Author Archives: Cory Wheeler
About Cory Wheeler
Cory Wheeler is the VP of Services and Customer Success at Zylo, where he helps tech-forward companies understand, manage and optimize their cloud-based infrastructure via the Zylo platform. Prior to Zylo, Cory spent 15 years in Finance and Procurement, managing categories and sourcing teams at Arthur Andersen, BearingPoint and both Takeda and Astellas Pharmaceuticals. Cory then built the Procurement organization at ExactTarget in 2012, and managed the integration of the new Marketing Cloud Procurement organization into Salesforce.com in 2015. He and his family reside in Indianapolis, IN, where they can be found cheering for the Purdue Boilermakers and Chicago Cubs.
SaaS has changed the way enterprise organizations acquire and manage software. In many respects, this development has transformed the role of modern procurement leaders.
Recently at ProcureCon IT Sourcing 2019 in Denver, we hosted a panel session with Bret Bartolai, head of procurement for Grubhub, and Andrew Park, senior strategic sourcing manager for Zendesk.
The conversation with these sourcing leaders and Zylo customers focused on the changes in expectations and leadership needed to manage SaaS in enterprise organizations.
With more than 20 million active users and 100,000 plus connected restaurants in more than 2,000 cities across the US, Chicago-based Grubhub’s online food ordering and delivery marketplace values speed and innovation.
Zendesk is the leading choice for customer service software for enterprise businesses. With more than 145,000 customers and 2,000 employees in 160 countries, the San Francisco-based company seeks to balance value with continued growth.
An Increasingly Cloud-first Software Sourcing World
According to IDG, spending on cloud services and SaaS has risen dramatically in the last few years. The average budget for cloud tools and services, approximately $1.6 million in 2016, grew to $2.2 million in 2018, a nearly 36% increase. Roughly 48% of that spend is devoted to SaaS, with 30% on IaaS and 21% on PaaS.
Park and Bartolai highlighted that as their firms are cloud-native companies (that sell or provide cloud-based services themselves), sourcing new software via the cloud is the default way of doing business.
“Being a cloud-forward business amounts to table stakes today,” Bartolai said. “It’s no longer an optional activity or solely a competitive differentiator.”
Bartolai specifically noted the need to attract and retain the best engineers and developers. A cloud-first environment allows the organization to provide talent with in-demand tools quickly.
In turn, this helps continue to spur the innovation that tech-forward companies like Grubhub and Zendesk use to preserve their competitive advantage.
The ultimate goal: Quickly provide employees the tools they need so they can continue to execute with agility. However, this “need for speed” needs to be balanced with tools that promote governance and optimize value.
How Strategic Alignment and Collaboration for SaaS Helps Elevate Procurement
Despite the acknowledgment that it’s now a cloud-first software world, few organizations have defined specific procurement strategies for cloud-based tools and SaaS. Enterprise software acquisition, once the purview of IT teams, has shifted towards lines of business.
According to IDC, the ease of cloud software acquisition means that more than 70% of application investment now originates from lines of business budgets, not IT. Unfortunately, when everybody can buy software throughout the organization, nobody truly owns and manages software in terms of developing best practices.
However, this shift represents an opportunity for procurement and sourcing professionals to create proactive processes and value specifically for SaaS applications.
Park and Bartolai shared the common experience of building the procurement function at their organizations from scratch. Their goals specifically for SaaS were to create best practices around how SaaS was purchased, provisioned, and governed.
The Evolution of Software Procurement
Both organizations formerly used semi-formal processes for software acquisition. Park highlights that his peers created a software review board for new tool requests.
Meeting weekly, representatives from Legal, Finance, Information Security, and the business stakeholders who had requested new tools discussed the pros and cons for each proposed application. If the tool met each team’s criteria, the review board approved the application for use. Bartolai’s team used a similar review process.
However, this process chiefly accounted for large, mission-critical applications that required significant budget or resources to implement. The review process also failed to address tools acquired by lines of business, including those purchased via P-cards or expense reimbursement.
Eventually, both Park and Bartolai turned to Zylo’s SaaS management platform to create a SaaS management strategy that:
- Provides full visibility into SaaS spend across the organization
- Measures the value each SaaS application offers to users
- Creates transparent inventories of licenses
- Proactively manages and enables negotiation for all SaaS renewals
- Identifies strategic opportunities to reduce SaaS spend
How SaaS Management Elevates Procurement’s Strategic Value
SaaS management empowers procurement leaders by focusing on their role’s strengths. With a SaaS management tool in place, a procurement leader can:
- Help the business understand what it’s spending money on with SaaS
- Learn how to categorize that appropriately
- Make previously inaccessible data (like license provisioning or utilization) transparent
- Provide business stakeholders awareness and data for upcoming renewals
Bartolai said these things allow teams and employees to focus on their jobs: generating revenue for the business.
