Tips on How to save $$$ on SaaS for IT Leaders

We’ve all been there! The feeling of being overwhelmed by the uncontrolled number of SaaS apps used by users across all the different business units in the organization causing you to sleep with one eye open and having a preoccupied mind about possible security incidents, along with the Finance department asking you to explain spend on apps that you never heard of!! Sounds familiar? Well, the question here is: What are you going to do about it?

The sprawl of SaaS apps in any organization introduces significant security, compliance, and financial risks that could lead to security breaches, costly fines, and loss of revenue and reputation. Therefore, visibility is KEY. This leads us to the first tip:

1. Assess Your Current SaaS Usage: Conduct a thorough assessment of your current SaaS usage, including all the applications being used, their subscription costs, and their usage by the employees. Identify the SaaS applications that are not being used or are being used infrequently, and always get employees’ feedback.

As previously mentioned, visibility is key when it comes to controlling SaaS apps costs. Without proper visibility apps accounts can multiply like rabbits. In addition to visibility, you need to fully understand the actual use cases and business needs for each app and its licenses, along with who uses each app. Therefore, you need the right tools for the job. Whatever SaaS Management Platform (SMP) tool you use, make sure that it covers the following high-level four pillars:

a) Shadow IT: You need to be able to find and act on the apps that you (IT) don’t control and don’t know about. According to Microsoft, 50% of SaaS tech apps are provisioned outside of IT! According to Gartner, 99% of cloud breaches are caused by application or user configuration errors. Therefore, your SMP of choice should provide Shadow IT apps discovery features like Multiple Discovery Methods and Real-Time Shadow IT Detection.

b) SaaS Onboarding & Offboarding: SaaS onboarding and offboarding should be part of your general onboarding and offboarding processes. Automation is key to streamlining, simplifying the processes and saving time, efforts and avoiding configuration mistakes. According to Penn Schoen Berland (PSB), 42% of millennials said they would leave a company due to substandard technology, and according to Pulse IT Community, 76% of IT leaders see proper SaaS Offboarding as a significant security risk. Therefore, automating on/offboarding can reduce risks and increase employee retention.

c) SaaS Spend Optimization: From a financial perspective, the goal here is to identify SaaS spending, and uncover the costs and value of each app along with eliminating wasted spend. This will keep your Finance department happy. From an IT perspective, the goal is to remove redundant tech and right-size contracts. According to ITAM Review, 35% or more SaaS apps licenses are wasted, and 25% of wasted SaaS licenses overlap with other apps! Hence the need for the SMP of choice to drive SaaS ROI with cost-saving insights and actions.

d) SaaS Renewal & Vendor Management: Are you constantly being hit by surprise renewals monthly? Well, you’re not alone! It’s hard to keep track of SaaS subscriptions these days especially when you don’t have proper visibility. Therefore, it’s important to take control of SaaS renewals & vendor management via the SMP of choice.

Visibility is great and all, but it still doesn’t answer a very important question: Who picks the SaaS tool that is right for the business needs? Making the right SaaS renewal decisions are hampered without input from the employees who use them. Even if you are aware of redundant SaaS tools that fulfill the same business need, IT still needs to decide which tool is the standard, and whether a tool should be supported and managed by IT or just authorized, and that’s why employee feedback is vital to resolve this challenge, and that leads us to the second tip:

2. Prioritize SaaS Applications: Prioritize your SaaS applications based on their importance to the business. Consider which applications are critical to your operations, which applications can be replaced by other software, and which applications can be discontinued altogether.

Prioritizing your SaaS apps should be part of your Business Impact Analysis (BIA) needed for Business Continuity Planning and Disaster recovery. You need to fully understand and assess the impact of not having critical SaaS apps available on the business from financial and productivity perspectives.

What is a BIA you ask? Well, as the research and advisory experts at Gartner define it, “[It’s] the process of determining the criticality of business activities and associated resource requirements to ensure operational resilience and continuity of operations during and after a business disruption.”

In summary, a BIA will help you:

• Identify which products and services provide your company the most value, and therefore should be prioritized, protected, and recovered due to disruption.

• Identify which business activities and resources need protection and recovery from interference.

• Set recovery timeframe expectations to guide your company’s priorities during a recovery phase.

