Businesses are demanding shorter contracts and other favorable terms from traditional SaaS providers as rising AI spending on Anthropic, OpenAI, and other AI providers eats into their broader software budgets, according to CTOs and CIOs interviewed by The Information's Laura Bratton. Examples include Ralliant (a $6.6B sensor components seller) reducing five-year contracts to one-to-three-year terms, IT services firm Ibex (~$600M revenue) shifting from three-to-four-year contracts to one-year terms, and Cummins (a $90B market cap diesel engine maker) requesting 90-day reassessment provisions for which AI apps it uses. Customers are also negotiating “swappability” clauses preventing vendors from charging more when launching new AI features, opt-out provisions tied to AI performance metrics, and “repricing triggers” that allow renegotiation if AI usage costs hit certain thresholds.