“Our role is to provide them with the tools and information to support making better business decisions,” Bartolai said.
Park noted that having a complete view of all SaaS applications within the environment – especially when previously unavailable – unlocks new collaboration opportunities.
“It’s powerful to have that information,” Park said. “Delivering a comprehensive report of everything in the environment is powerful. It’s a huge help when you’re going into any relationship.”
Practical Applications of SaaS Management for Procurement
Park and Bartolai also shared their experiences in developing best practices for several common SaaS management topics.
Identifying Value Optimization Opportunities
With a SaaS management platform displaying every tool in the environment, Park said he began optimizing by consolidating tools.
As a best practice, Zylo frequently recommends consolidating tools that have redundant functionality. Then determine which application is appropriate for all users and negotiate an enterprise agreement.
Parks said he focused his efforts on consolidating shadow IT SaaS applications that frequently pop up as freemium options. These included conferencing platforms, online storage platforms, and video communication tools.
Collaboration for SaaS Renewal Strategy
Park and Bartolai agreed that SaaS renewals represented one of the most practical areas for procurement-led collaboration. “One lever for procurement to show value is to support the business in terms of renewals and communications,” Bartolai said.
After documenting SaaS application spend and utilization information in a system of record, Park said renewal strategy becomes much more data-driven.“Providing teams with data on their renewals can help them prioritize,” he said.
For example, for mission-critical applications with a large user base and significant investment, Park’s team leads proactive renewal decisions 180 days in advance.
Engaging business stakeholders and teams such as Legal, IT, and Finance in the decision-making process forces a hard look at objective data. This review includes contract information, utilization data, license optimization and, other factors well in advance, he said.
Using SaaS management to elevate procurement’s role as a centralized, cross-functional, and collaborative leader has reset organizational expectations for Park and Bartolai’s roles.
Bartolai said that establishing a strategic, procurement-led SaaS management strategy has helped Grubhub prioritize IT security and value optimization.
Park noted that as he established full visibility into Zendesk’s environment, C-suite leaders have prioritized cost savings. “They want to see cost savings,” he said. “It’s a tangible metric.”
Founded in 1891, the City of Aurora, Colorado, was once a small frontier town primarily home to ranchers and farmers.
Spurred by the growth of neighboring Denver and the development of industries such as aerospace, defense, and health care, more than 374,000 people now call Aurora home.
A Thriving City, Increased Need for Accountability
With any municipality, managing finances, purchasing, and services amongst multiple teams and departments is a challenge. And the greater the size and the faster the growth, the greater the challenge.
Aurora, in particular, prides itself on transparency and accountability to its taxpayers. For example, all city expenditures are available to be viewed on its website so taxpayers can see exactly where their tax dollars go.
It’s in this spirit of transparency that Aurora recently undertook a broad effort to examine procurement processes and overall financial record-keeping. The goal: Drive maximum value for taxpayers from all municipal spending. This effort spanned the nearly two dozen city departments, including its IT team.
Aurora’s IT department challenged itself to discover any and all software-as-a-service subscriptions (SaaS) active within the municipality’s teams and organize them into a single system of record to enable improved strategic and financial decision-making.
“In any resource-constrained environment, you have to ensure financial accountability and value for every purchase,” says Aurora’s Chief Information Officer Aleta Jeffress.
By partnering with Zylo and applying its SaaS discovery engine, Aurora’s IT team unlocked a new transparent view of the SaaS tools in use throughout the city’s offices.
According to Zylo customer data, many organizations underestimate the number of SaaS applications by two to three times, which creates obvious difficulties for promoting transparency and accountability.
As a result of the discovery process, Aurora’s IT team identified approximately 200 unique cloud-based applications in 20 city departments. When combined, these applications represented spending of more than $4 million each year.
While this spending represented only a portion of the more than $600 million in total the city spends in a typical year on everything from new construction to water rights to payroll, Jeffress says accountability drives the decision-making for every transaction, no matter how large or small.
“For spending in smaller government organizations, accountability becomes increasingly important. You must ensure you communicate where the money is going and what it’s being spent on,” she says.
In several instances, Jeffress and her team were able to recommend that teams or offices consolidate SaaS applications with redundant functions. The discovery process also helped drive awareness around the value of a centralized SaaS sourcing process for applications deployed to multiple teams or departments.
