Getting SaaS management right in 2023: A complete guide
Software-as-service (SaaS) is a cloud-based software distribution model where applications are licensed on a subscription basis. Unlike traditional software, users can access and use SaaS applications through a web browser or mobile app instead of installing them on individual computers. By 2024, the SaaS market is expected to grow to $232 billion.
With nearly 40% of companies spending more than a million dollars on SaaS tools, SaaS buying and usage must be optimized to avoid wastage. A good SaaS management platform can enable this with unified contracts, license tracking, spend monitoring and workflow automation. As companies add more SaaS tools to their tech stack, CFOs want to prioritize SaaS application management to control SaaS spend and rightsize usage.
In this article, we will talk about:
- How SaaS application management helps
- The challenges with SaaS management
- A step-by-step guide to building a SaaS management strategy
- Best practices to follow in SaaS application management
What are the benefits of SaaS application management?
Here are the advantages that management of SaaS tools can bring:
- Centralized control: Businesses have better control and visibility over their SaaS applications, ensuring consistent usage and policy adherence.
- Cost optimization: Companies can identify and eliminate unused or unnecessary subscriptions, leading to cost savings.
- Security and compliance: Good SaaS management ensured regular updates, security patches and regulatory compliance, in case the law changes.
- Performance monitoring and optimization: Businesses can monitor the performance of SaaS applications and make necessary adjustments for optimal usage.
What are the challenges in SaaS management?
With over 250 tools being used in high-growth organizations, SaaS management can become complex. Here are some of the key challenges finance, procurement and IT teams face in SaaS management.
Visibility into SaaS landscape
Users, teams and departments use a number of SaaS tools for various use cases. Included in this is also SaaS that is bought by individual employees, who use their credit cards and reimburse to the organization. 360-degree visibility of this entire landscape is an organization’s primary challenge.
Identifying and tracking SaaS usage
Given how easy it is to buy and access SaaS, it is also easy to set up auto-renewals and forget about it. Many teams also try multiple tools before making a decision, often resulting in duplicates. Without a unified SaaS usage monitoring system, organizations find it difficult to understand whether a tool is even useful or not.
Ensuring compliance with data security and privacy regulations
Conducting security audits for hundreds of tools is near impossible for any organization. Therefore, they trust the vendor to ensure security. However, data security and privacy is the joint responsibility of the vendor and the organization. If there are regulations such as GDPR or HIPAA that apply to you, the responsibility is even higher.
Managing costs and optimizing SaaS subscriptions
Organizations must track renewals, negotiate pricing and identify unused subscriptions to optimize costs. Otherwise, they may end up paying for licenses they don't need or use.
Dealing with integration and interoperability issues
Some applications may not integrate well with each other or legacy systems, causing data exchange and collaboration issues. This can affect workflow efficiency and data accuracy.
Steps to build an effective SaaS management strategy
Finance teams must understand organizational needs, create a comprehensive SaaS inventory, establish governance policies and implement centralized management tools. Here are the steps to create an effective SaaS management strategy:
Assess organizational needs and goals
- Understand the business processes
- Identify pain points
- Determine how SaaS applications can address those needs
Create a SaaS inventory and categorize applications
- Identify and document all the SaaS applications used in the organization
- Establish their purpose, usage and ownership
- Categorize the applications based on their functions, departments or business processes
- Gain better visibility
Establish SaaS governance policies and guidelines
- Create a framework for managing SaaS applications consistently across the organization
- Outline rules and procedures related to security, data access, user privileges, compliance and acceptable usage
- Define roles and responsibilities for each stakeholder
- Establish approval processes for adopting new applications
- Address data backup and recovery procedures
Implement centralized SaaS management tools and platforms
Centralized SaaS management tools and platforms simplify the administration and monitoring of SaaS applications in the following ways:
- Set up a unified view of all SaaS applications currently subscribed to
- Manage licenses
- Monitor usage
- Track SaaS spending
- Automate user onboarding and offboarding
- Enforce security policies
- Access analytics and reports for informed decision-making
How can you manage SaaS applications effectively?
Poor SaaS application management can lead to security issues when access is not revoked after employees leave or productivity issues when new employees are not trained to use the tools. Here are some steps to manage SaaS applications better, save money by eliminating redundant applications and gain control over the SaaS stack.
Discover shadow SaaS and unauthorized purchases
- Identify and manage shadow SaaS applications to reduce financial, security and regulatory risks
Ensure the security of SaaS accounts
- Conduct regular security audits to ensure the safety of your organization's SaaS applications and software
- Check for regulatory compliance such as GDPR and HIPAA to safeguard the integrity and confidentiality of your organization
- Educate your end users about the risks of using unauthorized applications and licenses
Consistently optimize SaaS spend
- Evaluate whether every application and license you have is utilized
- Avoid paying for unnecessary features
- Educate users on how to use SaaS applications effectively
- Regularly renegotiate contract terms with your vendors based on usage
Spend time to manage SaaS renewals
- Maintain a comprehensive overview of all cloud purchases and upgrades in your organization
- Have a SaaS champion in every department to handle expenses, usage and ownership
- Maintain a well-organized system to manage contracts, including terms, clauses and important dates
- Utilize automated processes for purchasing SaaS applications and licenses to streamline operations and reduce manual effort
Future trends in SaaS management
Over the last few years, we’re seeing a consistent increase in the adoption of SaaS management tools. Organizations are realizing that their third biggest expense — SaaS — needs a closer look. This will continue to evolve as challenges become more and more complex.
Predictive analytics and artificial intelligence (AI) will enable organizations to gain deeper insights into their SaaS usage, performance and potential issues. AI algorithms will proactively identify patterns, anomalies and optimization opportunities, allowing for more proactive and efficient SaaS management.
Alerts and reminders will include more prescriptive recommendations to help procurement teams take charge of their negotiations. Advanced integration tools will make switching tools less complex, giving more negotiating power in the hands of the buyer.
Effective SaaS management is crucial for businesses to:
- Maximize the value of their SaaS investments
- Ensure data security and compliance
- Optimize costs and streamline operations
Effective SaaS management enables organizations to leverage the benefits of SaaS applications while minimizing risks and maximizing productivity. CFOs and finance teams can implement the strategies in this article to achieve successful SaaS management. By assessing organizational needs, establishing governance policies, monitoring performance, optimizing costs and staying informed about emerging trends, they can effectively manage their SaaS applications.
By leveraging Spendflo, you can proactively embrace the best practices, harness the full potential of your SaaS applications and save up to 30% on your SaaS stack.
Transform your SaaS buying and management with Spendflo today! Schedule a demo to learn more about how Spendflo can help you drive your SaaS stack like a well-oiled machine.
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