AI and software spending is skyrocketing in Europe, and new research warns organizations are failing to curb costs by rationalizing their software bills.

According to analysis from Spendesk, AI spending has risen by 340% in the last year, but finance teams are failing to keep on top of increasingly fragmented and unpredictable spending.

Companies are spending an average of around £213,000 per year on software, while 72% of businesses using AI are paying for two or more competing tools.

All told, Spendesk calculates that almost £6 billion could be saved across Europe by tackling duplicate software.

UK small businesses alone could save almost £399 million by rationalizing their software spend, the company claimed.

Spending volatility

AI-related spending is also highly volatile, according to Spendesk, with six-in-ten of the companies analyzed showing significant month-to-month variations. Bills varied by up to 61% from one month to the next, with peak months for spending costing up to eight times more than low-spending months.

This, the company noted, makes budget forecasting far more difficult and could land some businesses with huge, unexpected bills.

Spending with certain suppliers is growing rapidly, with Anthropic increasing sevenfold in six months, while spending related to Cursor more than doubled.

“We’re entering a new phase of AI in the enterprise. We’ve moved beyond using AI to produce and analyse information; we’re now taking it a step further by entrusting it with part of the work itself,” said Axel Demazy, CEO of Spendesk.

“For finance teams, that means moving from controlling every single flow to letting AI take on the tasks it can handle, while flagging only those that genuinely require human intervention.”

The perils of software duplication

A key concern for businesses lies in software duplication, according to Spendesk, and it’s often a result of neglect. Average license utilization stands at just 49%, meaning that around half the seats a typical company pays for go unused.

Meanwhile, the same software sold to companies the same size, doesn’t cost the same amount twice. Researchers described this as the “scale-up danger zone”, noting that headcount often grows faster than procurement discipline does.

“A company can run 30-plus SaaS tools before it has anyone whose job is negotiating the rate on a single one of them.”

Spendesk said that dealing with this requires benchmarking. Indeed, SaaS vendors are notoriously opaque about pricing, and finance teams can’t negotiate when they don’t know what other companies are paying.

Spend efficiency is also a blind spot, with cost-per-output becoming the metric that separates companies scaling AI profitably from companies just scaling AI spend.

Those that treat AI spend as a strategic input, not a line-item afterthought, will spend the next twelve months pulling ahead of the competition, researchers noted.

“The next step is to connect software and AI spend to business outcomes: the time saved, output generated, customers supported or revenue enabled,” advised the firm.

“A tool may be worth keeping even if it overlaps with another, provided its role is clear and its value can be measured. The question is not simply ‘what can we cut?’ but ‘what is this spend helping the business achieve?’”

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