AI (artificial intelligence) is nothing new, we can trace it to 1940 with the invention of the first programmable computer, and the idea of sentient beings created by humans goes back even further. So why does it seem like the term was invented in 2022? Let’s put it this way, people have been traveling to space for a while now, but if tomorrow a popular airline started selling affordable tickets to go to the moon, we would all be talking about it, right?
This is more or less what happened when ChatGPT was introduced, it put the power of AI in everyone’s hands for the first time. This technology was only accessible to a few, but overnight, anyone could now become a developer or an author by just by entering a couple of commands in a chat.
But arguably, those who saw most potential were businesses. In a post-pandemic world, companies were eager to make up for lost time, and these tools allowed them to automate almost everything. For a moment, AI domination seemed inevitable. From soft drinks to travel agents, all kinds of organizations promised to make their products more ‘intelligent’.
But after a couple of years of AI craze, the industry is sobering up, and we’re left wondering: Are businesses putting their money where their mouth is? Or are we still in the early stages, where novelty outweighs practical application?
Before diving into the numbers, let's discuss where this data comes from:
The dataset:
At Cledara, we have a unique vantage point to observe the AI landscape. Our platform helps small and medium-sized tech companies manage their software, from tracking usage to paying for tools. This gives us a bird's-eye view of how businesses interact with AI tools in the real world.
The survey:
To complement the data we hold, we also ran a survey with more than 200 participants to understand how businesses were perceiving AI. The participants were mostly tech companies with less than 200 staff, across the US, UK, and EU.
AI Adoption - What Does the Data Say?
AI Interest: The Curiosity Explosion
Let's start with the raw interest in AI tools. Since January 2023, we've seen exponential growth in AI tool usage. ChatGPT, the poster child of the AI revolution, dominates the field with 33 times more use than its closest competitor.
Since January 2024, the growth rate, while still impressive, has slowed. Are we reaching peak AI hype, or are these just the early plot points of an even greater exponential curve?
Note on data: The tracking is simple but powerful; we count the number of times users visit these tools. While this method doesn’t capture usage via APIs, it gives us a clear picture of direct engagement with AI tools.
When we drill down on 'Other AI Tool's we can see the rapid growth of these tools but on a very different scale to ChatGPT.
Interestingly, while ChatGPT is the undisputed heavyweight champion (with 33 times the usage of Perplexity and 41 times that of Claude), the underdogs are showing impressive growth. Since January 2024, Perplexity usage has surged by 238%, and Claude has grown 367%.
While looking at these numbers out of context, it might seem like ChatGPT is dominating the SaaS (software as a service) scene, but when we compare its usage to established software tools, it's a humbling reality check. ChatGPT might have been adopted by more companies than Hubspot, but it sees 9 times less usage than the CRM. It also falls behind Figma, GitHub, and Notion.
Headline Stats
ChatGPT dominates usage with 33x more use than the next closest competitor
Since January 2024 Perplexity usage has grown 238% and Claude 367%
ChatGPT is used in more organizations than Hubspot but has 9x less engagement
AI Adoption: From curiosity to commitment
Moving from interest to adoption of tools by businesses, we see a similar story. ChatGPT and OpenAI* are the big players, making up the lion's share of AI tools adopted by businesses. But there’s a twist – ChatGPT adoption has flattened since the second quarter of 2024 and even drops by July of the same year, while OpenAI adoption continues to climb in the same period, though at a slower rate.
*A note on this data: We’ve reported ChatGPT and OpenAI as separate tools. OpenAI refers to the API product of OpenAI while ChatGPT refers to the chat interface product we’re all familiar with.
But here's where it gets interesting. Let's zoom in on the growth rates for 2024:
- ChatGPT: A modest 13% growth
- OpenAI: A more robust 22% growth
- Other Top AI tools: More impressive 48% growth
- Claude and Perplexity: Growing rapidly with 282% growth
These numbers tell a fascinating story. While the big names are still growing, the other players are picking up steam quickly. This could indicate the beginning of a more diverse AI ecosystem, with businesses looking beyond household names to find tools that fit their specific needs, or a situation where the big players have hit the ceiling and don’t have space to grow anymore.
Headline Stats
62% of ChatGPT’s adoption came in the first 5 months after release
OpenAI and ChatGPT’s growth in 2024 was 16%
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AI Spending: Show me the money!
Now we're getting to the heart of the matter – where businesses are putting their hard-earned cash. Since January 2024, we've seen some interesting trends:
Somewhat concerning is the flattening of spending on ChatGPT and OpenAI. ChatGPT’s quick market saturation might explain its slower growth, but OpenAI’s slower spending growth is unexpected given its broader use cases.
