What is happening, folks? We'll get started in just a minute. Let somepeople trickle in. Shields, you wanna you wanna share a little bit aboutthe story that you were just sharing with us backstage? Well, yeah,Justin. I mean, you used to be the most grateful because if I didn'tmake it today, like, you would be on the hook for doing the intro. Yeah.I was in the Grand Canyon this weekend and on Saturday, and it turnedout to be one of those, you know, apocalyptic events.
Thankfully, made it out. There was there was some drama, but, you know,no injuries or anything for for our crew. But, yeah, it just made me youknow, texted Russell yesterday. I was like, man, I'm my head's all overthe place. I gotta I gotta get my priorities straight in life. You know?So definitely puts perspective on things. Well, we're we're happy thatyou that you made it back and and escaped. Well, you know, you were oneof the first people to like the the the video I posted on LinkedIn,Justin, and yet you didn't text me, like, saying, hey, man.
I'm so glad you're safe. You know? So anyway That was my that myconversation about that later. That was my LinkedIn agent that was justliking your content automatically. Okay. Got it. That makes sense.Alright. Well, everyone, thank you for joining today. Backstage, are wegood to get going? Are attendees auto muted? Yes. I think you are automuted. However, the q and a is alive and well, and we actually have itbeing monitored by real humans, not Justin's LinkedIn agent. So, you canjoin the conversation that way, and we do want it to be interactive aspossible.
But we do have a lot to cover, so we're gonna jump right in. First andforemost, we are coming up on budget season. And a big takeaway today isthat if you're using the same playbook for budgeting this year as youhave in years past, well, at best, I think it's gonna take you a lotlonger and be less effective than in years past. At worst, it could bean epic failure, an epic disaster, perhaps worse than my Grand Canyonadventure. So now we have to account for a big shift.
We've got, you know, this big bucket of head count. We have this bigbucket of software. And now we have this big, small, constantly changingsize of a bucket of of AI, and we need to account for all of it and dothat in a strategic manner in a way that brings back process, bringsback control, and without wrecking the company. And so finance obviouslyplays a big role. Procurement needs to play a much more strategic role.So today, we're gonna get into the why that's the case and how weaccomplish what we need.
Show you some awesome new capabilities within Tropic. And, hopefully, bythe end of this, you'll walk away with, concrete ideas and tangible nextsteps. So let's do a quick poll. If you could throw that up here. Let'ssee. Alright. I see. Go to polls tab. So while we're doing this poll andI think the question is, like, what feels the most daunting about twentytwenty seven tech planning? Yeah. Would love even if you don't pickothers, it says elaborating con comments. You know, it maybe say, like,you know, why, you know, in the comments of, like, which one you pickedand and a little bit about why.
In the meantime, I'm going to introduce our panel, our folks you'll behearing from today. So, Russell, budgets, money, all of that issynonymous with finance, and so it makes complete sense why you're here.Do you wanna quickly introduce yourself and say hi to the lovely people?Happy to. Russell Lester, president and CFO of Tropic. I think incounting, I've probably been through thirty different budget cycles, allof them different. None of them fun. It's it's a misnomer to think thatCFOs or finance teams love a budget season either.
No one likes budget season. So the goal is, like, how can we make thisthing called budgeting easier and better? And excited to dig into thattoday. Wow. Thirty budget seasons, and they've all sucked apparently.Okay. That's quite the, optimistic view on life. Justin, maybe bring alittle more of a positive flare. You're the CEO of a ProcureTech thathas come out with some pretty impactful new releases over the past yearor so we're glad you're here too. I'm guessing everyone knows you, but,you know, for the avoidance of doubt, can you maybe provide a a reallyquick introduction?
Yeah. Absolutely. Hey, everybody. Justin, CEO and cofounder here. Seesome friendly faces or, I guess, some friendly names in the attendeelist. Shout out Jose and and Cody. Just a couple that I'm that I'mseeing. So thanks for coming. We're gonna talk all about the, you know,budgeting and some of the best practices. Importantly, in the session,we are also gonna be weaving in a lot of the just released new Tropiccapabilities conveniently timed to support with budgeting. So I'm gonnabe here to to do some demoing, to do some kind of vision casting aroundwhat we hope to enable across all your businesses going forward.
Excellent. Excellent. And if you don't know me, my name is MichaelShields. I lead procurement here at Tropic, which is an interestingdynamic of of doing procurement at a procurement company, but I'm I'mgenuinely excited, you know, about this. I think with the right tools,with the right data, with the right focus, you know, procurement has anopportunity in front of us to really elevate our role. So as youmentioned, Justin, we have both customers. We've got prospects joining.You know? And a lot of this is built on the conversations that wecontinue to have with both of those groups, what we're seeing, and whatcan move the needle, etcetera.
So, Russell, maybe just to kinda kick things off, let's think, like,with the end in mind. From your point of view, you know, CFO, you'vedone this thirty times. What makes a technology budget credible fromyour perspective? Great question. It's funny. I find that people thinkthat budgeting is strategic planning, and they conflate the two, andthey get them out of sequence. So often, I see companies dive right ininto budgeting. And I always ask myself, like, what what are webudgeting for? So if we click up a level, the end goal of budgeting isto understand how to allocate scarce resources in the way that maximizesachievement of company goals.
Well, how do you know whether or not you're doing that, how to do thatunless you're aligned on the company goals? So I think there'sdefinitely a strategic bridge here where we gotta know what we'resolving for, how the market's evolving, how the company's evolving, whatrole do we play, how do we win. But then underneath all of that is we'rewe're spending tons of money on different things. Where are we spendingit? Where is it working? Where is it not? And where do we need toadjust?
