Spending on Anthropic and OpenAI models is eating up IT budgets, and enterprise buyers are pushing back. They're demanding shorter software contracts and tougher safeguards from traditional SaaS vendors. Sensor components maker Ralliant used to sign five-year deals; now it's down to one-to-three years. Its in-house AI agent has already taken over some ERP analytics work.
IT services firm Ibex has cut renewal cycles to a single year. Engine maker Cummins is insisting on a 90-day contract modification window so it can constantly evaluate and swap out AI tools.
Buyers are also squeezing in new cost-control measures. FedEx is demanding a repricing trigger: when AI usage costs hit a certain threshold, prices must be renegotiated. National Life Group wants substitutability clauses that prevent vendors from jacking up prices when they add new AI features, plus an early exit option if performance falls short.
EY-Parthenon data shows traditional software vendors' net retention rates have dropped about 15 percentage points over the past six months, as more customers refuse to lock in long-term spending with existing providers.