It’s worth noting the jump for ChatGPT in January 2024 took place when the Teams Plan was introduced, allowing businesses to protect their data and staff to access the latest models. Interestingly, usage didn’t change significantly over this period, suggesting employees were using the platform unofficially, and likely training the system on business data before the teams release.
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Headline Stats
62% of ChatGPT’s adoption came in the first 5 months after release
OpenAI and ChatGPT’s growth in 2024 was 16% while the other top AI tools grew 117%
Initially, my team was using AI to enhance writing and speed up editing. Now we use AI every day for brainstorming, summarizing, transcribing, researching, and automating workflows. I’ve never seen such a fast expansion of use cases.
In addition to our per-tool analysis, we examined AI's percentage of total spend across different teams. The data reveals notable growth in spending across all departments, with Marketing holding the largest share and Sales demonstrating the fastest growth.
As depicted in the chart, Marketing's share consistently leads, hovering around 4% before accelerating to nearly 6% by mid-year. This trend indicates Marketing’s strategic focus on leveraging AI tools for enhanced campaign effectiveness and customer insights.
Sales, while starting from a smaller base, shows the most dynamic growth trajectory. From a modest share below 1%, it nearly doubles by July 2024. This rapid increase suggests a burgeoning recognition of AI’s potential to drive revenue through improved lead management, forecasting, and customer engagement.
AI Pricing: Cheap and cheerful, or an AI surcharge?
While top SaaS tools see monthly spending about 2x more than AI tools, this gap is surprisingly narrow given AI's nascent market stage. This trend becomes even more intriguing when we consider that usage of AI tools is significantly lower - around 9x less than established platforms like HubSpot.
Earlier in our report, we noted that usage of AI tools like ChatGPT is significantly lower than established SaaS platforms - around 9x less than HubSpot. Traditionally, in the SaaS world, higher usage correlates strongly with perceived value.
However, AI tools are flipping this script. Despite lower ‘usage’, they're commanding premium prices relative to their adoption stage. This suggests a fundamental shift in how businesses perceive and derive value from software.
It seems we're witnessing a shift in how software value is created and perceived. AI tools are redefining the relationship between usage, value, and price in the software industry.
As the market evolves, it will be crucial to see if AI tools align more with traditional SaaS models or continue to chart a new course in software pricing and value perception.
AI’s rapid adoption is exciting, but its true value lies in solving industry-specific challenges. We’re still in the early stages of seeing how it will applied in these specific ways. We believe that’s where the real value to businesses will come from. The latest models, combined with deep expertise.
AI Churn: High growth, high turnover?
We've heard all about growth when it comes to AI, but how sticky are these customers? Are they signing up and staying, or jumping to the next best thing? We ran an analysis on account churn in 2024 to give you a picture:
- ChatGPT: 4.19% average monthly churn (43% annualized)
- Top AI Tools: 3.25% average monthly churn (33% annualized)
- OpenAI: 1.34% average monthly churn (15% annualized)
- Top SaaS Tools: 0.86% average monthly churn (10% annualized)
Compared to the most popular SaaS tools like Google, HubSpot, and Microsoft, AI churn rates are significantly higher. This might suggest early experimentation and high turnover in the AI market, rather than long-term dissatisfaction. Despite this churn, they remain some of the fastest-growing tools for Cledara customers, losing users but gaining them even faster.
Comparisons: AI vs SaaS
To really understand where AI stands, we need to zoom out and look at the bigger picture:
- Usage of the top AI tools has grown by a mind-boggling 245% in the last 12 months.
- In contrast, usage of top SaaS tools has grown by a more modest 24%.
Businesses purchasing AI tools have increased by 86% in the last year, compared to a 20% increase for top SaaS tools. However, the gap is closing – since March 2024, AI growth has slowed to only just exceed the SaaS growth rates.
When it comes to spending, the story gets even more interesting:
- In the last 12 months, AI spending grew by 446%, while SaaS grew by 36%.
- But in the last 6 months, AI growth slowed to 22%, while SaaS held steady at 25%.
Observations
So, what does all this data tell us about AI? We're seeing astronomical interest and adoption rates, often surpassing traditional SaaS categories. But when it comes to spending, AI is still playing catch-up.
This paints a picture of an industry in its adolescent phase – full of energy and potential, but still figuring out how to translate that into consistent value and revenue. The question remains: Will this interest eventually translate into sustained spending, or are businesses still unconvinced of AI's long-term value?
AI adoption faces obvious challenges, but its potential is vast. When viewed as 'Allied Intelligence', it enhances creativity, enables new dialogues, and redefines wisdom. With thoughtful integration, AI will be a valuable ally in creating a more efficient and innovative world.