And then the part two of that would be, how does what we're spendingconnect to the goals that we're setting and the results that they'redriving? And when you think about all the changes happening in themarket where tools are changing in terms of their capabilities, AI is onthe scene, People are changing how they do their work. So I think thisbudget cycle will contain the most rapid change of any on recent record.And so I think that's what go ahead. No. I was gonna say, we definitelyhave seen a lot of change, and I think people are saying, no.
Change change is constant. Well, the rate of change right now isanything but constant. Right? So that product that was evaluated and andand sold when, you know, you signed the contract whether even if it wasa year or two ago, it's likely evolved. The the pricing is likelyevolved and and maybe not just an uplift we're talking about, but acompletely new model needs have evolved. Right? The competitivelandscape is probably way different than it's been. People have changed.Champions have changed. You know, this sprawl has continued to happen.
I think buyer expectations in a lot of way have have changed, etcetera.ROI requirements have changed. So, and then you have these LLM budgetsthat are, you know, invoices, etcetera, that are wreaking havoc on on,you know, everything else. So, hopefully, that kinda gives you an ideaof, like, why technology planning is is going to be harder this year,and there's a lot more we can probably touch on as we go through this.But, you know, maybe, you know, Justin, you know, just kind of kickingthings off with you, right, as we kind of folk you know, focus on, like,okay.
How do we prioritize this, etcetera? Like, how do you have theseproductive conversations with your stakeholders and and bring somethingof value to the conversation? Like, what coaching would you give to, youknow, someone like myself, you know, in procurement, so that you'rehaving proactive strategic conversations? Yeah. I mean, the the so muchhas changed in terms of the availability of of data and insights andintelligence that's at the fingertips of central functions and teamsmore so than than ever has been the case. I know when, you know, when Iwas, you know, in the finance and operations function, I felt that Ireally had to trust and rely on my business team to come to me withinformation and data to use to help support a business case.
It was rare that I had the data and intelligence that I needed at myfingertips to actually go out to the lines of business and make surethat I could come with something of value proactively and and, you know,kind of, like, natively for them that otherwise wouldn't exist or or Iwould have to rely on on the the business team directly. So, actuallyAnd and Justin, are you if you I everything you're saying here makes alot of sense because if you look at the poll results of the of what wejust did, right, you know, obviously, unpredictable AI spend is a bigone, and that gets almost half, but you still have that limitedvisibility.
You know, there's sixteen percent said that. Too many renewals, sixteenpercent said that as well. Software overload and then insufficient timeand resources, etcetera. Really interesting to see what you sayreflected in in the poll results itself. Yeah. So, I mean, this is weall we all feel these pain points, and they're and they're real. So, youknow, shifting gears, I wanna I know we got a lot of customers on thecall here that are experiencing some of the latest and greatest withTropics. So as we start thinking about the forward looking view and theplanning perspective, I wanna show everyone here how how I would startthinking about using some of the the capabilities and data that's nativeto the Tropic platform to assist and aid in this forthcoming budgetingand planning conversation.
So nothing like a live demo for a hundred people. So we're gonna give ita shot and see where we land. Everyone can see my screen. Yeah? Yeah. Weoh, exactly. Can see it. Great. Big enough? Jose, can you I don't if I'mI don't know if I'm seeing it from the same perspective as everyoneelse. If you put in the chat, like, can you see Justin's screen, anyonewho's watching? Oh, we got, oh, we got a lot of thumbs up, and you'regood to go, Justin.
Okay. Great. Alright. So first and foremost, you know, what we do atTropic, right, is we consolidate a lot of different, you know, dataelements into one purse one one view. One of the most important andcompelling of those data elements being your contracts. Contracts are sorich with data in terms of your start dates, your end dates, what you'rebuying, how much are you paying, and all those things. And that reallyserves as the kind of foundation for how we can think about budgeting ona go forward basis.
And so for anyone that's, you know, in the Tropic platform, if youhaven't seen it before and this is your first time experiencing Tropic,what I wanna call your attention to is this latest release area calledsignals. What signals is is intended to be a forward looking view acrossall of your contracts that you have in the system where Tropic hasproactively layered in data and intelligence to surface where we see bigopportunities. So at the fur at this first tab here under thisrecommended section, what I'm able to see here is between October firsttwenty twenty six and December thirty first twenty twenty six, sobasically q four, these are all the contracts that are renewing in thattime frame where our system has identified potential savingsopportunities.
Now this is can be tied to benchmarking data, negotiation opportunities,etcetera, etcetera. But what we've done is we've been able toconsolidate this view and showcase in a ranked order where the potentialsavings are coming from across these different contracts. You can evenfilter. Let's say we wanna put hone in I let's say you've got a aplanning and budgeting conversation coming up with your, you know, revops leader, and you wanna hone in specifically on the sales department.Boom. Let's now isolate just the sales contracts that are coming up andbe able to take a look at where do we see potential savings.
And you could see a world where we expand this to, let's say, nextcalendar year. We wanna look across all of twenty twenty seven and wherethe big opportunities are gonna be. But if I pick on my favorite vendorto to pick on, Gong, and I go into this, you're now then transported toa screen that many of you will be familiar with from looking at contractinsights in the past, but we can now specifically hone in on why isthere a savings opportunity tied to, you know, in particular,benchmarking, where we can now go into our benchmarking view, see howthis contract has already been benchmarked across the database of ofcontracts that we have in the system, and we can now know going intothis planning cycle, you know what?
