasts use different definitions and should not be treated as directly comparable.
How Hercules helps businesses reduce software subscription costs
Hercules is an AI-powered app builder that lets teams create custom applications through natural-language instructions. Businesses can build workflows around their needs instead of relying on separate software subscriptions for every task.
- Replace multiple software vendors: MMA Plumbing says its 46-module operating system replaced multiple software vendors.
- Reduce annual software costs: Kingdom Construction reports saving $30,000 annually after replacing four vendors.
These are customer-reported outcomes, not typical or guaranteed savings. Custom applications can consolidate related workflows, but they still require testing, maintenance, and ongoing costs. Compare your current subscriptions against the full cost of building and operating an app, including Hercules pricing, AI Credits, Cloud Credits, and third-party charges. Under Hercules's October 11, 2026 terms, commercial use requires a Business or Enterprise plan. Free and Pro plans are for noncommercial use. The right choice depends on the workflows you need and the total cost over time.
Frequently asked questions
What is SaaS subscription waste?
SaaS subscription waste refers to money spent on software licenses that go unused or underutilized. This includes licenses for employees who never log in, seats purchased beyond what teams need, and subscriptions for tools with overlapping functionality. Zylo's 2026 benchmark estimates average annual license waste of $19.8 million among organizations in its analyzed dataset.
How does shadow IT contribute to SaaS waste?
Shadow IT describes software tools that employees use without IT department approval or oversight. Zylo reports that 81% of SaaS spend is controlled by business units, but decentralized purchasing does not necessarily mean software use is unauthorized. Shadow IT can duplicate functionality the organization already pays for through approved software.
What are the best strategies for managing multiple SaaS subscriptions?
Effective subscription management starts with visibility. Key practices include maintaining a centralized software inventory, tracking actual usage against purchased seats, reviewing renewals before auto-renewal clauses trigger, and consolidating tools with overlapping functionality. Organizations can also consider building custom applications to replace multiple subscriptions.
How can AI assist in optimizing cloud and SaaS costs?
AI can help identify usage patterns, flag underutilized licenses, and recommend optimization opportunities. However, 78% of IT leaders in Zylo's 2026 survey reported unexpected charges tied to consumption-based or AI features in the previous year. When using AI tools, set clear policies for reviewing costs and managing access.
What kind of financial savings can businesses expect from effective SaaS waste reduction?
Savings depend on the project. Kingdom Construction reports saving $30,000 annually in software costs. MMA Plumbing says it avoided quotes of at least €250,000 from development agencies, while Petony Transportes reports avoiding $230,000 in outsourced development costs. Avoided quotes are not verified net savings. To estimate your potential savings, compare your existing software costs with the full cost of building, testing, and running a custom application.