AI Value - What do businesses say?
The data above gives us a good understanding of how AI is being used and purchased, but it doesn’t tell us how AI is being perceived in the market. Are businesses seeing value? Most importantly, for those building tools, are they planning to spend more on it in the coming year? And where is that spend coming from? Are companies planning to replace staff yet?
We asked more than 200 businesses for answers to these questions, and put together their answers. For your context, these organizations are mostly small and medium-sized tech companies in the UK, EEA, and US markets.
The Value of AI
Numbers are great, but what are businesses actually saying about AI? Are they seeing the value, or is it all hype?
Unsurprisingly, 82% of companies surveyed are using or experimenting with AI. But here’s the reality check, out of those businesses, only 47% report seeing tangible value from the tools they’re using.
Breaking it down further:
- 82% of companies are using AI regularly
- 18% of companies are yet to use AI significantly
- 47% of companies are seeing value from the new technology
- 53% are still waiting to see any significant benefits
For the companies seeing value, they reported these benefits:
- 24% are reducing costs with improved efficiency
- 11% are growing revenue
- 12% are achieving both
The glass-half-full view: Nearly half of businesses are already seeing real benefits from AI, primarily in efficiency and cost reduction.The glass-half-empty view: More than half of the companies surveyed are yet to see significant benefits.
Headline Stats
53% of companies are yet to see value from AI
82% of companies are using AI day to day
Everyone is claiming to have a tool and our experience is that a lot of them don't really add much value, certainly not enough to warrant the cost. We are trying to be systematic in our approach and be problem-driven rather than tool-driven.
Expected AI Spend
Are businesses planning to spend more on AI, or are budgets unlikely to increase? Businesses are showing a clear trend towards increased spend on AI technologies. More than half of the surveyed companies anticipate boosting their software spend in the coming year, with 42.1% expecting a moderate increase and 7.9% planning for significant growth.
However, a substantial portion (31.6%) foresees no significant impact on their software spend, suggesting that AI might be integrated within existing budgets for many. Only a small fraction (10.5%) expects to decrease their related expenditures
These figures will be welcomed by software companies investing heavily in AI, but may be reason for concern with companies yet to see significant value and not planning to increase spend significantly.
Headline Stats
46% of businesses are not planning to allocate additional funds to AI in the coming year
54% of businesses are planning to increase software spend in response to the rise of AI
AI Resource Allocation
Here's where it gets interesting. How are companies planning to fund this AI future?
- 67% of businesses plan to adjust their budgets for more AI tools
- 46% will increase their overall software budget
- 15% will shift existing software budget to AI tools
- 6% plan to reallocate funds from non-software areas (like payroll)
The takeaway? AI isn't taking people’s jobs – at least not yet. Only 6% of businesses expect to divert funds from areas like payroll to fund these initiatives. It seems AI is being viewed as a complement to human labor, not a replacement.
Headline Stats
65% of businesses say they will adjust their budgets to accommodate more AI tools
6% of businesses expected to allocate funds from other areas like payroll to fund AI - We’re not being replaced.. yet
We've not changed the way we forecast spend but are including spend on AI in our forecast, both in terms of additional subscription costs as well as some consulting costs. We are a rapidly scaling business so all costs are changing quickly anyway.
A Final Thought
As we wrap up our deep dive into the state of AI in 2024, we're left with a fascinating paradox. AI has captured the imagination of the business world like few technologies before it. On one hand, we see explosive growth in interest and adoption, with usage rates that would make any SaaS founder green with envy.
On the other hand, we're faced with a more sobering reality. While adoption is high, the perceived value and willingness to spend significantly on these tools lag behind. More than half of the companies using it are still waiting to see substantial benefits, and nearly half aren't planning to increase their AI budgets in the coming year.
This paints a picture of an industry at a crossroads. The potential is clear, but the path to realizing it remains uncertain for many businesses. We're seeing a market that's enthusiastically experimenting with AI, but still cautious about going all-in.
The good news for proponents is that even with these mixed results, businesses are largely planning to increase their AI investments. There's a sense that the value is there, waiting to be unlocked. The challenge for AI companies will be to help their customers bridge the gap between adoption and value realization.
The message is clear: AI is not a magic bullet. It requires strategic implementation and patience to see results. But for those who get it right, the rewards can be significant.
As we look to the future, one thing is certain: AI will continue to be a major force shaping the business landscape. Whether it lives up to its lofty promises or settles into a more modest role remains to be seen. But one thing's for sure – it's going to be an interesting ride.
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