We think that there's gonna be savings potential that we should be ableto go unlock. Let's make sure that that me, as procurement or finance,is coordinated with my, you know, rev ops sales leader in in advance ofthis renewal so that we can make sure that we're gonna specificallytarget this contract and this renewal as a means of driving savings thatwe can use to unlock budget elsewhere across our department and and freeup and source from this specific engagement. And one thing that onething that I really like here is, like, I think back to my years, youknow, doing procurement for so long, Justin.
And, you know, a lot of times, it's like we chase the big contracts. Wewe focus on the big spend items. And the reality is is, like, thelargest contract is is not always necessarily where you should befocusing. And so, you know, once again, prioritizing what deservesattention, great, great view on what you're showing here. Yeah.Absolutely. And and what what this is intended to show is instead ofranking these different contracts by, you know, dollar value, we areranking them by potential savings. So you can see firsthand, right, thisGong contract here, hundred forty k in annualized value, but twentythree thousand potential savings.
DealHub, right below it, a bigger contract, three hundred twenty four k,but only ten thousand dollars in savings. Right? So we're we're nowthinking about how do we really wanna prioritize and allocate time basedon savings potential and not just overall dollar size. And you gottaremember every I lost count, but every finance team procurement team tooprobably in budget season, they take at least ten steps every year,every time to get to what you just showed because they've gotta come upwith and they do this manually.
If they don't have something to do this, they gotta come up with what isthe master list, what are all the ways we're spending money, who ownsit, when is it up for renewal, What tools are overlapping? Are wegetting a good price? Like, I it's it's easy to just look at this and belike, oh, that's cool. But, like, it how many hours of savings is justclicking on this and seeing it instantaneously? I I think it'sincredibly impactful for finance teams. And the benchmarking piecebefore wasn't even like you know?
I don't know how you did it, but I remember remember the whole peanutbutter spread concept of, like, hey. Let's just apply an average of xpercent. Well, in some cases, we that should go drastically down. Insome cases, you know, it might need to legitimately go up. You know? Oh,yeah. Every team would just say, oh, we're gonna do an uptick of five toseven percent vendor contracts this year. Right. Butter. The othercouple things just to highlight here is, you know, beyond just savingpotential savings opportunities, we're now also servicing other,valuable insights that can go into budgeting, things like compliancegaps.
You know, we enable every organization to be able to input theirpolicies as an organization, and our AI will then track where are thosewhere are their gaps against your policies and this specific supplier'scontract term. So I can go back into my favorite Gong example and see,you know, exactly where we're out of compliant with, you know, thingslike payment frequency or, you know, the renewal cap requirement anddefined schedule. So, again, all of these policies being set at theorganization level in your settings where we can then be tracking andmeasuring and and visualizing where those gaps exist to be able toincorporate them into some sort of annual planning slash budgeting cyclethat might come up.
We're gonna spend a lot more time on consolidation in a moment. This isa brand spanking new feature of Tropic, so gonna gonna come back to thisin a moment. But, again, we're surfacing some other ways that we can usesignals as a way to surface the big opportunities, the the the the themeaningful, moments for planning and, and proactive conversations.Awesome. So I I guess, like, just kind of, you know, as we kind of pivotaway from this and move on to the next topic, real quick, Russell, like,if, you know, how do you feel like we've if, you know, if you'recoaching me in procurement or or someone else in procurement orstakeholder, etcetera, how do you frame these opportunities in termsthat support the budgeting decisions, and and how does that layer intothat process?
Because you talked about it used to be ten steps and and one, but, like,how do you take this data, and then, like, how do you package that up?Yeah. Well, you know me. I love the framework levers and leakages.Levers are things that multiply the business. Leakages are things whereyou're wasting money, you're wasting time, you're wasting resources.Every company has both. It's always the process of the budget cycle tofigure those out and unlock them. I think what signals does is it'ssurfacing things that would have taken multiple clicks, conversations,queries, calls, outreach, back and forth, reaching out to supply.
Like, if you think about all the many projects that lie underneathgetting to what that signal looks like in the old way, that's the goldhere is that you're you're you're fast forwarding and you're you're thensurfacing that in a way where the the finance and procurement team canimmediately dive in and have a strategic conversation about these typesof, capital allocation decisions. And before, that would have been maybemaybe to your point, couldn't be done at all, or it would have been doneat the tail end of the process when you're too far down the budget cycleto actually make a change.
You wanna be asking these questions upfront, and that's what signals letyou do. Yeah. I like that. So, Justin, I I think that that was reallyhelpful, especially as you focus on, like, historical spend and maybesome of the traditional SaaS spend, etcetera. But, you know, half thepeople, if you saw the poll, were interested in this idea of and andnervous about, you know, AI and and the the surprise invoices they'regetting. How do I account for that, etcetera? So as we think aboutbudgeting for AI spend, how do we kind of, maybe do it in a way to wherewe are being you know, putting in proactive controls in place instead ofreacting to the surprises that have been kinda coming across maybe ourour accounts payable team over the past, you know, twelve months?
