SaaS apps are more popular than ever before.
In 2020, the average enterprise used 288 SaaS applications company-wide.
With this many tools, managing SaaS can be a full-time job. You need to constantly ensure:
All the SaaS apps you’ve paying for are being used.
You’re not paying for multiple applications with the same use-case.
Shadow IT is not a common occurrence in your organization.
And to manage SaaS correctly, you need to conduct SaaS spend management on a regular basis.
Here’s everything you need to be prepared:
- Understanding SaaS Spend Management
- Why SaaS Spend Management Is Important in 2021
- How To Get The Most Out of SaaS Management Software
Understanding SaaS Spend Management
SaaS spend management is the process of actively managing internal SaaS licenses.
Today, more businesses than ever are dependent on SaaS tools. Companies use between dozens and thousands of SaaS applications to manage their day-to-day work.
In an average organization, many employees across departments and functionalities have the ability to buy new SaaS tools, which leads to SaaS waste.
SaaS waste takes several forms, including unused tools, unused licenses, and apps with duplicate use-cases.
Each of these oversights can add up to increasingly costly mistakes for your business. According to our research, the average SaaS-heavy company wastes over $135,000 on duplicate or unused tools.
By vigilantly managing your SaaS inventory, you can ensure you’re getting the most out of each SaaS subscription you’ve purchased.
Why SaaS Spend Management Is Important in 2021
Having a deep understanding of how disorganized SaaS tools can lead to internal problems is critical to preventing mistakes from occuring.
#1. Rise of Shadow IT
Shadow IT is a term that refers to the action of purchasing and using IT tools and resources without getting approval from the IT department.
Since many companies don’t have formal rules around which employees are or are not allowed to buy SaaS apps, this can happen frequently.
Here’s what it might look like:
- Trello is used company-wide for project and task management.
- One department lead discovers Basecamp and thinks it’s a better fit for their team. They make the decision to buy a new subscription without checking with the IT team first.
- When collaborating with different departments, several additional team leads start to think that they like Basecamp better than Trello as well, and decide to migrate to Basecamp too.
When this happens, the organization ends up paying for duplicate licenses for tools with the same use-case (even though one of the tools isn’t even being utilized anymore).
#2. Duplicate SaaS Apps & Unused Licenses
Having a clear and robust vendor management system helps to avoid shadow IT, but there are still ways your SaaS spend might be inefficient.
Constant vigilence is required to prevent:
- Duplicate apps. Two different departments buy two different apps that end up having exactly the same use-cases.
- Forgotten cancellations. A department stops using a specific application but forgets to notify the IT department to cancel the subscription.
- Unused licenses. Department buys a new SaaS tool, fails to gain buy-in from their team, and it ends up being abandoned (but still paid for).
- Overpaid licenses. When an employee quits, the IT team forgets to cancel their SaaS licenses.
Managing SaaS spend is a never-ending task.
Here’s how you can do it in practice:
Take Control of Your IT – Use SaaS Management Software
Many companies create robust Excel spreadsheets to track their SaaS spend and usage. If this sounds like you, you’ll know where the gaps in efficiency are:
- Someone (or several people) need to constantly keep the sheet updated with subscription pricing plans and the cost of using each app, which changes as subscriptions do.
- Manually tracking who is using what app, and for how long, is virtually impossible.
- The SaaS management owner (ideally someone in IT) should always be alerted whenever new applications are purchased, though this is rarely the case (see: Shadow IT).
The spreadsheet approach adds a lot of complexity to an inherently complex problem, and the need to constantly nag team members for data is time-consuming and ripe for human error.
Luckily, there’s a robust technology solution that solves the issue of wasteful SaaS spend: SaaS management software.
SaaS management software is a tool that allows IT teams to get complete control over every SaaS app used within their organization.
Once onboarded (which can take as little as a few minutes), the tool can automatically discover every SaaS tool your company is using.
And keeps it updated on a regular basis, without having to manually add new tools.
You also get a top-down dashboard that shows you all the essential information about your SaaS spend and usage, including:
- Who’s using what software?
- Who’s in charge of buying specific tools?
- Which apps are being unused or underused?
That’s not all, though. The software also comes with dozens of other features, such as:
- Employee Onboarding & Offboarding Workflows. Create and run workflows for onboarding and offboarding employees to SaaS apps.
- Vendor Management Workflows. Set up SaaS acquisition and cancellation workflows through a single platform.
- Compliance & Security. Know which of your SaaS tools are compliant with certain regulations, such as SOC2, GDPR, and others.
Want to manage your SaaS spend efficiently? Book a demo now.
SaaS Spend Management FAQ
Do you still have some questions about SaaS management? We’ll answer them here:
#1. What is a SaaS management platform?
A SaaS management platform is a type of SaaS used for managing SaaS subscriptions. You can use it to track all your SaaS licenses in one place, and uncover information like:
- Who’s using what software?
- Who’s the application owner for a given SaaS?
- Do you pay for any SaaS tools that aren’t being used?
- How much are you paying for any given SaaS app?
- When’s the next billing date?
You can also use a SaaS management platform to onboard and offboard employees to and from different SaaS tools, as well as run vendor approval workflows.
#2. How do you manage SaaS?
- Set up strict vendor approval workflows to avoid shadow IT.
- Set up employee onboarding workflows and ensure that all your licenses are being utilized.
- Set up employee offboarding workflows and ensure that all their SaaS licenses are canceled (or given to another employee).
- Use a SaaS management platform to discover deadweight apps and cut them out.
- Ensure that all relevant employees, team leads, and app owners are using the SaaS management software.
- On an ongoing basis, keep track of SaaS usage and avoid SaaS waste.
#3. Who’s responsible for managing SaaS?
The people responsible for managing SaaS subscriptions are:
- The IT team, ensuring that newly purchased SaaS tools are secure, compliant, and not a duplicate of an existing tool.
- The department leads, ensuring that their team members don’t get tools they don’t need.
- Application owners, making sure that they’re not paying for any deadweight apps.