“We’re now seeing all [SaaS] purchases and being able to talk to the employees about them. Step one is always awareness, and then you have to educate your users about the process, Jeffress says.
“Now, if we find disparate things or if somebody comes to the table and says I want to buy a hundred software licenses for my team, we have a process to evaluate that.”
SaaS Discovery Establishes Foundation for Collaboration
The process of discovering and accounting for all the municipality’s SaaS purchases yielded another important benefit: The opportunity to collaborate across teams and standardize spending definitions.
One of the difficulties in analyzing spending data across large organizations is the lack of standard definitions for subscription-based software. According to Zylo data, more than 50 percent of SaaS spend occurs outside known software expense types.
For example, with the help of Zylo’s discovery engine and system of record, Jeffress and the IT team found that a SaaS application employed by its public libraries to monitor resource check-outs was labeled under a “dues and subscriptions” expense type rather than “software.”
While clearly unintentional, expense anomalies like these underscore why it can be difficult to manage SaaS tools at scale without the explicit use of a SaaS management platform that promotes transparency and collaboration.
With the ability to comb through every financial transaction associated with SaaS applications line by line, Aurora’s IT team and the departments it supports now have to ability to identify, understand, and manage their technology resources more effectively, thus safeguarding value for taxpayers.
The Future of SaaS for Aurora
By using Zylo as a system of record to track all SaaS tools currently in use and going forward, Aurora’s IT team also began the process of eliminating unneeded tools, consolidating redundant applications, and tracking purchases more accurately. These efforts have led to more efficient and effective spending of taxpayer resources and improved value.
“At this point, I don’t think anybody would debate the value of Zylo,” Jeffress says.
At Zylo, we strive to understand our customers’ challenges, motivations, and how our solutions will impact their business.
Based on invaluable customer feedback like this, we recently launched new features to make enterprise SaaS management more effective than ever.
We’ve had the opportunity to listen to customers’ goals for improving their enterprise SaaS strategy via the Zylo SaaS management platform.
We’ve incorporated that feedback into numerous new features that empower SaaS governance and enhance spend visibility.
These features will spur the next evolutionary step towards mature, scalable SaaS management at a time when the managing cloud-based subscriptions software consumes a growing amount of capital and resources.
Here are a few highlights:
Zylo Provides the Next Steps for SaaS Management
The new capabilities enable businesses to create a distributed model for SaaS management. This allows SaaS visibility, tasks, and ownership to be delegated to users throughout the organization, reducing administrative burden without sacrificing oversight or governance.
A large enterprise’s total investment in cloud-based subscription software now represents spending of about $10,000 per employee, according to Zylo data. In comparison, it costs about $14,000 per year to provide healthcare benefits to an average employee and their dependents according to the National Business Group on Health.
Business Units Level Up Enterprise SaaS Management
Technology leaders who deploy Zylo can now create and view multiple separate business units from within the SaaS management platform.
This allows users to curate separate, unique SaaS inventories for separate business units but also maintain a bird’s eye view of all SaaS applications throughout the business.
Example use case: A services firm expands globally, acquiring several new teams in multiple countries.
To understand their acquisition and start consolidating technology assets and practices, IT managers want to identify the total SaaS inventory throughout each new organization but prefer to monitor each location as a separate entity.
In this scenario, a Zylo admin can now create and monitor each team and its respective SaaS inventory as a discrete business unit.
Establishing a SaaS Governance Framework
As more companies embrace a mix of SaaS applications across an entire enterprise, new SaaS governance strategies emerge. In particular, some firms choose to allow business units, teams, or individuals to manage some or all of their respective SaaS application portfolios directly, rather than via a centralized IT team.
This “distributed management” approach for governance creates efficiency by reducing administrative burdens and constraints on the central IT team. However, distributing the controls for SaaS application management requires new governance controls to allow for granular, user-level oversight.
Customize and Configure SaaS Application Details
We’ve learned quickly that even within a robust system of record like Zylo, no two companies – or even teams within companies – manage SaaS applications the same way.
Example use case: Your Finance team may want to quickly see information about contract payment details, while your IT team prefers to prioritize the number of licenses deployed and each license user’s activity.
To address these factors, the Zylo SaaS management platform now allows administrators to reorder any SaaS application profile field and display the most important fields first.
Now, Finance teams can see payment info at a glance or customize their application with dozens of other attributes, and other teams can customize and prioritize according to their unique needs.
Distributed Management via Views & Access Controls
One new feature that we think signals the evolution of SaaS governance is the ability to distribute access to SaaS management functions across the organization.