• Identify contractual, legal, and regulatory commitments.

• Clarify appropriate spending capabilities to meet recovery objectives.

• Collect and organize additional data like team and staffing requirements, contact information, and more for a business continuity plan (BCP).

3. Negotiate Better Deals: Contact your SaaS vendors and negotiate better deals. Many vendors offer discounts for longer-term contracts or prepayments. You can also consider negotiating a better deal by using a competitor's offer as leverage.

Your SaaS Management Platform should have a centralized SaaS contract repository containing all terms and compliance status and information. Once centralized, IT teams can get automated alerts and notifications on invoices, key renewal, or cancellation dates. This eliminates the chance that automatic renewals using prior licensing terms happen. Since your SaaS spend management software notifies you of critical dates long before automatic renewal, you can renegotiate license levels, pricing, terms, and other necessary contract changes.

4. Consolidate SaaS Vendors: Consolidate your SaaS vendors to reduce the number of subscriptions you're paying for. This will help you negotiate better deals and simplify your vendor management.

An SMP needs to unify all SaaS vendor data, including products, renewals, invoices, and compliance in a single place. With a central repository to store all app contract details, there’s no more time-consuming searching. Gone is the digging through pages and pages of complex, long contracts – some with multiple apps over multiple years to find the right details.

5. Monitor Usage: Monitor the usage of your SaaS applications and subscriptions regularly. Identify any usage patterns that are driving up costs and take action to address them.

Just like your single sign-on tool is crucial for running IT, so is a SaaS spend management platform. Every organization needs a SaaS system of record. Since a SaaS spend management tool is a SaaS system of record or a single source of truth for the organization’s software resources, it delivers savings and operational efficiencies. Within a single pane of glass, you view your organization’s entire SaaS catalog - of all apps currently or formerly available to users.

There are four savings opportunities ways an SMP can help with:

• Find the same SaaS app used within different accounts. Consolidating these accounts is probably the easiest way to lower costs without disrupting users. When multiple employees or departments create accounts for the same app, no single account qualifies for negotiated deals and volume pricing. In addition, your enterprise misses out on higher volume license tiers that often bring preferred features, functionality, and support. With the new visibility that your SaaS spend management tool reveals, you can consolidate multiple accounts and save.

• Detect unused and underutilized SaaS app licenses. Seeing employee SaaS adoption and getting deep insights on usage highlights unused or underused apps allow you to cash in on easy savings. Instead of adding a new license, you can reclaim an underutilized one and redeploy it to someone else who will get the most out of it.

• Reveal duplicate SaaS applications fulfilling the same business need. Solving the problem of overlapping apps -- with an organization-wide standard app – lowers costs like consolidating multiple accounts. Standardization often comes with volume pricing and additional benefits associated with higher license tiers. You get new management efficiencies, too. IT, procurement, and accounting teams are no longer burdened with supporting so many vendors, thereby lowering organizational costs.

• Use employee surveys within your SMP tool to aid app consolidation decisions and speed cost reductions. SaaS spend management tools reveal usage insights on redundant SaaS apps, but to speed time to saving, you need real user feedback.

6. Optimize Subscriptions: Optimize your SaaS subscriptions by using the right subscription tier for your needs. For example, if you're not using all the features of a premium subscription, downgrade to a lower-tier subscription.

Without a total understanding of license usage, planning is like a shot in the dark. Not knowing license use at a granular level like vendor and product, smart budgeting decisions by employees or departments are not achievable. Let's take a common example: Zoom.

It’s not enough to know who uses Zoom. Most everyone does. To make good budget decisions, it’s important to know how much a department and employee use their licenses for each type of Zoom product like Zoom Rooms, Zoom Webinars, or Zoom Meetings.

7. Consider Open-Source Alternatives: Consider open-source alternatives for your SaaS applications. Open-source software can be a cost-effective alternative to commercial software, as it's often free and has a large community of developers.

8. Train Employees: Train your employees to use the SaaS applications efficiently. This will help reduce usage costs and increase productivity.

By following the above-mentioned tips, IT leaders can achieve significant savings on SaaS and reduce their overall software spending helping IT, Finance, and Procurement teams right size their SaaS stacks and associated licenses, contracts, and expenses bolstering the enterprise’s ability to grow and win sustainability.

Kinan.