SaaS spending has lately been on a roll and is rising over the years. However, only recently did we find out that SaaS spending is overtaking traditional software investments. In the upcoming years, it’s not a surprise if you see SaaS overtake everything.
In only eight years, The SaaS market has grown from $31 billion to around $1.6 trillion. This is a major gap and is now giving companies a heads-up to pay more attention to how they manage their SaaS expenses.
Well, don’t worry because, in this article, we’ll dive deeper into numerous tips on how you can better manage your SaaS expenses.
The Importance of SaaS Spend Management
To entirely understand why SaaS spend management is important, let’s dive deeper into some statistics:
- On average, departments use around 200 applications.
- 51% of IT spending has gone from traditional solutions to the public cloud.
- Studies also showed that most businesses are more involved in SaaS than they think.
However, let’s not forget one thing. If you don’t have the proper strategy for managing your SaaS expenses, the risk of overspending can become high.
8 Tips for Managing SaaS Spending
1. User Provisioning
User provisioning is an excellent way of promoting the creation of user accounts, user account management, permission assignment, the modification of accounts or privileges as necessary, account deletion, and disabling all unnecessary accounts.
User provisioning grants users access to several applications and systems, regardless if they are cloud-based or hybrid. Furthermore, here are a few tips for user provisioning to follow:
- Make your IAM centralized: IAM is a set of processes and standards that are used for managing the digital identities of a user efficiently and safely. It ensures that the right people have access to the right technological resources.
- Automated provisioning: Eliminates challenges and the time it takes to manually manage accounts and profiles. Additionally, it reduces security breaches by reducing human errors and improving operational efficiency.
- Use a SaaS management platform: Using a SaaS management platform and the delegation features is what helps you provide much better and quicker services that are cost-effective.
2. Monitor Your SaaS License Usage
One of the biggest SaaS mistakes a company makes is paying for a license that isn’t used. For example, if you have 50 members on your team but are paying for 60 licenses, it’s not worth it because 10 extra licenses aren’t worth the extra money.
Unmanaged SaaS Software prices are larger than you think, and when you reduce unnecessary costs, you can greatly reduce the amount of money you are paying. Let’s say one license you pay for is around $500. If you cut ten unused licenses, in this case, you’ll be saving $5000.
Furthermore, the two biggest reasons why people stop using SaaS licenses are because of:
- Turnover: Team members change over time, and in several cases, new team members will get added to your SaaS platform and take over unused licenses. However, team members that leave won’t be using the additional licenses, and in the long term, all of these costs add up.
- Growth Assumption: Scaling companies sometimes will assume that they are rapidly growing. This way, they’ll urge you to buy more licenses in the future than they need. For example, if you assume that you’ll have 100 team members at the end of the year, it’s not a good idea to buy all of the licenses before you acquire these team members. You never know what the future holds, so always seek to save that money.
3. Centralize Your SaaS Purchase Decisions
Companies sometimes find it challenging when it comes to software spending. Centralizing your SaaS purchase decisions allows you to get the best of both flexibility and low costs. How does this work? Well, it’s done by purchasing a license for each person/department, you can make purchases for each department/person based on specific processes.
This practice won’t only help you save money but also give you much better control over your organization’s expenses.
4. Use Shadow IT
Shadow IT is when a company has numerous tech services managed and used without needing the proper approval from stakeholders. These types of services don’t have purchase or usage records. In this case, you have no idea where and what you spend on your budget. Avoid cutting costs at the last minute, and ensure that all of your tools are entirely optimized.
If you think some employees might forget about the rules, you can implement a spending policy and ensure that all employees are complying with it. Once you create a spending policy, don’t forget to mention the following:
- Who should be purchasing the goods and services?
- Who is the signing authority?
- What is the new way of requesting new purchases?
- Do you have enough internal tools to serve that purpose?
5. Consider Task Management and Re-allocating Users
If you want to reduce SaaS spending by managing your tasks, you need to do the following activities regularly:
- Deactivating all accounts that aren’t used.
- Analyzing hotspot inactivities.
- Customizing your workflows.
- Monitoring all anonymous consumptions.
- Re-harvesting your unused licenses.
Additionally, some companies have re-allocating users, which has to do with how they archive licenses for users who need them and those who don’t. It’s not all about that, but in some cases, it’s about a user who needs fewer services and some who need more of them. After you assess the level of services each user needs within a SaaS app, it’ll lead to a considerable amount of savings.
6. Review Your SaaS Pricing Pages
If you want to learn more about SaaS support, you can check the SaaS platform’s pricing pages. You can conduct A/B testing and use conversational bots if you see fit. In several cases, companies that use SaaS products will use their licenses only at one service level.
However, in some other cases, your company can access savings by using a few of the licenses at a lower service level for all users who don’t need the more advanced features. SaaS platforms and providers will use different plans in order to meet different interests and requirements.
A great example is like when you visit a website and you check out its pricing plans. The more premium plan will offer more advanced features, but the more basic one will have less to offer.
7. Build SaaS Inventories
By building up SaaS inventories, you can avoid headaches and keep everything running smoothly. Here’s how to do so:
- You get rid of unused software by getting a clear overview of your software and when you need to renew it.
- Track management allows you to prevent paying for any unused apps and ensure they are up to date with the latest features.
- Your SaaS inventory helps you save money by negotiating much better deals and avoiding any late fees.
- Additionally, you can keep your data safe by ensuring that only authorized users can access your apps.
Your SaaS inventory should include your list of software that is installed on each computer and its providers. By doing this, you can identify and see which computers need to be updated and which don’t.
Moreover, the SaaS inventory should include a list of the user accounts that are associated with each computer. By doing this, you can assess which users need to be added and removed from the system, so you can identify which computers are affected.
Don’t forget to include the most important details about your software, such as:
- The price.
- Terms & Conditions for canceling services.
- The type of integrations that are required.
- The start and end dates of renewals.
The software helps you track inventories much better, and this is something you should be aware of.
8. Create SaaS Reviews
A SaaS inventory is crucial, but the most important thing is to review your software a few times a year and identify whether you need those apps or not. Always remember that SaaS offerings might change over time, and companies must evolve. Therefore, it’s crucial to stack your solutions to meet customer needs regularly.
Overall, having good SaaS reviews allows you to save money, improve operational efficiency and use the proper tools for your job.
The Final Cutdown for a Better SaaS Spend Management
These are the most important tips for improving SaaS management expenses. Nevertheless, it’s always important to cut your usage on any licenses you don’t need and not to purchase unnecessary licenses thinking all your assumptions will be correct.
Furthermore, don’t forget about creating SaaS reviews, reviewing your SaaS pricing pages, and building SaaS inventories.