Futureproofing your IT budget

Over the last ten years there’s been an explosion in the variety of SaaS tools and capabilities flooding the market.

The current hype surrounding AI is further fueling the SaaS frenzy as organizations eagerly seek out cutting-edge solutions from new vendors. Market research reveals that, on average, companies utilize over 300 SaaS apps, collectively spending approximately $232 billion in 2024. However, a staggering 53% of these SaaS licenses go unused, representing a significant waste!

This dilemma leaves IT leaders and Business Owners with two core challenges in the SaaS and cloud realms: managing complexity while gaining transparency in the IT stack, and curbing rising costs as effectively as possible. But navigating the expansive landscape of SaaS applications can be daunting, with myriad optionsand associated costs to consider. Enter our insightful Playbook for SaaS CostOptimization!

We demonstrate how you can achieve immediate cost reductions by 30% and more while mitigating technology risks. Unveil these steps for immediate action:

• Identify and eliminate unused accounts

• Optimize application usage and subscriptions

• Automate provisioning and deprovisioning

• Reduce application sprawl

• Proactively manage renewals

Tailored for CIOs, IT professionals, and business leaders, it offers actionable strategies to rein in escalating SaaS spending. By focusing on SaaS costs youcan swiftly effect change and regain control over your IT budget. Before divinginto these practices, let’s explore current IT trends and how organizations adopttechnology. This insight will clarify why SaaS costs are rising and resources areunderutilized.

In recent years, what was called shadow IT is now seen as departmental or democratized IT. The traditionalIT department’s sole responsibility for technology is fading as technology becomes integral to every aspect of business. For instance, a data science team might be better equipped to choose a business intelligence or analytics platform than the IT department.

Increasing governance requirements

Furthermore, legislation in almost every country is either in progress or already in effect to tighten technology governance, especially regarding data privacy and security. However, the decentralization of technology management outlined above makes it challenging for organizations to effectively oversee their tech stack.

The universal need for technology insight

With decentralization and increasing governance requirements, IT teams – and even broader business units – require deeper insight into their tech landscape.This has sparked a surge in tools and processes, often overlapping and causing technical and cost inefficiencies. For instance, Application Lifecycle Managers, ITAsset Managers, and Cyber Security teams all seek tools for universal discovery and inventory.

Automation, workflow, and AI

The rise of remote work, a push for better employee service, and staff reductions have spurred investment in automation, workflow, and AI tools. Many IT outfits now deploy AI-driven virtual service agents and leverage automations to streamline software and hardware delivery, mimicking the seamless online retail experience employees expect.

These trends in IT Management and how organizations consume technology have led to several impacts on IT Governance.

Application sprawl

With departments and individuals making theirown technology decisions the inevitable outcomeis application sprawl. Many solutions all doing moreor less the same thing. This is inefficient from a cost,productivity, and governance perspective. Morecontracts to manage, less standardization, moreapplication risks, higher costs.

Renewals management

This application sprawl means that organizations have many more renewals to process. Where software spend often previously took place via multi-year contracts with a small number of publishers SaaS has now completely flipped the model. Many vendors, manyproducts, purchased on a monthly or annual basis.Each renewal has an overhead in terms of scrutiny and administration, and the sheer volume – several renewals per week for most large organizations –means that inevitably budgets will not be spent efficiently. 

Controlling shadow IT

Shadow IT remains a problem. It’s too easy for employees to find a solution, even a free solution, andto start using it at work. The presents IT with a problem given the increasing governance requirements noted above. It’s particularly problematic in highly regulated industries because it’s difficult to prevent a noncompliance. Traditional controls such as removing computer administration rights (the ability to install software) don’t work, because often SaaS apps require nothing to be installed. 

IT teams face a perfect storm. They’re under pressure from CTOs, CFOs,and other senior leaders to boost IT visibility and cut costs amid globalchallenges. They’re grappling with a lack of control and insight due totrends like decentralization. Plus, unregulated SaaS spending is hamperingtheir cost management goals. The solution is SaaS management.

Automated inventory & discovery

By employing various methods, you can automate discovering and inventorying SaaS apps, whether they’re officially acquired by IT, departmentally sourced, or used by individual employees. Methods include connecting to app admin portals via APIs,leveraging Enterprise Single Sign On tools, using existing Software Asset Management tools, and analyzing expense data to identify shadow IT. SaaS Management Platforms (SMPs) streamline much of the work involved in managing SaaS consumption.

Data driven insights

SaaS consumption evolves rapidly, with new applications entering your organization regularly. This dynamic environment requires transforming data from discovery tools into actionable insights for decision-making. Reliable data facilitates engagement with stakeholders, who, in a decentralized model, are also application owners, to modify your organization’s SaaS usage efficiently.

Automation of provisioning/deprovisioning

Automation is crucial for effective SaaS application management. Previously, employees commonly accessed a limited set of applications like email and productivity software through a single network login.Now, they use multiple SaaS apps, leading to a rise in account and credential management. Automated provisioning and deprovisioning are essential for managing this influx efficiently, especially during employee turnover for security and cost control.

SaaS cost management

Most organizations prioritize SaaS management for cost management. The focus on SaaS cost management offers numerous opportunities for significant savings. Cost optimization in SaaS typically fits the 80/20 rule (also called the Pareto Principle).In this case, that means that 80% of your potential cost savings can come from 20% of your software stack. On average, you’ll want to look at your top 10to 15 tools in terms of cost. These will be your biggest levers to impact the bottom line.With ROI measured in days and weeks rather than months and years now is a great time to start looking at SaaS Cost Management and steps to take now.

Why SaaS cost management?

• Companies are gobbling up more and more SaaS apps these days
• Every app comes with its own price tag usually per person using it
• Contracts for these apps usually roll over every year
• With tons of renewals happening monthly SaaS Management teams have loads of chances to cut costs

Proactively manage renewals

Adopt a proactive stance on SaaS renewals, using advanced insights to negotiate better terms, anticipate needs, and avoid last-minute decisions.

As you’ve seen throughout this guide, most organizations juggle multiple SaaS renewals every week. Each renewal is a chance to save, so making sure you’ve got time to seize that opportunity is crucial. That’s where a renewals calendar or pipeline comes into play – it keeps you on track.

But remember, you need to carve out time to chat with folks across the board to tweak license numbers and rein in app sprawl. For big-ticket apps like conferencing or file sharing, you might need a few months to shake things up. So, when you’re diving into a SaaS CostManagement program, cast your gaze ahead to next quarter’s renewals. That way, you’ll have the runway you need to score those sweet savings.