SaaS costs are rising three times faster than inflation, with Microsoft and Salesforce leading the charge, prompting IT departments to rethink budgeting and vendor strategies.
SaaS costs rise faster than inflation
A survey published in May found that the cost of SaaS subscriptions has increased three times faster than general price inflation over the past three years. This trend highlights a growing concern for IT departments managing digital budgets.Microsoft raises subscription prices
On July 1, 2026, Microsoft raised the price of its Microsoft 365 E3 subscription from 32 to 39 dollars per user and per month, a 22% increase. Other Microsoft products like Office 365 E3 and the F1 license for field employees saw even higher increases of 24% and 50%, respectively.Annual cost increase for IT departments
According to Cigref and Asterès, IT departments report an 8.7% annual increase in the cost of their cloud and software services over the last three years. This is significantly higher than the 5.8% increase reported in a similar survey in 2022.Inflation and software pricing comparison
Insee reported an average annual inflation of 2.6% over the past three years, with prices increasing by 8% overall. In contrast, software rental costs have surged by 28%, showing a much steeper rise.Future projections for IT spending
The same study predicts that cloud and software costs will absorb 42% of the digital budget by 2030 at the current rate. Currently, these costs already make up 28% of the budget, signaling a major shift in IT spending priorities.Dominance of major suppliers
The top five SaaS suppliers control 53% of the IT budget, with Microsoft being the most frequently mentioned. This concentration of market power influences how IT departments allocate their resources and negotiate terms.Cost-cutting strategies by IT departments
To offset rising costs, 47% of IT departments have reduced other digital expenditures. ESN (external service network) services are the most commonly cut, with 57% of departments reducing them.Economic model changes in IT departments
The rising costs are not only increasing expenses but also shifting priorities, favoring existing software solutions over company-specific projects. This is leading to a significant transformation in the economic models of IT departments.Common issues reported by IT departments
IT departments have reported several practices that contribute to rising costs, including lock-in (40%), AI activated by default (32%), planned obsolescence (30%), bundled offers (26%), and changes in billing units (21%).Bundled offers and pricing changes
Bundled offers are a common example of rising costs, with Salesforce increasing its Enterprise and Unlimited editions by 6% in August 2025. AI functions were moved to complementary modules, increasing the overall cost without changing the base license price.Shift in economic models
The acquisition of VMware by Broadcom in 2023 marked the end of perpetual licenses and signaled a shift in economic models. This move was primarily driven by revenue optimization rather than offering new features.Rising costs in European cloud providers
European cloud providers, represented by the CISPE, reported license cost increases between 800% and 1,500%. This reflects a broader trend of rising SaaS costs across the region.Impact on European economy
The additional cost of these rising SaaS subscriptions is estimated at 140 billion euros for Europe between 2026 and 2030, with 93 billion euros leaving the European economy permanently.Survey methodology and potential bias
The survey was conducted by Cigref, which represents IT buyers. The study is based on 54 IT departments that have opened their IT costs, which may introduce a potential bias in the reported figures.Emergence of new and cooperative models
The rising costs are creating opportunities for new entrants and cooperative models around open-source solutions. The Data Act, effective January 12, 2027, will also impact how cloud providers charge for changing suppliers.Reconsidering technical architecture
As software rental costs rise and AI reduces construction costs, IT departments may need to reconsider their technical architecture and whether to build in-house or rent. This shift could influence hiring practices and the use of AI agents.Collaborative negotiation strategies
Negotiating collectively, especially in public services with similar needs, could help IT departments manage rising costs. A "SaaS tenant association" might be more effective than individual negotiations, leveraging the collective weight of groups like Cigref or CISPE.