Yeah. I mean, the the number one request that we've received from frommany people on this call and and brought more broadly in the market is,you know, Tropic, this is great for helping with all of my kind oftraditional contracts, but, you know, the world is moving towardsconsumption. How do I get a handle on these, you know, rapidly growingcosts, particularly tied to tokens and AI because I don't have thevisibility I need to plan effectively. And it feels like we're, youknow, at risk of of runaway cost, or we've already experienced therunaway cost dynamic, and we've had to, you know, fund this AI spendthrough cutting costs elsewhere, whether that's people or whetherthat's, you know, avoiding hiring or or deprecating other valuable toolsacross the stack.
And so I I know everyone here is feeling a lot of these pain points, youknow, pretty explicitly, and, you know, we've heard we've heard you loudand clear and have been very focused on how can we support in theendeavors around these consumption based agreements and the problemsthat they charge or the the problems that they they create. So, youknow, what we have what we have built is a way to actually monitor anddetect this, you know, AI spend directly from the tools themselves,plugging into the Anthropix and OpenAI and cursors of the world.
And really just as a starting point and as we, you know, plan to expandthis into the broader consumption kind of market industry, you know,writ large, you know, the Clays, the GitHub actions, the Snowflakes, andmaking sure that what, you know, SaaS management tools were able to doat one point for licenses, we can start to help support on theconsumption side of the house so that we can provide real visibilityplanning and awareness around AI where AI is going. We're super pumpedabout this.
I know, Shields, you've also heard a lot of the challenges and painpoints around escalating and growing AI costs. Yeah. I mean, at at theend of the day, like, in so many cases, companies are having to reactand then adjust budgets accordingly after, you know, these invoices comein, and then, you know, that is controlling the budget. Like, the the AItail is wagging the the rest of the, of the dog in a sense. You know?And so it's definitely, you know, top of mind, you know, for myself, fora lot of my peers, etcetera.
You know, obviously, we've done a lot of conversations, Justin, about,like, what we can actually do to, like, negotiate, etcetera. But, like,whether, you know, the the gap is visibility, forecasting, governance,like, you know, who who can kinda commit to what, that's a real problemthat we're trying to solve in real time. So I guess, like, Justin, Imean, you kinda teased it out a little bit, but but what have you built?What are you what are you you know, how do you recommend us, you know,moving forward?
Yeah. Absolutely. Let's show let's let's let's see it live. Right? Well,I I will in in a moment. One one of the things just to piggyback off ofwhat you said, Shields, is, you know, over the last six, twelve months,one thing that I've noticed about our team in particular is that we havebecome privy to some of the most complex and largest AI spends acrossthe market, you know, more broadly. Because of the nature of the, youknow, amazing types of companies that we are working with, we're seeing,you know, ridiculously large AI spend commits, whether it's with theAnthropix or OpenAI's or, you know, however it might be.
And that's allowed us to sit on this really powerful dataset around whatis everyone paying for these tools, you know, what are the differentstructures that are that are being put in place, and doing so, like, atthe very tip of the spear in working with some of our most innovative,highest spend customers across the market. So, you know, we sit on thisreally powerful data asset around how do we negotiate, how should we bepricing, how should we be structuring, and the missing piece for us hasbeen, well, how can I now monitor in real time so that we can beinjecting these insights proactively without having to wait for ourcustomers to come to us around how should we adjust or change our spend?
So without further ado, let's jump into Tropics AI consumptionmanagement tooling. So what you'll see here is a a new dashboard for thecustomers that are out there. This is also brand spanking new. If you'relogging into Tropic, you know, like, yo. Where's my AI consumptionmanagement? You do not have access to it yet. We would love to give youaccess to trial it out following this call. But the way this works is weare now taking, like I said, the three key suppliers in the AIconsumption realm, OpenAI, Anthropic, and Cursor, and providing realtime visibility into where the spend is going.
Trying to centralize all of the consumption, you know, commitments thatare, you know, in place across these agreements, overage exposure, andaggregating this not just at a per supplier basis, but doing so acrossall of the various token providers so that we can see how much are wespending, how many tokens are we actually using, the average unit cost,both input, output, and monthly spend with these different tools. Onething that we've heard loud and clear is, like, yes, you can getreporting from the Anthropic admin console or, you know, maybe myengineering team has built some reporting, but no one is buildingreporting that's specifically focused on the office of the CFO andprocurement teams to give them the tools that they need to understandhow are we pacing, where are we going, and what can I do about this tohelp, you know, drive savings and and mitigate costs going forward?
So here's all this information. If I dig dig directly into, you know,Anthropic as an example, what I can now see here is my commitment thatI've agreed to, my projected spend based on what current trajectorylooks like across the term that we're we're ultimately evaluating. So tolook at this a little bit more closely, I've got my fifteen thousanddollar commitment here. You know, we're sitting here in August at twelvepoint four k. This term is supposed to last us at the end of December,But we see here that we've now got an intersection point forecasted forsomewhere between September and October based on current run ratepacing.
What does that mean for us? You know, as as finance procurementpractitioners, that means, uh-oh, we're at risk of overages. And if wedon't act now proactively when we have the chance before we actually hitthis commitment, we're gonna be stuck in a position of very limitedleverage with Anthropic or OpenAir, whoever it might be, and trying toget these over to cost wave as a as a show of good faith, let alonetrying to negotiate a better unit cost or or price point for the overallcommit.
So we're we're showing the pacing here. We can do some fun stuff likeadjusting the the calculation strategy based on recent run rate, youknow, flat folds, all things that are designed to give you some someindication and clarity around what this forecast and projection isultimately looking like. If we take a Do you see, Justin, do you see,Justin, this expanding beyond, you know, the suppliers you talked aboutas more and more suppliers switch pricing models? One hundred percent.We are we are soliciting feedback from customers right now around what'sthe list of of of vendors we wanna be adding to this.
