From my experience working with high-growth startups over the last few years, I‘ve created a five-step process to control SaaS spends that has stood me in good stead. I bring them to you here with bonus tips from the good folks at Spendflo. Let’s get to it.

Step 1: Take inventory

Does it ever happen to you that you start research with a tab or two on the browser and before you know it, 20+ tabs are staring back mockingly and you no longer know which tab is what? Something similar happens with the software stack. 

When you race from one initiative to another, you need the tools to improve productivity and accelerate outcomes. So, you buy the tools you need and keep moving on. It seems too small an item to fuss over. But over time all these tools add up. 

The best way to handle this is to hit pause and take inventory. At one of my previous organizations, we did this a few months into our Series A. Here’s a good starting point: 

Lay out the tool name, contract value, contract term and renewal date on a spreadsheet. 

For the absolute source of truth for this data, we went to our accounting tool, Quickbooks, and took an ‘expense by vendor’ report. You feel free to find data from where you can. While you’ll get the names of the tools  and their  costs this way, the other three are a different story. Typically, contract value, contract term and renewal dates are stuck in different email threads and hard to retrieve. 

Spendflo tip: Get a list of all the tools you use through SSO — Microsoft, Google or Okta. Once you get this list, write to the support email of the vendor and request a contract copy. They should be happy to send it to you quickly.

Step 2 - Evaluate usage and employee sentiment

While looking at the financials, we realized that 5-10 tools were hitting the credit card that no one knew about. This usually happens when your team buys SaaS for short-term projects but forgets to cancel them once the project is over. Or you’ve switched to a more suitable tool, but forgot to cancel the old one. Sometimes, this happens when leadership changes and the new boss wants new tools. 

On the other hand, it’s also important to know if your teams like the tools, else they are unlikely to use them. Regularly tracking usage and sentiment can minimize such wastage. 

Check the last login date — you could use a discovery tool for this — and categorize into mission-critical, nice-to-have or bottom-of-the-pile. 

Spendflo tip: “Cancel credit cards every three months,” suggests Sid. “When someone shouts, you know that a tool that was being used is canceled.” This hack won’t scale, though. So here’s another one.

Monitor who uses what. Run regular polls asking users two things: Are they satisfied with a tool and is it critical to their work?  Use your discovery tool to achieve this. Or choose Spendflo. We have integrations with all the SSOs, track usage with the Chrome extension, and have pre-built surveys that can be sent on Slack or email! 

Step 3 - Identify duplicates

Duplicate software bloats your total SaaS spend. Duplicate doesn’t just mean one person having two licenses. It can take various forms:

Overlapping features: This happens when the intersection of features between two or more tools is high. For instance, your marketing CRM and sales CRM could do most of the same things. 

Multiple contracts for the same tool: When buying is decentralized, different teams end up buying the same tool with different contracts. This means you’re losing out on bulk discounts.

Unused licenses: Users who have left the company, moved departments, completed projects etc. and therefore not using the tool, still holding licenses. 

Identify all tools and categorize them for similarity — all project management tools, monitoring tools, ticket management tools etc. 

Spendflo tip: We see that project management tools are generally the culprit here. In most organizations, at any given time, various teams use Jira, ClickUp, and Asana. Speak to the department heads to explore consolidation.

Step 4 - Negotiate with data

It is critical to know what your business needs are with each tool. For each use case, find out the multiple SaaS options available and their pricing. This data empowers you to steer the negotiation. 

If you don’t get the right price for option 1, you’ll be ok walking out because you have other options. 

Spendflo tip: Do a little bit of research on Reddit or Quora to get the market price for each tool. But note that SaaS pricing is dynamic and changes often. That’s one of the many reasons we built Spendflo — to have up-to-date benchmarking data collated from what our customers are paying. Offloading SaaS buying to the experts frees up the team's time and saves costs.

Step 5 - Repeat

You clear out the junk drawer when you spring-clean, but a couple of months later it contains random items again. Similarly, as your company changes and grows,  subscription creep or SaaS creep is inevitable. 

Develop a SaaS clean-up process and repeat it every quarter. Doing it manually for 120+ tools is painful, but it saves a lot of wasted dollars. 

Alternatively, you can use Spendflo. The platform that effectively incorporates this five-step process and other best practices.

Now a quick recap

Stephen Newland
Director of FP&A, GrowthLab Finance-as-a-Service

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