5 Tech Trends That Will Drive Software License Spending in 2024

In 2024, generative AI is anticipated to be a big force in driving software expenditure. Organizations are expected to increasingly invest in licenses that enable them to harness the capabilities of Generative AI but also to experiment with its potential applications. This trend, combined with the accelerating adoption of SaaS tools, the challenges associated with cloud migration, the evolving landscape of compliance requirements, and the deluge of data facing businesses, will significantly influence software spending patterns.

 These converging trends highlight a growing need for organizations to not just spend on software but to do so strategically, ensuring they derive maximum value from their investments. This scenario underscores the rising importance of software license management solutions in 2024.

1.    The Promise of GenAI

The growing interest and recent growth in generative AI have propelled it to the top of technological priorities for organizations in 2023 and cemented its status as a top strategic tech trend in 2024.

Generative AI promises to be a transformative force in software license management. It presents innovative approaches for managing, utilizing, and optimizing license portfolios.

Overall, GenAI potentially enables organizations to save up to 10% of their IT expenditures. However, the practical implementation of Generative AI in SLM is still largely in the exploratory phase.

C-Suite Leaders: Curious but Cautious

Many business executives approach the implementation of Generative AI with caution, emphasizing the need for a measured and practical strategy. Notably, a majority (52%) of C-suite executives acknowledge their limited understanding of GenAI, and a mere 3% have identified its potential value in organizational contexts.

IT leaders with more than a decade of industry experience tend to place less emphasis on generative AI as a priority compared to newer IT executives. Among these seasoned professionals, only 17% consider GenAI a key focus, whereas 29% of IT leaders with under ten years of experience view it as a more significant priority.

GenAI Headwinds

This cautious stance is further influenced by the lack of GenAI-specific strategic frameworks and governance policies within numerous organizations. Such a gap highlights the need for tailored approaches to integrate GenAI effectively into business operations.

Additionally, the challenge is intensified by a notable skills gap. There is a scarcity of professionals who are proficient in both GenAI technology and specialized domains, such as software license management. This shortage underscores a broader issue in the talent market, where the demand for dual-expertise individuals outpaces the supply.

Moreover, the limited availability of practical use cases poses another obstacle. Without concrete examples demonstrating GenAI’s effectiveness, organizations may struggle to envision its application and impact. Alongside this, concerns about traceability, reproducibility, and particularly data privacy, remain significant barriers. These issues not only affect the willingness of companies to adopt GenAI but also shape the regulatory and ethical landscape surrounding its use.

CIOs: Extremely Optimistic

Contrary to the broader C-suite perspective, CIOs display a notably different stance regarding generative AI. A substantial 82% of CIOs believe their organizations are well-prepared to leverage GenAI as a strategic business resource.

This optimism isn’t limited to leadership levels; it permeates through the employee ranks as well. An overwhelming 84% of IT executives report that their staff members are not only ready but also enthusiastic about integrating AI into their daily workflows. These professionals are eager to explore the various possibilities and advancements that GenAI can bring to their work environment.

Despite this, the promise of SLM solutions, especially those enhanced with advanced AI capabilities, is undeniable. Numerous vendors have already begun incorporating AI into their offerings, ranging from AI assistants to AI-powered vendor contract management and predictive analytics. This marks the onset of a competitive race to develop the most effective AI-driven SLM solution, signaling a significant shift in how organizations will manage their software assets.

2.    Increased Adoption of SaaS Tools

Forrester forecasts that by 2024, an impressive 75% of software investments will be allocated to Software as a Service (SaaS). This will facilitate a significant transformation in organizational software procurement and management strategies. This fundamental shift towards the SaaS paradigm will require companies to adapt their approaches to software access and management.

The move towards SaaS often involves navigating more complex cloud-based licensing models. Unlike traditional software licenses, SaaS subscriptions can vary greatly in terms of usage metrics, user access levels, and service tiers. Companies must realign their IT strategies to effectively manage these cloud-based services. This involves not only a technical shift but also a change in how budgets are allocated and how software value is assessed.