By introducing views and role-based permissions to dictate what individual teams and users can see, edit, and manage in the Zylo platform, technology leaders can now delegate the administrative management of SaaS to users throughout the company.
Views & access controls create the ability to:
- Improve SaaS visibility
- Empower a proactive, distributed SaaS management strategy
- Preserve data compliance and confidentiality
- Automate processes for SaaS discovery and ownership
Within the Zylo SaaS management platform, administrators can now toggle permissions and access controls per team or user, customizing what each has access to. Now, customized access and permission sets for to subscriptions, team data, payment data, administration, and integrations can be toggled on or off for individual users.
This ability to distribute SaaS governance access controls to teams and individual users when appropriate can reduce administrative burden and process overhead.
For example, for teams who have access to SaaS application information – including contract terms, user activity, or license provisioning information, they no longer need to send IT requests for info about these application details.
Improve SaaS Visibility
Improve SaaS visibility for teams and users across the business by creating views that show the specific subsets of SaaS applications they own.
This allows technology managers to socialize SaaS application data in a secure way and distribute a portion of SaaS management throughout the business while retaining the oversight needed for an overall management strategy.
When teams and users have the ability to view and access key SaaS management info such as cost, renewal dates, licenses, and utilization data, they can help eliminate surprises and unplanned spend.
Example use case: Your Marketing team owns a large SaaS application inventory.
Today, they need to stay informed with frequent updates about upcoming renewals, license counts, and other key data.
Providing this team with access within Zylo of all Marketing-associated SaaS applications and their related data can enable them to make better decisions about their SaaS portfolio usage and composition.
Empower a Proactive, Distributed SaaS Management Strategy
Empower a proactive, distributed management strategy for SaaS applications by giving teams and users role-based permissions to directly control the management of their owned applications.
This includes the ability to switch specific Zylo platform functions on or off per user. Examples include the ability to add new applications to the platform, edit payment data, reprovision licenses, or integrate new applications.
Toggling these controls per user or team gives Zylo admins the ability to mix and match access controls and fine-tune a distributed management strategy based on the users’ qualifications.
Example use case: Your Finance teams should see, but not manage, all SaaS applications.
Finance is qualified to see all applications entering the organization and update payment information, but don’t need to make changes to API integrations or subscriptions.
A Zylo admin can now create a custom set of permissions for Finance users that allows them to view all applications throughout the business but only grants the ability to edit application payment data.
Preserve Data Compliance and Confidentiality
Preserve data compliance and confidentiality by combining the ability to restrict views and permissions to only the users who need it, technology managers can ensure sensitive company data remains secure and confidential.
Automate Processes for SaaS Discovery and Ownership
Save time by automatically making new applications visible to the right teams and users by automatically assigning new applications to certain views based on application attributes found in Zylo’s ever-expanding library of more than 10,000 application profiles.
Enhancing SaaS Spend Visibility
One of the primary reasons for undertaking a SaaS management strategy is improving access to data that drives informed decision-making. Informed decisions thereby increase the value of SaaS applications as a resource for the enterprise.
To that end, we’ve released a number of measurement enhancements that unlock new insights into application value, including indicators for application engagement.
Identifying Duplicated Applications Instances via Cost Centers
After deploying the Zylo Discovery Engine, customers frequently find they have more than one instance of the same application.
To continue to make this information visible, when viewing a single application, Zylo users can now see the total number of cost centers associated with it.
This allows users to easily identify which different business units who are expensing identical tools so teams can work to consolidate their usage of those apps and negotiate a more favorable deal.
Enhanced Insights into Transaction Frequency
An effective way to drive value from SaaS applications is by consolidating multiple expensed instances into a single enterprise license. The application then becomes more centrally managed and typically delivers more value than a smattering of one-off unmanaged instances.
But how do you identify the best opportunities for consolidation? We have found the frequency of application transactions is be a good indicator, so we enabled access to this data to the Zylo subscription dashboard.
Users can now see applications with the most or least amount of transactions to identify the highest expensed applications that do not have an enterprise contract. These applications can then be evaluated for opportunities to move to an enterprise contract.
Greater Visibility into Accounts Payable and Expensed Transactions
We know that shadow IT typically grows more quickly when teams and users can expense their purchases. We also know a thorough Accounts Payable approval process can help stymie shadow IT growth.
To help users understand their recent SaaS application payment activity, we added AP and Expensed spend attributes to the subscriptions dashboard, including the ability to see last transaction dates and the amount of spend.
This allows users to identify their top expensed applications and create a strategy to begin consolidating apps to a single contract and/or move SaaS acquisition into Accounts Payable.
