You might be spending more than you should on your Software as a Service (SaaS) applications. Redundancies, unused licenses and assumption-based purchasing decisions make managing your SaaS applications a messy, and costly, experience. Control SaaS usage by viewing adoption and consumption.
However, without the right usage data to show the true cost and value of SaaS applications (ex. unit rate), organizations are losing money year-over-year to unnecessary expenditures and inefficient license and contract negotiations.
Reigning in your SaaS application portfolio management requires a shift from assumption-based purchasing to data-driven, consumption-based purchasing.
Understanding usage trends will maximize the value of your current subscriptions (ex. moving licenses from one department to another based on changing business demand); and it will provide supporting data for planning out future years (ex. high/low usage requires more/less licenses at contract renegotiations).
Challenges with managing SaaS usage
Lack of visibility into SaaS spend and usage. Siloed operational and financial data means that SaaS application and service owners lack access to contract and cost data, and vendor owners overseeing SaaS contracts do not have access to usage data. There is no view where the financial (with the fully burdened spend of SaaS inclusive of supporting labor, help desk, internal software development, and hardware costs) and operational metrics of SaaS can be evaluated together.
Opportunity cost with contract renewals. When SaaS contracts are only reviewed at renewal time, organizations forfeit negotiating leverage built up from an ongoing assessment of usage. Without license cost and usage trends across multiple SaaS applications, there is no holistic view of contract spend. Business stakeholders procure their own SaaS solutions without a full view of the organization’s SaaS portfolio. This leads to waste through over-purchasing and poor price optimization through under-purchasing.
User activities not pro-actively managed. One-size-fits-all user licenses tie up spend that could be redirected to change-the-business (CTB) activity. License assignment based on assumptive criteria like headcount dictates more permissive (and costly) licensing to cover the range of work potentially handled by each hire. Instead, organizations that map specific roles to licenses benefit from right-sizing their licensing choices.
Siloed operational and financial data drives. Application and service owners have usage data and vendor owners have contract and cost data. Only in combination do you see how usage drives cost. Without breaking the data silo, business stakeholders can’t determine if the demand for SaaS capabilities is satisfied by the current portfolio or if new capacity is needed.
Consequences of wasteful SaaS portfolio management
- Poor view of SaaS portfolio usage hides cost trends from cost center owners
- Over-purchasing leads to waste or under-purchasing doesn’t optimize price per SaaS license
- Lack of visibility into usage data results in allocated but unused licenses
- Disconnect between cost and usage limits negotiation leverage with SaaS vendors.
A SaaS portfolio management solution must automatically extract SaaS financial and operational data and deliver calculated metrics to show the cost, adoption and usage of SaaS solutions.
5 must-have capabilities for SaaS portfolio management
Vendor and application owners are asked to provide oversight on the usage and cost of SaaS applications, but without the ability to combine operational and financial data, vendor managers are unable to optimize SaaS license purchases based on demand/usage. And application and service owners can’t understand the burdened SaaS application total cost of ownership. To control SaaS usage, you need to:
- Aggregate SaaS spending by vendor, product, and license type
- View accurate measures of cost per license
- View SaaS licensing costs with appropriate burdening
- View SaaS license usage by license type, user, and group
- View SaaS utilization by service and user