Like I mentioned, the clays of the world, the snowflakes. You've got abunch of the, like, existing consumption based suppliers that are highin the list because they cause so much so many challenges in inmeasurements and tracking today. But to your point, Shields, is thatthere is a whole slew of current seat based, you know, suppliers thatare integrating consumption based, you know, capabilities or credits ortokens into their pricing models. And my personal belief is that, youknow, the SaaS management of old is gonna very quickly go away to theconsumption management of new because that's gonna be the real costdriver across our our customers and tech spend going forward.
So we while we have started here with the biggest pain point that we seetoday, which is, you know, the LLMs and, you know, AI costs, this isintended to expand beyond just AI and and become the solution forconsumption consumption based pricing more broadly. I have to imagine,Russ I have to imagine, Russell. Like, if if you're, you know, the CFO,you're looking at this chart, and I actually like, I'm looking at thischart and like, oh, like, we'll cross through November. Like, that's notthat bad.
And maybe I'm just, like, completely biased given I'm reading the newspeople are burning through their budgets within q one for the annual.But but I have to imagine that as CFO, this empowers you to to ask thosequestions proactively of of, okay. Who's the biggest user? You know,what are what what are we using it on? Like, asking some of those ROIassociated questions would potentially adjust the curve. No? For sure.Think about the old way. The old way would be figuring out who are wespending money with that's categorized as AI, who owns those agreements,are they in the ERP, run a query on the ERP, then run some forecastmodel, linear regression, or otherwise.
Right? Like, it it's just all these micro steps just to fast forward andget to what we see here in seconds. So the the benefit here is not onlyI have the answer in seconds, it's top of mind, it's predicting into thefuture, but, also, I can see who are the main people. If it's myengineers, I'm probably super excited because I can go to the board andsay, yes. We are accelerating our use of AI. Remember, a lot of boardsare saying, we want you to spend more money in AI and spend less insoftware, which in many ways is a bit nonsensical or complicated atbest.
But this helps you see, am I doing that? Whereas if you see that thereare team members that you're not quite sure how they're using AI andthey show up here in the in the, heavy list, maybe we need to put a capon their usage. So I think it also helps the administrator of these, AIinvestment tools make micro decisions, you know, not just the bigbudgetary decisions, but more of the month to month decisions, as weapproach that that curve, that break point where we're going beyond thebudget threshold that Justin identified.
And that's that's something I I think we really need to take away is iswe're not talking about planning so much as now an annual cycle is iswe're looking at this and tracking it potentially month to month to tokind of avoid those, you know, spikes, those those costly, you know,overages because, you know, this usage based AI pricing, it doesn't fitthat traditional software budgeting. Right? So very It doesn't. And andCFOs and procurement leaders are gonna be asking of this data, whatefficiencies are we getting for that investment?
What time savings are we seeing? And then, therefore, what is the ROI onthis fifteen k commitment that we're showing here? Yeah. Good. So, Iknow it's early, but what are what are customers how are they reactingto this? How are they using this? Yeah. I mean, it's a it's a great kindof segue into some of the components that we're trying to support withinthis. You know, for one, we know that everyone wants to be able toisolate their spend across the different components that that underlieit.
Right? Whether it's the model itself Interesting. And we can see, youknow, the various tokens being consumed, the cost, etcetera. We've alsointegrated these proactive kind of alerting systems into this as well.Right? Maybe engineering releases a new workload on Cloud Opus fivewithin the products, and that all of a sudden is creating a spike wherewe've now got, you know, hundred seventy five percent increase in spendin the last thirty days over the previous thirty days. Are we accountingfor that? Like, do we is our current forecast, you know, planned and andbuilt around a run rate that we have a knowledge of where and we're abit disconnected from what's actually happening, you know, within theengineering team or within the organization as people are embedding, youknow, their cloud co work and building new agents into their systems toto take on more and more responsibility.
So we are we're trying to keep track and measure the alerting that wecan do and provide across these different models. We can do so at theuser level as well so we can see who the biggest consumers of thesetokens and spend are. Similarly, you know, see some spiking or thatmight be happening with different users and and how we might wanna beable to mitigate that. And then finally, and I think most importantly tothe ROI conversation, is doing this at the API key level.
Right? So what an API key can represent is a specific project orspecific initiative that a user is taking on AI to support. And bylooking at the API key level, we can now say, okay. We have anunderstanding around what the cost basis is associated with thisspecific API key. So now to the extent that we can attribute revenue tothis initiative or, you know, productive gains or enhancements, we cannow start to, you know, take on some of these ROI based calculationsbased on the underlying cost data that we see here.
Very cool. Lot of lot of good comments in the chat there. Love to seeit. Obviously, AI being a big focus for companies, especially thiscoming year, but, you know, not not to, like, take it away from anythingbecause, Justin, I I love this, you know, ability to have thisvisibility, make proactive decisions about it. I really think that,like, this could be I don't wanna say a game changer because that feels,you know, overhyped, but in in a lot of ways, it is because it reallycan move you from that reactive to that strategic.
But but I wanna be like, I I wanna maybe say something. I don't know ifit's provocative, but I I think it kind of you know, we started talkingabout SaaS and and the renewals coming up and the q four calendar. Wemoved to AI, and I think it's really easy for people like, you know youknow, procurement or finance and, you know, to be like, okay. Well, thefocus should be on AI. Right? And and we've all heard, like, SaaS isdead, etcetera. It was very interesting.
