Inside Software 11.23.25 - What 200+ CIOs just told us about FY26 software spend
Every other week we’ll provide updates on the latest value levers and trends operators are asking us about in Technology and Software. If there are things you want to hear more about - shoot us a note.
Back in the early COVID days there was a lot of hand-wringing about software budgets, so my colleagues Greg Fiore, Adam Barrowclough and Grant Kieffer decided to just ask CIOs directly. That was Round 1 in March 2020. We’ve kept it going ever since—now at Round 17—so we can see how sentiment actually changes over time, not just this quarter’s vibes.
The Budget Outlook: A New Normal (Not 2021)
The headline: budgets are nudging up, not roaring back. CIOs feel a bit better about the macro and most expect modest increases in 2026. Europe, despite more uncertainty, is flashing its strongest “we plan to spend more” signal in 3+ years. Translation: the punchbowl from 2021 is gone, but the party isn’t over—it’s just got a tighter guest list and a dress code.
That selectivity shows up everywhere. Renewals aren’t rubber-stamped, expansions come with tougher questions, and discount pressure is up. Public SaaS tells the same story: revenue growth re-accelerated (+13% YoY in Q2’25), but NRR has reset around ~108% (down from ~116%) and GRR has drifted toward ~94%. Growth is back—but you have to earn it.
How AI Is Hitting Budgets (Without Getting a Blank Check)
AI still gets attention and dollars. 80% of companies expect to increase AI spend in 2026. But there’s an emerging 8% cutting back because pilots didn’t pay off - this is a marked change, an acknowledgement that companies may have spend money on projects with limited yield. And despite all the hype, workforce impact is still muted: ~25% say they’ve slowed hiring due to AI, and only ~3% report direct headcount reductions. The CFO question—“where are the savings?”—is still hanging in the air.
Where the Money’s Actually Going (The Useful Bit)
Security remains the most protected line item, AI is now right behind it, and on-prem infrastructure is still the first place many would trim if cuts are required. Inside the app stack, analytics/BI continues to attract investment while most horizontal suites sit roughly flat. Net out: buyers will pay for clearer insights and faster outcomes; they’ll defund whatever looks like shelfware or legacy plumbing.
What This Means for Software Leaders
Plan for discipline, not a tide that lifts all boats. Know where you sit on the “grow vs. cut” map by category and buyer segment; aim your pipeline and pricing accordingly.
Pressure-test—and deliver on—your value prop. If you accelerate a critical workflow, unlock high-value data, or solve a real business problem, buyers will find budget. Make the proof visceral: time-to-value, outcomes dashboards, and referenceable wins.
Get crisp on strategy and GTM execution. Where are you on the penetration curve? What’s actually driving growth in your slice of the market? For adjacencies/cross-sell, nail the persona, motion, and your right to win—and arm Customer Success with playbooks that expand usage without reflexive discounting.
Note: The opinions expressed in this article are my own and do not represent the views or specific recruiting practices of Bain & Company. The information provided is believed to be from reliable sources but no liability is accepted for any inaccuracies.
