ChatGPT Creates a Shadow App Headache
- By CDOTrends editors
- June 26, 2023
ChatGPT adoption has skyrocketed. But while articles talk about the rise in productivity, it also creates pressure on SaaS spend.
That's conclusion from the recent 2023 State of SaaS Series report from Productiv, a SaaS management company.
The report analyzed how nearly 100 million SaaS licenses were used over the last three years—including more than 100 billion app usage data points—to produce the first of a three-part series released over the summer that provides an in-depth look at crucial SaaS stats and insights on SaaS growth, spend, consolidation and usage.
In the report, the company calls for procurement, IT and finance to take immediate action to rationalize their SaaS portfolios before spending and governance challenges spiral out of control.
“Our data demonstrate the path to immediate action for CFOs is to better identify and consolidate SaaS apps, given the cost reduction pressures currently facing every company,” said Jody Shapiro, chief executive officer and co-founder of Productiv. “Buying and renewing software never stops, but the best procurement practices require collaborative decisions using data across IT, procurement, finance and functional leadership on what software to purchase, renew, downsize and consolidate.”
During a time when companies have been looking closely at cost control, Productiv found that SaaS portfolios continued to grow 32% between 2021 and 2023 to reach an all-time high: organizations now use 371 SaaS apps on average. Data suggest businesses have tried establishing better procurement and governance practices around SaaS, as shadow IT dropped by 8% from 2022. But employees and lines of business continue to purchase software outside of IT control at high rates—51% of SaaS apps in organizations still remain shadow IT—indicating much room for improvement.
According to Productiv’s data, one-year contracts increased annually as a proportion of all contracts from 79% in 2020 to 85% in 2022, suggesting companies are avoiding being locked into an app and its associated cost if their needs change.
Productiv also linked the continuing increase in SaaS spend to the popularity of ChatGPT. The departments using ChatGPT the most include Marketing, Engineering and Product.
“Given our report reveals widespread shadow use of ChatGPT, it’s time for companies to figure out how to foster innovation using ChatGPT without security risks,” said Aashish Chandarana, chief information officer at Productiv. “To avoid shadow IT, organizations need to develop appropriate SaaS governance policies that help teams take their free and purchased apps out of the shadows and ensure the right level of corporate policies for procurement, security and compliance.”
ChatGPT adoption has skyrocketed. But while articles talk about the rise in productivity, it also creates pressure on SaaS spend.
Image credit: iStockphoto/gorodenkoff