Just today, there was a article put out by Only CFO and talked about howSaaS is actually rebounding. Like, if you look at if you look at, like,the, you know, the cloud index, etcetera, where, you know, we're seeinglevels, like, since twenty twenty two, it's outperformed the semi in theconductor industry. What what's really interesting is, you know, some ofthe things you've talked about, Justin, where, you know, we need to betreating these renewals less like renewals and more like sourcing eventsbecause AI has done a lot of things, including, by the way, making it soa lot of the vendors out there, they've massively accelerated.
They've expanded their road map. They're they're expanding into eachother. Okay? And and so you you like, the competitive landscape, whichwe talked about at the very beginning, is changing very, very quickly.And so I think of this as, like, we shouldn't be thinking of these asrenewals. We should be thinking these as, you know, sourcing events andand what we should be doing to strategically manage that. And are wewith the right provider that we've been with for a very long time? Andand by the way, switching you know, Justin, you and I were in Seattlethis week, and we were at a table with a bunch of finance people, and wewere talking about legacy vendors.
And there's been this big decline in switching cost, which is which isreally interesting. So I guess all that to say is, you know, as we kindof keep our eye on that AI ball, you know, how do we still manage thisother bucket, which some people say is dead, but I think is alive andwell and needs a lot more strategic management than it potentially hasin in years past. So I guess, like, Russell, as you kinda think aboutthis from a budgeting angle, you know, are are you I've heard some CFOsask like, hey.
Do we need even need this to more need this anymore? I've heard otherCFOs say, hey. Maybe we do, but but the question they're asking is, havewe looked at other providers? Have we done that due diligence? Is thatsomething that you're hearing as well? Yeah. I envision a future wherewe don't talk about SaaS and AI as if they're such separate things. Themetamorphosis of the two is going to continue to overlap because manySaaS providers are having AI led strategies and embedding AIcapabilities.
And so this this peculiar separation of the two, I think, will be shortlived. But the right question that this season allows us to ask is whatdid we hire these tools to do, and are they accomplishing that job to bedone? Has the job to be done changed? And do we now see a case wherethese smaller bite sized AI investments are biting into some of the jobsto be done that the core tools were accomplishing and the inverse? Do wesee a case where people have fired some SaaS tools in lieu of AI doingit only to realize that they forgot that part of SaaS tools are alwayson tools being nurtured and improved over time, dedicated owner,engineers actually building them versus AI tools that someone hackedtogether with a clawed model.
It's now in production, but it's not a software tool. And so we see thisvacillation between we can shut down all these tools. We've got AI nowto, oh, crap. The person that built this has left. No one knows how itworks. It's now producing AI slot. So we're in that fun season right nowwhere all that's happening, and I think it's the noise is going toeventually settle. But in this noisy period is is the time that now morethan ever we need our ear to the ground and our eyes open so we canwatch all of this.
Because otherwise, finance leaders and procurement leaders are gonna getreally burned by all this because we it's just gonna suck up more scarcecapital, and we're not gonna know what we got in return. Yeah. I agreewith you. The noise is costly. I love that comment. Yeah. I I thinkthere's, like, a a moment of reflection here. Is your sourcing musclealive and well? Because to your point, Russell, having that ear to theground, doing demos of, you know, compete competing products to see whathas changed, and are they further along on their AI adoption that youcould be utilizing yourself.
But but to your point, it's not just looking at the the supplier youhave today and saying, hey. Who, you know, offers similar solutions?It's going back to the needs. It's going back to the decision criteriaand saying, hey. Let's define what we actually need. And by the way, thethe the existing supplier may no longer be a good for fit for that atall, and who are the providers in this space that could potentiallysolve for that? So is your sourcing muscle alive and well?
Justin, you are the king of data. I've known that for years. You'realways looking at things from an analytical point of view. You know,obviously, one thing that you and I have been talking about for years isis this, like, overlap. And and and our customers have been asking forthis, and we kinda did it manually for a long time, and now we'veswitched to more automated, but this this tech stack rationalization. Sowhen you combine these two ideas of of sourcing with consolidation, withoverlap, like, how how do you recommend to customers and prospects tothink about that?
And then, I guess, you know, the obvious question is, like, how can weleverage tools and processes to do that in a manner that, as Russelltalked about, you know, it can be done with the limited resourcesavailable to us. Yeah. For any of you, I mean, for our customers thathave been fortunate enough to be on a call with Shields where hedelivered one of our infamous TSARs, the tech stack analysis and andrecommendations. To his point, we used to have to a big value prop, andeveryone on this call can appreciate, is you you undoubtedly believe andfeel like there is overlapping capabilities, redundancy across your techstack today that is just hard to find, you know, because you may nothave the specialized knowledge that your marketing team does around aspecific set of tools, but it feels like there's gotta be a way toconsolidate around these different suppliers.
And doing that at scale is nearly impossible because who has the breadthof kind of insights around technology capabilities to to be able to doit effectively? But more importantly, today in today's day and age isthat these things change every week, every month as suppliers releasenew capabilities, release new features, embed, you know, new stuff,bundle it into existing SKUs that where there might where you may havehad a very clean tech stack six months ago after a really in-depth andkinda cumbersome initiative. You know, now six months later, afterseveral release cycles, I guarantee there's overlap in your in your techstack that wasn't there six months ago just by nature of the speed withwhich innovation's happening.
