Software-as-a-service (SaaS) has become the way businesses work, and while cloud applications can provide significant benefits, it’s important for CIOs and CFOs to put SaaS management practices into play to help ensure they don’t spend more than necessary and get the most value for out of their investment.
But many hurdles can get in the way of optimizing SaaS spend. Finance teams can find it challenging to maintain a long list of SaaS apps while also monitoring new software costs. All too often, software costs can lurk in the shadows. In addition, costs are often hidden by recurring subscription charges set to auto-renew, personal credit card purchases, and low-level expenses not always scrutinized by corporate finance. For these reasons, the true expenditures can be difficult to pinpoint and quantify. This helps explain why SaaS has a reputation for quietly draining resources and eroding precious IT budgets.
Problems of SaaS Management
- SaaS apps are purchased when the corporate IT team already has those tools available through a different app – creating duplicate SaaS purchases or redundant apps. This creates SaaS waste and overspending.
- Unused or underutilized app licenses are also an issue when employees stop using software or when an employee leaves the company.
- True costs can also cause overspending due when more employees sign on and usage habits increase unexpectedly.
So, what does a CFO or CIO do to better manage SaaS applications and spending? To answer that question, we’re sharing three strategies for effective software cost savings. With these tips, you’ll be able to minimize spending and focus on maximizing return on investment.
Strategies to Reduce SaaS Spending for CFOs and CIOs
Below are the best practices and techniques to minimize SaaS costs and maximize the utilization of enterprise software licenses and resources.
Illuminate Shadow IT to Identify SaaS Apps and Costs
Cloud applications are readily accessible today as freemium models make it easy for employees to try new tools and then purchase them online without involving corporate IT (and therefore finance). This problem is known as Shadow IT, and it can be mitigated using a SaaS management platform like Tangoe’s.
The Tangoe One Cloud for SaaS solution helps IT and finance teams uncover all the SaaS apps a company uses. With five methods for Shadow IT discovery, companies can quickly and easily see the realities of SaaS usage.
How does it work? Our Smart App Discovery methods uses 550+ direct app integrations and work with 200,000+ other applications. Plus, we use tools like single sign-on (SSO) or identity protection (IDP). We can also integrate with finance & expense management system to gather intelligence or use browser extensions (optional), and desktop agents (optional).
Shadow IT Discovery: Benefits of Tangoe One Cloud for SaaS
- Identify accurate SaaS spend, including unit costs and actual spend data or true costs
- See underutilized apps and licenses that go entirely unused, allowing teams to reallocate resources
- Insights helps you analyze which applications offer similar features as a way of guide the strategy for reducing any redundant apps
- Cost savings of 20-40%!
Track and Monitor Software Usage and Contract Renewals
It’s important to revisit SaaS spend and usage habits because business needs and employee needs are always evolving, and overspending happens when software licenses are out of sync. There are a variety of reasons usage habits change. Here are just a few:
- Organizations may adopt more application licenses over time – they may start with 10 users but end up with 1,000
- Applications get new features and functionality, which makes usage grow
- Business needs expand — usage starts with a narrow set of needs (doing only reporting) but then expands into more analytics for example
- Once the project is over, users don’t use the tool anymore, but they forget to discontinue the SaaS subscription
Tangoe helps with all of these situations. Our Tangoe One Cloud for SaaS solution includes a renewal tool, helping finance and IT teams stay on top of SaaS contracts with a simple-to-use calendar.
License & Contract Management: Benefits of Tangoe One Cloud for SaaS
- Insights about apps, users, and usage helps make data-driven decisions around SaaS service cancellations and renewals
- Additionally, it also offers the flexibility to prioritize renewals based on specific requirements
- Categories show if apps are centrally managed by the business, managed by a specific team, as well as unmanaged or restricted by security or corporate policy
- Usage details reveal last login, power users, unused licenses and any apps that have no identified owner
- License management systems allow companies to design their own playbook for license administration, including programmatically assigning and reassigning licenses during on- and off-boarding processes
- Alerts help teams stay proactively informed long before a contract renewal deadline
5 Best Practices for SaaS Optimization
While the steps above are fundamental for creating an optimized ecosystem, there are seven simple rules you can follow to further optimize your SaaS business. Don’t rush – best practices can be tackled over time. SaaS optimization is an ongoing process that involves recurring analysis and management, so you can return to these best practices as your needs evolve.
- Understand Your SaaS Stack: Visibility into your SaaS tech stack can help you streamline processes by identifying and addressing problems, such application redundancy. Understanding the components of your stack, as well as how they’re used per person and application can help you find opportunities to consolidate vendors, gain better visibility for security, and optimize application performance.
- Control Costs: Controlling costs means reducing the amount of money you spend on operating expenses. The money saved can be reinvested into the business. Removing waste is one way to control costs — for example, evaluating your software licenses for redundancies and those with little use. The goal of SaaS governance is to make sure that your SaaS stack is used properly and effectively. That involves making data-driven decisions to reduce costs and mitigate risks. Start by creating standard applications for each purpose, along with guidelines and training on how to use each application.
- Automate SaaS License Management and Other Workflows: Automating SaaS management workflows like bill pay and employee on- and off-boarding helps you complete repetitive and time-consuming tasks automatically, which also improves accuracy and efficiency. You’ll free up more time for your people to focus on other areas of the business.
- Address Shadow IT: Shadow IT can lead to decreased productivity and security, along with increased and redundant costs. Uncovering and addressing shadow IT can help to avoid these problems and help to improve the overall security posture of your organization. Shadow IT can recur over time, making it an area to regularly audit.
- Improve Adoption: Improving employee adoption of SaaS leads to increased productivity, better data quality, stronger collaboration and engagement, and, finally, reduced support costs. When employees are familiar with and comfortable using SaaS applications, they’re more likely to be engaged and have stronger performance.
SaaS spend optimization is an ongoing process that ensures your organization is on the cutting edge of technology use, efficiency and cost management. When you understand where SaaS overspending originates and how to correct it, you’re on your way to gaining the benefits of SaaS without compromising cost or efficiency.
When you need to put an effective SaaS Management strategy in place, Tangoe can help.