In this age of SaaS, with service providers springing up every day, it becomes difficult for companies to assess and get the best prices suitable for their...
Software as a service or SaaS, has changed the way businesses operate around the world. According to the 2018 global outsourcing survey, 93% of CIOs are adapting or planning to migrate to the cloud. The major reasons for them were to reduce their overall expenditure involved in purchase/installation, ongoing costs like maintenance and upgrading in the future. Other than that, on-premise structure also made it hard for them to instantly remove the physical servers when they wanted to cancel the service.
So, in order to satisfy their organization’s diverse needs with agile and modern solutions, these companies are spending billions trying to integrate various SaaS softwares into their business environment so as to create a sustainable software stack.
According to a recent report, in 2018 a company spent around $343,000 on SaaS, which is approximately a 78% increase as compared to the previous year!
And as per the reports, the average number of SaaS applications used in a company was a whopping 150!
Imagine the amount of money a company would be spending during the initial stages of purchasing SaaS softwares for the first time! Come on, do the math!
Now wait! Isn’t SaaS costs supposed to be a lot cheaper than an on-premise setup?
Certainly yes, if you can manage it properly.
According to the SaaS Cloud Spend Survey 2020 by Harness, the average spend across all survey responses was around $4.69 million.
And out of that, 30-35% is wasted!
That money could’ve been invested in developing the business, marketing or improving the customer experience.
SaaS overspending can dent your business in many ways:
According to the 2019 survey by Cloudability, 58 percent of respondents said they are overspending on cloud resources, and out of those, 69 percent said they overspent by up to 25 percent more than their budget.
Overspending beyond budget can have negative impacts in ways you never imagined. It can:
Now, how can you be aware of the pitfalls that lead to your SaaS overspending? Here are some cues to avoid that -
Compared to an on-premise setup, cloud is definitely cheaper and easier to manage. But poor management of cloud resources can cost you a ton of money. Different vendors charge different pricing for their services. This pricing can change depending on the region, utilization, and more which makes it difficult for companies to understand cloud expenses.
Spendflo’s Solution: Conduct data-backed negotiations with the SaaS vendors to get upto 30% savings on the initial cost.
When employees, departments or teams try to procure SaaS licenses without the permission of the IT team or with the help of a procurement team, it could lead to duplication of existing apps used in an organization.
This happens mainly when a company is in its growing stage and continues to work without any SaaS strategic plans or any preset app usage protocols for its employees.
Orphaned subscriptions may occur when the company fails to reassign or block the subscription of an outgoing employee. This results in in-app subscription without any ownership.
Stealth IT, the information technology (IT) systems built and used within organizations without explicit organizational approval comprises 50% or more of IT spending in large enterprises. - Everest Group
Spendflo’s Solution: Implementing a deeply integrated SaaS approval process into your internal communication systems. This prevents unnecessary spending on SaaS subscriptions without approval from the IT leaders. Only the approved SaaS requests will be handled.
With the growing dependency of companies on SaaS cloud computing, employees are using more applications for higher productivity. As more employees use these SaaS applications, the company might not be able to keep a track of how and when these cloud apps are used.
The absence of a SaaS subscription management system would easily lead to duplicate and orphaned subscriptions mentioned above. It could also lead to uncontrolled spending without any record of the same.
Spendflo’s Solution: A robust SaaS procurement and renewal management tool, which shows you metrics such as
In this age, SaaS softwares really does make it easier for organizations to run efficiently. But without proper strategy to manage the costs, you could lose track of your spending. While shifting to the cloud may be a cheaper and efficient solution, it also makes it less predictable and uncontrollable than older methods.
But there’s a way to manage it efficiently. We recommend 3 simple yet testes tips for any organization that is looking to manage their SaaS stack more efficiently -
With the right SaaS subscription management strategy, you can save up to 30% on your SaaS spend.
Automating tracking of SaaS tools will help you understand how much you are spending for SaaS subscriptions. It is recommended for organizations with no real grasp on the spending.
How is it done?
Usually, a SaaS Management platform will first map your current portfolio to understand which SaaS applications are being used and who is using which application. This data will be analyzed to track the monthly and yearly spend for all your applications. Spendflo has a free consultation and an easy-to-fill survey that can help you get on track at the earliest.
Come up with valuable insights to reduce SaaS spend and plan SaaS procurement and SaaS renewals at just the right time.
How is it done?
This step involves two different approaches.
Utilizing data derived from negotiations we benchmark pricing for our customers and negotiate in good faith with vendors. We also procure licenses and provide discounted pricing to our customer base from the largest vendors in the world.
Plus we identify duplicate software and right size licenses for reducing the overall application spend and increase the business value using them.
If you need to get SaaS costs under control, ironically, you must never miss a renewal. So, calendarize key dates for SaaS software like renewals, cancellation, onboarding, etc. We start negotiating rates and renewals based on user insights prior to the renewal dates.
Startups today need SaaS to run efficiently. Efficiency not only involves operations but also in unknown areas such as your SaaS spend.
It can be done by identifying the gaps in adoption within specific teams to plan enablement and training. Using a tracking application usage across teams to enable better pricing.
SaaS enables SMBs and enterprises to run their businesses at scale efficiently. But the costs involved due to improper management of SaaS applications can negatively impact them directly and indirectly. Therefore it is recommended to understand how SaaS procurement and management can reduce duplicate subscriptions, and increase your savings.
With a dedicated procurement and management team in place, you as business can:
To understand how you can save upto 30% on your SaaS spend, schedule a demo with Spendflo today.
Our free savings analysis tells you how much you’re guaranteed to save with Spendflo. Learn more about cleaning up and automating your tech stack from our experts.