And so the the way to combat that is, you know, you're always onsourcing muscle that Shields is saying that is scalable, intelligent,and can actually surface a lot of these overlaps the moment that youneed them and the moment that they occur rather than as part of a morekind of in invasive and cumbersome initiative to identify theseoverlaps. Sourcing has always been one of those things where it's alwaysbeen important, but it's one of those strategic things that often getskind of put to the back burner.
You know, there's always more tactical kinda urgent things. And Ibelieve the future of procurement very much is like, lies within thisworld of of sourcing, and that's going to be a competitive advantage forthe for, you know, the companies that that that do that well. Yeah. Hugefan of huge fan of sourcing right now. You know, Justin, I I guess,love, you know, for you to kinda show us, you know, walk through anexample. I think we've kinda talked about it at, you know, the highlevel kind of philosophical of we need to do this, and it takes time.
It takes resources. And so this is something where if we're trying to doit manually, it it's it is gonna be a massive drain on resources if wecan supplement that, and this is the future. Right? This is, like,humans doing human things with the aid of technology. This is where wecan take sourcing to a level to where it's not just, you know, a a fewitems here or there. We know where where to focus, etcetera, and andit's you know, those signals are kinda being broadcasted to us.
Yeah. Absolutely. So, again, a brand new feature released as of twoweeks ago. If you don't have access to this now, it's because it's notpart of your plan. But if you would like access to it to try it out andexplore, you know, definitely hit up your account manager. And if,again, if this is all brand new, happy to to give you the full the fulloverview. Okay. So we talked about consolidation. If I go over to thisconsolidation tab in signals now, what we are surfacing here is, Ithink, the kind of secret sauce that makes Tropic really unique.
It's the combination of AI to be able to scan, evaluate, and explore,you know, all the contracts, all the SKUs across your various, you know,technology tools in the system while also then layering in our team ofexperts and their unique insights around who does what, what do thesedifferent SKUs and capabilities actually mean to represent so that wecan create a AI plus human loop process to create the most accurateconnections between SKUs and capabilities so that we can identify andsurface them in a way to actually be mitigated and executed upon.
So here we go. We're back in our consolidation view. I'm looking atcontracts with an end date between October first and December thirtyfirst. And my friends at Gong, they're back on the list. And what I'mseeing here is that there's about forty thousand dollars in high overlapthat should be addressed. And so if I click into this specific scenario,what I'm served here is that there is, like I said, twenty five thousanddollars in high overlap TCV. And what I can see is that there's someClari overlap.
I can look at the two contracts that we have in the system and theirrespective term dates, you know, etcetera, etcetera. But, really, what Iwanna go into here is figure out where is this overlap actuallyexisting. And so we see here that with in Gong, there's this Gongforecast essential SKU that is overlapping with revenue forecastinggrowth and Clari for reps. These two SKUs is part of the Clari productsuite. And that overlap is equating to fifty thousand dollars inpotential savings if we were to mitigate or eliminate it.
So really, really valuable to be able to to still and and drill downdirectly into the specific SKUs that are out there and the knownconnections between different suppliers so that we can go build forthese plans redundancies. So as you're approaching your budgeting seasonnow, we can now see that, great. I've got this opportunity to mitigatesome redundancy, you know, potentially get rid of, some of the overlap,there's a there's an initiative to work through with the respectiveowners and Emily here being you know, saying, which one of these can wedeprecate?
How can we make sure that we're not, you know, leveraging thesedifferent redundancies here and save money across our tech stack?Because then we can then take this money, either send it back to thebusiness, redeploy it elsewhere for for growth initiatives, butultimately identify where these savings potentials are actually comingfrom. But we also know there's some SKUs that don't have overlap that wewanna keep. So it looks like Gong here, we're getting a bunch of othervalue above and beyond just the forecasting SKU.
And so maybe this is a suggestion that Clari Clari may not be long forthis world in our tech stack. And then lastly, we've heard this requesta bunch, an actual report and list of the the various SKUs includedwithin these products. Many of you have asked, like, is there a way thatI can see what SKUs are actually in my contracts in this structured way?And so that's now available as part of this redundancy analysisinitiative as well. So just going back to it, you know, we can now show,you know, at a supplier level, at a specific overlap where thatredundancy is actually happening, click into many, many more of these,and start to identify and mitigate, and address these spend overlapitems.
I mean, Russell, I'm gonna be honest and say that I'm more excited aboutthis than even the AI consumption stuff. Like, as a budget owner, thisis the ultimate payoff. In some budget cycles, you can never get tothis, but everybody's aiming towards it because you're you're trying tofigure out what tools have we hired, what did we hire them for, who ownsthem, what are they costing us, are we getting a good price, when is itup for renewal, can we take action on it, All of that typically consumesthe entire budget cycle.
Next thing you know, you're scrambling. You're trying to save money.You're cutting stupid things. You're cutting things you don't know ifit's gonna break. This lets you enter the budget season empowered withthat knowledge to go to the business owners with that information. See,typically, it's a give take, and you're it as finance and procurement,you're always the ones asking the questions, needing something. Now thetables turn. We're coming to them with the insights. We're asking themthe questions. We're compelling them to make a business decision.
And I think that is incredibly cool, and it also will elevate thestrategic importance of finance and procurement leaders across thebusiness. Because imagine being able to go to your board and say, I'lltell you why I think I can save this much money next year because lookat what look at the redundancy we're sitting on. So the you can tell I'mfired up about this one, Justin. This one is going we are going to hearfrom customers that this capability is going to really change the gamefor the money they can save.