SLM solutions can ease the transition to a SaaS-dominant environment by providing insights into usage and cost patterns, which is vital for making informed decisions about software subscriptions and negotiations with vendors. A comprehensive software license management strategy helps enterprises maintain compliance with licensing agreements and prevent overspending.

3.    Cloud Migration’s Software Licensing Challenges

An estimated 78% of CIOs reported to have migrated most of their operations to the cloud. However, despite this widespread transition, over half report facing difficulties in realizing the expected benefits and outcomes. Additionally, this shift to the cloud brings with it substantial challenges in managing and optimizing software licensing.

 According to Deloitte, many of these unanticipated financial strains are primarily attributed to software licensing costs, compounded by issues like limited license portability, intricate licensing models, vendor lock-in, and inefficient cost management.

Software license management solutions helps organizations capture relevant insights into their licensing situation and plan their migration better. This not only ensures a cost-effective transition but also enables organizations to harness the full potential of cloud-based operations. By addressing issues of license portability, complexity, vendor lock-in, and cost management, SLM tools are essential for navigating the intricacies of cloud migration successfully.

4.    Advanced Data Analytics vs. Data Deluge

According to Salesforce, 73% of business leaders see data as vital for decision-making, but 41% struggle to harness its value due to its complexity. This challenge is further emphasized by a report from Snow, indicating that 46% of IT executives are overwhelmed by data volumes. Consequently, an overwhelming 91% of IT leaders are prioritizing investments in tools and technologies for transforming this data into actionable intelligence.

With the surge in software consumption, the need for deep and effective data analysis, including license utilization and user metrics, is more pressing than ever. Organizations are not just collecting data; they are seeking ways to interpret it meaningfully. As data complexities grow, the integration of sophisticated data analytics in software license management is becoming a key determinant of organizational success and strategic agility.

5.    AI-Driven and Proactive Compliance

A recent study by Accenture reveals a significant trend in the compliance sector: 54% of compliance professionals anticipate that generative AI and machine learning technologies will fundamentally transform compliance processes. Moreover, 93% of these professionals believe that AI will significantly reduce human errors in compliance, leading to unprecedented levels of effectiveness and efficiency in these processes.

As more organizations transition to cloud computing and integrate SaaS tools, they are confronted with an array of new licensing models, rules, and regulatory frameworks. This complex landscape demands a shift towards a more dynamic, AI-driven approach to compliance, essential for staying agile in fast-evolving regulatory environments.

Software license management solutions enhanced with AI capabilities become more essential for organizations. They play a crucial role in effectively managing the intricacies of software contracts, vendor agreements, and compliance requirements.

AI-enhanced SLM solutions enable organizations to shift from a reactive to a proactive stance in compliance, significantly reducing risks such as financial penalties, operational disruptions, damage to reputation, and loss of customer trust.

III. 2024: A Promising Year

2024 is poised to mark a significant milestone in global software expenditure, with total spending projected to surpass the $1-trillion threshold. This surge is especially pronounced in sectors heavily reliant on engineering and specialized software licenses, where the need for advanced technological capabilities is paramount. The advent of new technologies, particularly generative AI, is expected to catalyze further increases in software license spending.

 This trend is sparking a heightened demand for advanced Software License Management (SLM) solutions. Organizations are not only focusing on meeting licensing compliance and embracing cutting-edge technologies but are also keen on optimizing the value of their software investments while strategically minimizing financial risks.

 The evolving technological landscape, spearheaded by these key trends, is set to have a profound impact on the SLM sector, influencing both providers and consumers of these solutions. In response, organizations are increasingly adopting a holistic strategy that skillfully balances financial management, legal compliance, and strategic planning. Such an approach is becoming indispensable for navigating the complex and dynamic market dynamics of the software industry.

Let's talk

We’ll show you how your business can benefit from Open iT solutions.
Please note:
By submitting this form you are agreeing to receive additional communications from Open iT. Your information will be processed in accordance with our Privacy Notice.