Software as a Service (SaaS) spend is huge, and it’s estimated to get even bigger: Gartner estimates that SaaS spend will grow to $122.6 billion in 2021. Of course, SaaS is one of the most explosive growth areas in an organization’s operational budget. This rapid growth offers its own set of new challenges:
- Visibility: SaaS is increasingly becoming business-led and purchased outside the standard procurement channels.
- Accountability: Ownership is rarely assigned once purchased, resulting in a lack of responsibility of management.
- Utilization: A study found that once provisioned, as much as 30% of application licenses purchased go completely unused.
- Risk: SaaS applications often store sensitive customer data, financial details, and IP that must now be secured. Are your SaaS apps secure?
Organizations need to have proper visibility into what their SaaS portfolio contains, who is responsible for owning which parts of that portfolio, and how to drive high utilization across the portfolio to eliminate waste and unnecessary spending.
Three steps to kick-start effective SaaS application management
1) Identify your SaaS application inventory
While it might sound basic, SaaS identification and discovery can oftentimes be more complex than you’d think. You cannot manage what you do not know, which is why taking stock of all your SaaS applications, no matter how big or how small, is vital to properly managing your portfolio. According to Crunchbase, there were over 15,000 SaaS companies in the world by June 2020, with almost 1,500 founded in 2017 alone. How many of these companies’ offerings do you have installed?
Start by connecting to your organization’s single sign-on (SSO) system to gain visibility into the applications that have been registered in SSO as well as gain insight into which users are logging into what applications. An initial SaaS app audit is warranted to determine just how many of these solutions are deployed across your organization. Who is using each SaaS app and for what purpose?
You can and also should gather application data from other sources, including direct API connection and/or financial systems. The fidelity of data varies depending on where and how you get it, but to properly account for all SaaS software, it’s important to collect information beyond one source.
2) Centralize your SaaS contracts
Some organizations manage contracts in a contract management system, while others manage it through email or a patchwork of homegrown processes. Regardless of how contracts are stored, it is essential to manage them in a centralized location so that you can map those contracts to specific application utilization data.
Collecting contracts and being able to see those contracts in a linear visualization or dashboard can provide IT finance and procurement professionals with data necessary to proactively manage upcoming renewals while evaluating potential applications to cut.
Another benefit of marrying contracts with specific application usage data is that upon contract renewal time, procurement can have insight into any contracts you may be incurring waste on due to underutilization, making these vendor agreements prime for rightsizing. Are apps over-provisioned and/or underutilized?
3) Manage user activity across applications
Managing user activity across your applications can allow your organization to get the most out of the licenses that you pay for. A SaaS portfolio management tool like Cloudability SaaS can help with this. Cloudability SaaS has automated connectivity to SaaS applications, which can help you get near-real-time readouts on which users are using the licenses that they consume.
Additionally, managing users and tracking inactivity on a frequent basis provides your vendor teams with the ability to proactively send unused application requests to users, helping identify any licenses that may be good candidates for reallocation purposes. Generally, you won’t be able to reduce the number of licenses that you’ve paid for when you are in the middle of an agreement, but that does not mean you cannot reallocate licenses to others in your organization that may get a better use out of it. Could little-used SaaS licenses be deployed more efficiently elsewhere, or can unused licenses be eliminated?
SaaS budgeting is increasingly decentralized; mid-sized companies average as many as 32 different billing owners for their SaaS apps. Who owns, selects, and deploys SaaS apps in your organization? And who owns SaaS from a budgetary perspective?
Make data-driven decisions about your SaaS portfolio
No matter where you are in your SaaS journey, utilizing best practices and proper management techniques can help avoid potential risks and alleviate current challenges. Learn more about how Cloudability SaaS can help you understand, manage, optimize, and govern your SaaS portfolio.