SaaS spend is out of control

At a glance

• The main takeaway: The average business today uses between 50 to 500 SaaS applications, depending on the size of the company.
• Impact on your business: Software spend has increased exponentially, while most firms are not getting full value from this investment. In addition, critical data to run your business is spread throughout your business vs your decision-maker’s hands.
• Next steps: Audit SaaS usage, decrease license spend and consolidate data to empower decision makers.

The full story:

SaaS spend is out of control. That’s right, I said it. Companies today are now buying SaaS applications at an unprecedented rate, and the buying process for these applications has become distributed, i.e., removed from IT and placed in the hands of non-sophisticated technology buyers. The average large enterprise has nearly 500 SaaS applications, according to Productiv, and even the smallest of businesses can now have up to 50 within their world. SaaS applications are going nowhere as they provide great value, so how does a business owner, CFOs or IT professionals begin to get a handle on this rapidly growing sprawl?

1. Begin with an audit – Build a list of all SaaS applications that includes the cost, the number of licensed users, the primary stakeholder, i.e, executive sponsor, and the actual usage of the application.
2. Identify all underperformers – Any SaaS application underutilized by your team, i.e., you have 100 licenses, but only ten people log in regularly.
3. Reduce license spend – Now that you have a list of underperformers, meet with the primary stakeholders to discuss reducing licensing spend on underutilized applications. Be prepared to offer up an alternative, i.e., a way to get the data into the decision-maker’s hands, but leave no doubt that the number of licensed users will decrease.
4. Implement a new buying process – Slowing down the purchasing of SaaS applications can be good. You can create a model that allows the executive sponsor to identify how the application is planned to be used, who will interact with it and how often they will need the data.
5. Make sure you have a strong data management process and warehouse – To slow down the sprawl of SaaS; you need to ensure that the business can get access to key data and share that across company silos. This will allow you to empower your decision-makers with key data and keep them happy since you just took away their buying power.

The bottom line

SaaS is here to stay, and the pandemic significantly accelerated the adoption and deployment of these applications. That doesn’t mean you are powerless as a business owner, CFO or IT leader, but it does mean you must have a straightforward process and plan to ensure your business is not overspending on unused licenses.

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