The popularity of software as a service (SaaS) has skyrocketed. It’s evolved from a few niche tools to an expanding library of cloud applications that every company across industry depends on. But without following SaaS optimization best practices, you can be overwhelmed by the rising number of applications to manage and their costs too.
According to a report from Harvey Nash Group, 73% of global technology experts consider SaaS technologies to be “quite important” or “very important” for their organizations. But with so many SaaS cost optimization tools available, finding and optimizing the right SaaS solution has become increasingly difficult.
Discover how SaaS optimization can help your organization, how to get started and what you need to know to make this process more effective.
SaaS optimization is the process of assessing your applications in use and aligning key areas, including licenses, users, workflow and spend. The process involves identifying and addressing all issues that affect the IT management efficiency and value of your SaaS tools and resources.
Successful optimization unlocks continuous improvement in cost savings and usage efficiency to drive maximum value from your applications.
By using SaaS management software and optimization tools, you can create a SaaS optimization cycle. This cycle allows you to automatically iterate and optimize for every new application, user, license or process you add. It also enables ongoing cost efficiencies and removes the need for manual intervention.
SaaS price optimization is essential for any organization looking to control costs, become more efficient and obtain the maximum value from their SaaS investments and IT budgets. It helps you identify areas where you’re overspending and improve your bill pay and vendor management inefficiencies.
There are three main factors that typically lead to companies overspending on SaaS: lack of visibility, unauthorized license auto-renewals and data silos.
Lack of Visibility
The first issue, a lack of visibility into inventory, is often the result of shadow IT activity. This occurs when cloud technology is provisioned by individual business units without your IT department’s formal approval. As a result, IT lacks visibility into your organization’s use of SaaS technologies, much less their purpose. This can lead to redundant applications purchased across multiple vendors as well as security concerns. Without that insight, you can’t optimize SaaS application investments, comply with government regulations, or control costs.
The second factor, unauthorized license auto-renewals, is a common problem when SaaS products and applications are provisioned without involving IT. Because IT isn’t aware of subscriptions, no one is monitoring usage or managing the renewal process, leading to wasted spend.
A third overspending factor is data silos, which occur when different business units are using SaaS applications that don’t talk to each other. This lack of data integration prevents IT from getting a holistic view of SaaS usage and complicates efforts to assess, control and optimize spending.
Reduced SaaS Spending
With SaaS optimization, you reduce spending and ease vendor management burdens by identifying redundancies and consolidating underused licenses. Determine which tools offer the greatest value, pose the least security risks, and have the highest levels of adoption, so you can identify SaaS licenses that can be discontinued and make data-driven decisions around license upgrades.
Having greater visibility into your SaaS applications and licenses means it’s easier to find and remove any outdated, unused, or high-risk apps. Additionally, the security team can more accurately track the list of vendors and contractors with access to company information systems.
Optimizing your SaaS apps also provides greater visibility into what services are in use. By tracking data such as user behavior and usage patterns, you gain greater insights into your business-critical tools and identify potential issues and opportunities. For instance, employee on-boarding and off-boarding becomes clearer as teams can see where licenses go unused. Financial chargebacks are also easier when IT has visibility into the applications used by each department and employee role.
SaaS optimization also helps you identify and eliminate unneeded applications while consolidating and replacing multiple applications with a single comprehensive option. This process reduces the need for your team to switch between platforms, leading to streamlined operations and greater efficiency.
SaaS optimization can help increase IT productivity by streamlining and automating management tasks and workflows including bill pay, renewal calendars, and pricing comparisons. It can also help teams conserve resources, for example, by limiting the amount of users who can access an application. Your people have access only to the tools they need, and work isn’t interrupted by unnecessary distractions.
Your SaaS optimization process requires structure and strategy. Here are four steps to get there.
Assess Your Applications
The first step to optimizing your SaaS approach is conducting a comprehensive inventory assessment of all applications within your organization. This process entails evaluating all associated SaaS transactions, licenses, contracts and subscriptions, plus the departments and individuals using them.
Ideally, you’ll obtain this data through direct integrations with Single Sign On systems and business-critical applications, but also financial and accounting systems. Once you have that and any other data, you’ll be able to automate analysis with real-time updates inside the SaaS management and optimization platform.
Rightsize Your Inventory
The next phase involves identifying and taking proactive action against any SaaS applications that are duplicative and unnecessary, unauthorized or provisioned outside IT. Start by assessing what you have. Getting an accurate picture of your SaaS applications informs your decisions about what to keep and how to improve inventory management going forward.
Assess Usage and User Activity
Upon organizing and rightsizing your SaaS stack, the next area of focus should be usage and user activity. You need to know what kind of applications you’re using, how much and when. This analysis will help you determine where you can save money by reducing or removing unnecessary applications, as well as other unused SaaS tools and resources.
If you can identify areas where users are inactive, you can also focus on improving the user experience in those areas to encourage more engagement. By understanding your data usage and user activity, you can optimize your SaaS stack for both cost and performance.
This is also a time to evaluate role-based permissions. Optimizing this area restores control over usage and access, which improves compliance and mitigates security threats.
Optimize and Forecast SaaS Spend
One of the main benefits of SaaS optimization tools capabilities is that you can automatically integrate technologies, connecting each transaction to the appropriate application. You can then leverage those insights to budget, forecast future needs and ultimately trim the fat off SaaS spend.
Here are four ways you can do that:
Compare usage to current plans, pricing and contract value. Assess current SaaS spend versus what the organization requires and can budget for.
Terminate low-impact and no-impact subscriptions to maximize efficiency across teams and departments. Look at applications that have little usage.
Create accurate, fact-based estimates:
Forecast budgetary needs based on current usage and SaaS spend trends and patterns.
Maintain and monitor schedules:
Check your alerts and notifications to keep you aware of any billing or contract issues, auto-renewal reminders or other items to address.
While the steps above are fundamental for creating an optimized ecosystem, there are other best practices you can follow to further optimize your SaaS business. Don’t rush – best practices can be tackled over time. Don’t worry about completing all these best practices at once. Build them into your routines and processes. 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.
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.
Staying on top of day-to-day duties while managing time-consuming tasks is a difficult juggling act. Doing this manually results in avoidable errors and lost productivity. Automating SaaS management workflows like bill pay and employee on- and off-boarding helps you avoid these issues by completing 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.
Implement SaaS Governance
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.
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.
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.
Privacy, security and compliance are important for every organization, but SaaS systems are especially vulnerable because they often store sensitive information such as customer and financial data. Enhanced security improves day-to-day operations while reducing or avoiding the costs associated with data losses or breaches.
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.
If you’re unsure how SaaS optimization can benefit your organization, consider partnering with a SaaS management software provider for guidance and support.
Learn how SaaS management software can further help with your SaaS optimization, such as identifying and preventing shadow IT.
Meet with a solution expert today.