Well and especially because what we have historically spent money on mayor may not be things that we should be investing money in the future. Iwas jotting down some things, and some of these are from ourconversation today, Russell, and some of them are are from the past.We've had these things like, what are you looking for when when you wantto approve a line item or something that comes across your your yourdesk. Right? When these renewals and I really think we should nowreplace that word because I think renewals are no longer something wherewe should expect that they renew.
It's like, maybe they shouldn't, maybe we shouldn't. But what are ouractual needs? And did those change reevaluation? Yeah. Reevaluation.There you go. Reevaluation. What are our actual needs? What do theychange? Can we do this with AI for real? Is there a consolidationopportunity? Who else did we consider? And then, of course, going backto what Justin showed us in the very beginning, are we getting a goodprice? Like, if we can answer those five questions, and for all I knowyou wanna add another one in there, but if we can answer those fivequestions, we feel really good about putting it in that budget line itemand putting an associated value with it.
If one of those questions isn't asked, it's a little bit of thatmystery. It's a little bit of that squishy. It's like that unknown.Pretty cool concept. Yeah. Because there's a game budget owners playshields, as you know, where if they know they're sitting on what I callspoilage or leakage, they'll sit on it so they don't lose it in the nextbudget cycle, and they may reallocate it in the next year. And so,obviously, that's not that's not advocating for the company. That'sadvocating for your own department.
And, typically, you'll get in the meetings where they'll be like, well,finance procurement doesn't know what they're talking about. How manytimes have you heard that? This helps us know what the heck we'retalking about. That's actually that's I'm glad you said that because ifwe zoom way out, one of the things I love about Droppik is I I you know,it's hard to be specialized when you're covering spend for the entire,you know, company. But but a company like this with with thisintelligence, with this data, with these signals, with these and notonly helps us be proactive, but it helps us bridge that gap from being aa generalist, someone who knows the process really well to a specialist,someone who knows the spend really well, which is which is kinda cool.
So alright. We are, unfortunately, almost out of time. Justin, Russell,some closing thoughts. Russell, let's let's start with you. Yeah. Imean, we have to do budgeting. We can't avoid it. We need to dobudgeting. It's important. Budgeting is not strategic planning. You needto lead with data and insights and be informed. You need to equip yourteam. You you owe it to your team to equip them to have theseconversations. If you ask them to enter a budget cycle without thesetools, without these capabilities, they're empty handed, and thiscycle's more complex than ever.
Every SaaS provider's changing their pricing. AI consumption is on therise. Dollars remain scarce and need deployment to the proper homes, andso you need a method. You've got to mechanize this. You've just seen amethod. If you're a customer and you're not using this stuff, please useit. If you're not a customer, become a customer because you're missingout because the we're we're going to continue to innovate and deliverthis type of cool stuff. It's real dollars, real time savings, changingthe game for, users that are using it.
Love it. And if you have any q and a, you can put them in the chat.Justin, I'll go to you. And I know we've talked about the individualcomponents. You know, if we wanna bring it back, I know you're excitedabout the new home page, new dashboard. We'd love to, you know, get yourthoughts on, like, why you're excited about that. But any closingthoughts from you? Yeah. Absolutely. I think what what we have reallycome to see is that the nature of budgeting is it it has achieved thislore because it is so intensive.
It it takes so much time and so much energy. And and the the end statethat I really want us to be able to empower is to make budgeting feeleasy, but also be able to do a budgeting like, you know, exerciseinitiative much more often. Right? Because in today's day and age, youcan do a big planning endeavor annually, but three months later, sixmonths later, it's gonna it's gonna be out of date. And and at the paceat which things are moving, you need to be instrumenting yourselves tobe able to do this, like, always on planning type initiative.
So our goal here really is to keep these signals, keep these dashboardsand awareness top of mind always so that our customers can have accessto the information they need when they need it and can start to thinkabout, like, how can I do this quarterly cycle or even monthly and do aspend review with my my key business stakeholders and come to them withthe data and intelligence that that they need to, you know, be deployingtheir budget more intelligently rather than, you know, the other wayaround?
Yeah. The one the one thing I love is that I think, you know, there'sprobably always gonna be this time of year where we do the thisbudgeting process. But to your point, Justin, the quarterly monthly,like, so much of the work is actually being done throughout the yearthat really what we're doing is we're kinda consolidating information wealready have. We've had that finger on the pulse the entire time. We'vebeen working through the spend review. We've seen those signals. We'veactioned it. So it's almost like, hey.
Here's everything we're seeing. We consolidate it just to make surethat, you know, we feel good about our plan for next year. But this isnot a start, you know, September first and spend four weeks kicking off.No. We have, you know, had our finger to the pulse for, you know, theentire year, and we've adjusted our process accordingly. So I'mgenuinely excited because I see this as less of a headache, althoughthere is a lot of moving parts, and more of an opportunity, assuming wehave the right, you know, tools and and process at our disposal.
So thank you, Russell, Justin, for for weighing in today. Thank you forall those that joined. Good questions in the chat, really validating.And if you have any, you know, follow-up, you know, definitely encourageyou to to reach out to the three of us. If you're a customer, customer,reach out to your account manager. We can we can pick up thatconversation where we left off today. But, hopefully, you're walkingaway from this feeling a little more excited, empowered as opposed to,you know, scared, nervous, etcetera.
Thanks, everyone. Thank you all. Thanks, everybody.
