Cledara automatically classifies SaaS purchased into one of more than 70 different categories. This helps people understand what SaaS is available in their company, CIOs to understand the structure of their company’s SaaS stack and it creates a rich set of data for us to understand how companies apportion their software budget across different types of tools.
How does a tech startup spend their software budget?
We decided to dig into the data to understand how the tech startups that use Cledara apportion their spending across different types of tools. Developer tools account for the largest single category of spend, with companies spending nearly double per month on developer tools than collaboration tools, the next largest category. This intuitively makes sense, you’d expect tech startups to spend a lot on building technology, but what is a surprise is that companies are spending more on developer tools than they are on all ‘customer’ related software categories like CRM and marketing.
SaaS spend is very concentrated
Spend is quite concentrated, while a 50 person company has on average 45 SaaS subscriptions and we classify subscriptions across more than 70 different categories, the top 9 categories account for 82.9% of software spend.
Drilling down to the individual subscription level, on average, the three largest software subscriptions paid for by a tech company account for an average of 42.9% of their total software budget. From this we can see three things:
- The tail in SaaS is very long - the other 43 subscriptions an average company has accounts for only 57% of spend
- There is a massive opportunity for smaller SaaS companies to win a greater share of wallet from their existing customers and so they shouldn’t be shy with pricing
- There is a potential argument for consolidation in the SaaS sector - the larger vendors appear to be very successful winning a large share of wallet, so there may be opportunity for cross sell by existing vendors to their customer base
This level of concentration also applies at the category level. Looking only at developer tools, the three most popular tools in the category used by tech startups that use Cledara, account for 56% of spend in the developer tools category. And that’s before you start to piece together how much money companies pay to Atlassian every month for the different products they offer.
What are the most popular SaaS tools used by tech startups?
Cledara has the ability to track data about the different SaaS tools used by different types of companies on an anonymous basis. In time, we’ll use this data to help companies make buying decisions based on the tools used by similar types of companies. In the meantime we’re curious about what the most popular types of tools are, how they compare for different types of companies (startup vs non-startup, by geography, stage etc) and what the most popular tools are in each software category. Here’s a sneak preview:
- Developer tools: Heroku
- Collaboration: LucidChart
- CRM: Pipedrive
- Business Productivity: GSuite
- Human Resource Management: BambooHR
- Customer Support: Helpscout
- Social Media Marketing: Netfeedr
- Data Visualisation: Tableau
- Analytics: Mode