AI spending grew 293% last year. Here's how companies are using AI to stay ahead.

Here at Ramp, we have a unique vantage point of corporate finance trends, with tens of billions in spend from tens of thousands of businesses each year managed through our platform. In Q1, our customers’ spend grew despite sticky inflation and dropping small business optimism, mirroring market trends of persistent consumer spending. 

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Our data show Ramp customers bet on innovative AI and finance tools to stay competitive, while controlling expenses in areas like business travel. Let’s take a closer look at the investments they’re making.

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P.S. Download our Q1 2024 Business Spending report for even more insights and charts.

AI is going from experimental to operational  

As expected, companies are deepening their AI usage: the promises of automation, cost savings, and better decision-making are critical for a competitive firm to pursue. Still, the sheer growth in AI spend is striking: AI-related card transaction volume increased by an incredible 293% year over year, compared to an increase of just 6% in overall software transaction volume during the same period. 

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From our data, we can see the latest AI vendors that companies are using and how much they’re spending. For our analysis, we included companies on the 2024 Forbes AI 50 list and an additional 339 Ramp vendors that we consider part of the AI landscape. Here are our top observations. 

Businesses that rely on AI are increasing their usage

Expect your AI spend to grow. Over a third of Ramp customers now pay for at least one AI tool compared to 21% one year ago. The average business spent $1.5k on AI tools in Q1, an increase of 138% year over year and evidence that companies using AI are seeing clear benefits and doubling down.

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However, the number of Ramp customers choosing to begin investing in AI has leveled off. This quarter, the number of customers spending on AI grew by just 3%, a stark decline from the peak of 45% growth that we saw in Q2 2023. Companies not yet using AI may be waiting to see its impact on early adopters before investing in the technology themselves.  

AI usage is rising the fastest in non-tech sectors

If you operate in healthcare or financial services, don’t drag your feet on AI adoption. While tech-focused companies were the quickest to adopt AI tools, companies in these industries and others are catching up. The healthcare and biotech sector saw the largest year-over-year increase in the number of companies transacting with AI vendors (131%), while tech saw the slowest growth (45%). This growth is likely thanks to a proliferation of tools that have begun to demonstrate clear industry-specific use cases—for example, automating radiology workflows to prioritize high-risk cases, double-checking doctors’ conclusions, or scanning and analyzing new research papers for relevant insights.

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Non-tech companies are outpacing their tech peers when it comes to spending growth, too. Here, financial services took the lead, growing mean card spend year over year with AI vendors by 331%. The consulting and professional services sector is ramping up its AI spend as well, with the highest quarter-over-quarter growth at 117%—despite (or perhaps because of) recent industry downsizing. In these fields too, demonstrated use cases for AI from offering automated financial advice to data analysis and pattern recognition seem to be driving the increase in adoption. 

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Why is adoption slowing down for tech companies? Market saturation likely plays a role: while the tech sector showed the slowest growth in the number of companies transacting with top AI vendors, the overall AI adoption rate in the tech sector is still higher than in any other field.

The usage of “narrow” AI tools is increasing

Encourage your teams to test functional AI tools, e.g., AI for sales intelligence. General development AI tools like OpenAI continue to be category leaders by all measures, but narrow AI tools—ones that replicates human intelligence for a dedicated purpose—are gaining popularity. These specialized tools now account for four of the top ten vendors by customer count (Fireflies.ai, ElevenLabs, Instantly.ai, Beautiful.ai) and four of the top vendors by expenses (Seamless.AI, accessiBe, Fireflies.ai, Instantly.ai).

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AI tools are solidifying their place in the business toolkit

Budget for recurring AI spend. Of the businesses that started transacting with AI vendors 12 months ago, 56% still spend with the same vendors, indicating these tools are here to stay. OpenAI has the highest customer retention rate and spending growth among leading AI tools. 82% of companies that spent on OpenAI a year ago still spend with them today. In fact, on average, OpenAI customers grow their spend by 25% every month in the first year of service. 

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Back office finance tools are big winners

AI tools are grabbing the spotlight, but our data show finance tools also gained traction in Q1: TaxBandits, Tax1099, Aatrix Software (payroll), and Stripe were all on the list of fastest-growing vendors by customer count. The surge of tax tools is, of course, seasonal, but the prevalence of finance tools on the list suggests that companies and contractors are increasingly scrutinizing their finance operations and adopting new solutions to automate compliance.

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Businesses are watching their travel spend 

One area that businesses seem to be managing more carefully is business travel: although spend with airlines rose dramatically in Q1, overall travel budgets stayed steady. Despite inflationary headwinds, businesses are making it a point to meet in person, with an increase in international trips. Companies countered the increase by curbing their spend on discretionary expenses like restaurants, entertainment, and alcohol after the holidays.  

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An overall strong start to 2024—but speed bumps may be ahead 

Overall, year-over-year spending increased in nearly all top categories, giving 2024 a robust start. Advertising led the gains with an impressive 40% year-over-year change in mean card spend, followed by airlines (34%). While these categories were leaders, positive numbers across the board show that companies are not shying away from investments, with many categories showing multiple consecutive months of positive recurring spend.

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Companies on Ramp seemed buoyed by high consumer spending and a record-high stock market. Time will tell if the elusive priced-in rate cuts from the Federal Reserve will turn the tides in corporate spend. Indeed, our data show that businesses are now taking longer to pay invoices even as accounts payable spend has increased across all industries, raising questions as to whether companies are paying closer attention to their cash flow, making later payments due to high interest rates, or simply waiting to pay their bills. In Q2, staying ahead of the competition may mean balancing growth spend with strategic cost-cutting. 

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For more data insights, download our full Q1 2024 Business Spending report or join our May 22nd webinar with Perplexity and ElevenLabs.

_{Methodology: For this analysis, we looked at thousands of aggregated, anonymized transactions on Ramp cards and invoices paid through Ramp Bill Pay. For year-over-year comparisons, our sample size comprises customers who have been active with Ramp over that entire 12-month period. Quarter-over-quarter comparisons comprise customers who have been active with Ramp over the two quarters analyzed. Small SMBs represent companies with 1-24 employees. Large SMBs represent companies with 25-99 employees. Midmarket companies range from 100-999 employees. Expense categories for their transactions are based on merchant category codes provided by Visa. These and other report definitions are subject to change. Analysis is based solely on card and transaction data observable by Ramp, and should not be taken as an indication of a company's or Ramp’s business performance. Some data points were excluded to protect customer privacy.} 

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