The Best Guide to SaaS License Management

Software as a Service (SaaS) licensing can be complicated to manage, and its complexity can quickly increase as an organization grows. At some organizations, License Management can look a lot like the discipline of software asset management (SAM), where the IT team attempts to balance the number of software licenses purchased with those actually consumed or used. The key difference is that modern SaaS management is centered around people, whereas an old-school SAM approach focuses on managing the assets themselves. As we all know, people can be unpredictable!
In the SaaS world, it can be tougher for IT teams to wrangle licensing and usage, since the nature of software purchasing has fundamentally become distributed across the entire organization. In the past, the role of IT has been highly centralized, and has controlled all of the decision-making around software purchasing and licensing. Today’s SaaS-forward organization looks dramatically different; team leaders are buying and allocating licenses across their teams themselves. Without the proper visibility, IT teams are often left at a loss trying to track all of these decisions across the organization, which is where License Management can get tricky.
A subset of SaaS Vendor Management, which focuses on both License Management and the financial and compliance relationships of third-party vendors, SaaS License Management is very specific to how people control and use apps within an organization. Before we get into the specific challenges, let’s look at the two main areas of License Management: Tiers and Utilization.
If you’ve ever signed up for a SaaS subscription, you probably know that there are usually several tiers you can choose from, depending on your organization’s needs. These tiers typically fall into the following categories:
Another dimension of SaaS licensing is utilization, or how much an app is used, and how many of those licenses are actually allocated across the organization. Without the proper visibility across SaaS accounts, the question of utilization can often be difficult for IT managers, or even the team leaders themselves, to answer.
When it comes to license allocation, licenses are either used or they’re unused. Taking it a step further, you’ll also want to know if licenses are allocated or unallocated altogether. If there’s an overabundance of unallocated or unused licenses, your organization may be spending significantly more than it needs to on SaaS.
There are many flavors of SaaS licenses out there, but some of the most common pricing models include:
The relationship between apps and people is far more complex than most organizations realize, which can have major, hidden business implications. Much like Facebook’s “Social Graph” for people-to-people relationships, the SaaS Graph illustrates people-to-app relationships and the complexity they can introduce into the organization. SaaS licenses are one dimension of the SaaS Graph, which you can read more about here.
Data from Blissfully’s Blissfully’s 2019 SaaS Trends report shows that the typical 200-500 person company uses 123 apps, which doesn’t sound too out of control. But, when you consider the SaaS Graph relationships, it gets much more complicated: the same sized company has an average of 2,700 SaaS Graph relationships. The number of relationships get deeper and more complex as the organization grows: companies with 500-1,000 employees have an astounding 5,671 app-to-people relationships!
Imagine how complicated this gets from a SaaS licensing perspective, as people move between roles, shuffle responsibilities, and new employees come and go. The one thing constant about the SaaS Graph is change, so here are a few key implications you should be aware of for License Management.
In simple terms, Employee Lifecycle Management refers to the steps HR, IT, team leaders and other stakeholders take as an employee joins, progresses within an organization, or as an employee leaves an organization. From a pure SaaS licensing perspective, there are a few key phases of the employee lifecycle that organizations should focus on mastering:
Not all SaaS users look alike. As new team members are on- and offboarded throughout the year, the role of each user can get especially complicated. Without a clear understanding of these roles, organizations could be wasting time on inefficient processes, wasting money, or worse, granting permissions to the wrong people (which could be a big security concern). Here is a suggested list of internal roles to assign to one or more team members, to effectively manage each SaaS subscription.
In 2018, the average company spent $343,000 on SaaS, a whopping 78 percent increase over 2017. In fact, companies spend more per employee on SaaS than on laptops. The average midsized company has 32 different billing owners for SaaS apps, effectively distributing the task of IT budgeting across the entire organization.
With SaaS budgets and the cost-per-employee quickly rising, organizations need to implement an effective License Management strategy. In SaaS-first businesses, it’s difficult, if not impossible, to use a centralized decision making approach to budgeting and License Management, since team leaders often become billing owners themselves.
The most effective way to meet these budgeting challenges is for IT and finance leadership to gain further visibility into the SaaS stack and collaborate directly with team leaders to determine the organization’s needs (an approach we call Collaborative IT). There may be some cases, for example, where longer-term contracts can save the organization money over more flexible licensing options, if teams are going to use a guaranteed number of licenses.
Tracking SaaS renewals can get tricky, especially since they happen at different points throughout the year. While some vendors are great about reminding you about subscription renewals, others just come and go with little fanfare. As a result, many organizations overlook renewals as an opportunity to negotiate pricing and terms, or re-evaluate the team’s needs.
A Collaborative IT approach can help teams keep renewals in check. Consider following this checklist for SaaS vendor renewals:
Data privacy is a crucial consideration, especially for organizations that are beholden to certain compliance regulations like GDPR or HIPAA. However, many organizations that sell to the enterprise also need to be aware of their vendors’ data privacy practices, especially if they’re pursuing compliance certifications like SOC2.
Typically, data within apps exists in three different states:
Without the proper protections in place from both a user and vendor security perspective, sensitive data could be at risk. For example, each user’s connection to an app presents a possible vulnerability, in the absence of strong passwords and/or multi-factor authentication. And in most cases, organizations will want to get documentation into each vendor’s security processes, certifications, and/or attestations during the initial contract or renewal process.
Considering all of the implications described above, it’s easy to understand why SaaS License Management is so difficult for many organizations to wrangle. Between the sheer volume of apps, the number of license types and the amount of decision makers in an organization, many IT teams struggle to gain visibility into exactly what’s in use in the organization, when, and why.
Often, organizations track SaaS licenses in a very ad-hoc or disorganized way. Some individual teams may keep their own spreadsheets, which can be difficult to maintain or gain a collective view across the entire organization. Still others may have no system in place at all. Even if your organization does use spreadsheets, it can still be impossible to get data on the number of licenses available, usage of key subscriptions, and other important information that could determine the course of your budgeting strategy.
Luckily, there are solutions available to serve as a single pane of glass for visibility purposes, and help teams effectively collaborate across all key SaaS stakeholders.
Having the right systems and automation in place will help make some of these SaaS License Management challenges much easier. Instead of depending on ad-hoc processes, automating many rote tasks—such as checking renewals, configuring accounts, or tracking team changes—can save a lot of time and allow the IT team to focus on more strategic tasks.
Solutions like Blissfully provide IT, HR, finance, and team leaders with a single pane of glass to gain visibility across all of your SaaS vendors. Blissfully can help manage key License Management workflows including employee on- and off-boarding, team changes, vendor approvals, renewals, app usage, and more.
Blissfully’s system of record provides consistency within ever-changing SaaS organizations, and empower simpler collaboration across stakeholders.
Blissfully allows teams to input new SaaS licenses or import existing ones, and integrates with vendors such as Salesforce and Zendesk to sync key license and user metadata into the system.
When a license is up for renewal, or an employee is onboarded or offboarded, Blissfully notifies key stakeholders about required changes or approvals. With Blissfully, teams can easily track apps, people, and spend in one place.