Why Cost Optimisation Now Tops the CIO Agenda
IT procurement in a recession is no longer a contingency exercise — it is the main event. Around 60% of CIOs believe a recession is likely or already under way, and for the first time cost optimisation has overtaken security as the top IT priority, named by 84% of CIOs. With average SaaS spend running at roughly $55.8M per company and around $11,530 per employee, software is where the scrutiny lands hardest. Every renewal is now interrogated for evidence, not promises.
The instinct in a downturn is the across-the-board cut — trim every line by the same percentage. That is the approach that destroys capability while leaving waste untouched. The disciplined alternative is to cut by capability risk, in sequence, which is the same prioritisation logic that runs through our contract negotiation strategy guide and our contract-first budget optimisation approach.
The Safest First Cut: Shelfware
Shelfware — licences paid for and never used — is the only cut with zero capability cost, which is why it always comes first. Around 93% of organisations carry some shelfware, and close to a third of enterprises waste at least 21% of their software spend on neglected licences. A login-based utilisation review routinely finds that nearly a third of licences are dormant. Reclaiming those at the next renewal removes cost the business will never feel.
The discipline of measuring true consumption before every renewal is the foundation of our guidance on software licence true-up and on total cost of ownership — both of which depend on knowing what you actually use, not what you bought.
In a downturn, the first money you save should be money the business never notices is gone. Shelfware is exactly that — and most enterprises are sitting on more of it than they think.
Speed matters in a downturn, but so does proof. A finance team under pressure will question every claimed saving, so each reduction needs to be evidenced rather than asserted — login data showing dormant licences, deployment records showing over-provisioning, benchmark figures showing an above-market rate. The enterprises that move fastest in a contraction are the ones that already have this visibility instrumented before the pressure arrives; those starting from a blank inventory lose weeks building the evidence base while the budget hole grows. The lesson most CIOs draw from one downturn is to keep the utilisation data live permanently, so the next contraction can be answered in days rather than months.
Renegotiating Mid-Term
A downturn improves your odds of mid-term relief because the vendor is under revenue pressure too — but the lever is exchange, not demand. Vendors resist headline licence reductions, yet they will deal to protect committed revenue. The move is to trade something they want — a multi-year extension, an early renewal that pulls revenue into their current fiscal year, a reference, or expansion in another product area — for relief on price, payment terms, or added entitlements. Frame every ask as a swap, and build the position on the leverage principles in our vendor negotiation leverage guide.
Downsizing Rights and Right-Sizing
The structural protection a downturn teaches you to value is the downsizing right: a contractual ability to reduce licence counts at renewal to match headcount. Without it, a 15% workforce reduction still leaves you paying for 100% of the licences. Negotiate downsizing rights into every renewal now, while you have the rationale, so the next contraction translates directly into cost relief. Pair this with right-sizing over-provisioned tiers — moving users off premium editions they do not use — which the 2026 procurement best-practices guide treats as standing discipline rather than a crisis response.
| Cut, in Order | Capability Risk | Typical Saving |
|---|---|---|
| Eliminate shelfware | None | 10–25% of licence spend |
| Right-size tiers | Low | 5–15% |
| Defer / phase new spend | Low–Medium | Varies |
| Reduce used services | High | Last resort |
The AI Tax Trap in a Downturn
The defining 2026 trap is the "AI tax": vendors hardcoding 15–25% renewal increases justified as the cost of new AI capabilities, whether or not you use them. Because the increase is tied to the vendor's own investment rather than your usage or ROI, conventional value arguments gain little traction. Push back by demanding the AI features be unbundled and separately priced, refusing to fund capabilities you have not adopted, and benchmarking the underlying product against its pre-AI baseline. Vendor-specific patterns — including how SAP and Oracle are positioning AI add-ons — are tracked on our SAP and Oracle intelligence hubs.
Defer, Don't Just Cut
Not every saving has to be permanent to count this year. Deferring discretionary new spend, phasing rollouts, and renegotiating payment terms to ease cash flow all reduce in-year outlay without destroying capability — and in a downturn, vendors are often willing to extend terms to keep deals alive. Sequence the toolkit by risk: shelfware first, right-sizing second, deferral third, and genuine service reduction only as a last resort. For a structured review of your estate that finds the safe cuts before the painful ones, request a confidential briefing, or download our CIO contract governance white paper to put the discipline on a permanent footing.