SaaS Management Maturity Demands Custom, Flexible Controls
Even though many organizations are just kicking off their SaaS management journeys, they are doing so with planning and intention for managing SaaS over the long term.
This is especially true for businesses operating at enterprise scale where the goal is to manage cloud-based subscription software so it maximizes value and minimizes reduces administrative burden.
We’re proud to make these new features available to our users and customers. We believe they empower the next step in the continuing evolution of SaaS management.
Adrian Dunne knows the potential downside to success.
After more than a decade of successful growth and strategic acquisitions, employees at his company, NextRoll (formerly known as AdRoll Group) had also acquired an overabundance of SaaS applications.
As NextRoll’s Senior Director for Global IT, Dunne’s role includes monitoring and managing the software and SaaS footprint across the entire organization.
But multiple teams at multiple locations owned multiple unique SaaS application instances, obscuring the oversight Dunne knew was necessary to a proactive IT security posture. “I’m the type of guy who wants to know about every single piece of software in my environment,” he says.
NextRoll is not alone in facing the challenge of shadow IT growth, which grows particularly quickly following growth, mergers, or acquisitions. These activities contribute directly contributors to unplanned decentralized software acquisition, but the issue is also widespread: Zylo data shows that more than 50% of all SaaS purchase transactions now occur outside of IT budget lines.
As a result of more teams and business units spending directly on SaaS, the average Zylo customer initially underestimates the number of SaaS application within their org by two to three times.
More Data, Better Decisions
By utilizing Zylo’s SaaS management platform, Dunne and his stakeholders on teams like Finance and Security untapped a single, centralized view of all SaaS applications throughout every NextRoll team, regardless of location.
“We were able to use Zylo to get the critical data from financial transactions and gain a complete view of everything,” Dunne says. “It unmasked the rogue software spending that was sidestepping procurement processes or sitting on personal credit cards.”
Dunne says that Zylo’s direct integrations into financial systems also transformed the process of a software audit from an intensely manual spreadsheet-driven exercise into a streamlined, collaborative program that focused on curating, analyzing, and improving the data streams created by SaaS acquisition.
NextRoll reduced its number of duplicate applications by more than 53 percent within 12 months.
“It can be challenging to manage all the data Zylo presents and know where to begin,” Dunne says. “But once we had the tool in place, we were able to begin the exercise of cleaning everything up.”
With this data curated, streamlining app purchasing behaviors across the organization became possible. For example, NextRoll reduced its number of duplicate applications (those purchased by more than one employee) by more than 53 percent within 12 months of deploying the Zylo platform.
Visibility Creates Improved SaaS Security, Management
Zylo’s ability to make data about NextRoll’s SaaS application inventory fully visible enabled Dunne and line-of-business stakeholders to make immediate improvements to security and IT governance throughout the org chart.
To reduce risks caused by the proliferation of low-cost applications, Dunne’s and NextRoll rolled out a new procurement policy that eliminated reimbursement approvals for personally expensed SaaS app purchases.
Not only did this help stymie the growth of unique SaaS applications to NextRoll’s overall software inventory, it also helped improve the company’s cybersecurity and data protection stance.
“It wasn’t easy,” Dunne says. “It can be hard for people to fully realize the minute you sign in with your company email, you’re effectively giving away data. But we’ve driven that home and it’s working.”
NetRoll decreased the number of employees who expensed application purchases by 48 percent…creating a 22 percent reduction in the number of unique SaaS applications.
With the introduction of this process, Dunne and NextRoll decreased the number of employees who expensed application purchases by 48 percent in the 12 months. This process was also central to creating a 22 percent reduction in the number of unique SaaS applications.
For larger purchases, Dunne created a SaaS application review board with sequential approval, ensuring that no new application enters use within the business unless it’s first been reviewed by IT, security and compliance, then Legal for contractual terms, and finally Finance.
“No contract gets signed unless all four steps have happened,” Dunne says.
To learn more about how Zylo improves security through enhanced visibility and professional SaaS lifecycle management, request a demo of the leading SaaS Management platform today.
Before the age of SaaS, IT departments bought and deployed all applications, maintaining full control, visibility, and security of the software stack.
Today, software purchase and deployment are decentralized with LOBs purchasing up to 50% of SaaS subscriptions annually. As a result, on average, companies underestimate the number of SaaS applications in their stack by two to three times.
Unfortunately, relationships between IT and LOBs are often broken: IDG reports that only “41% of LOB respondents view IT as a strategic advisor.” Therefore, IT and Procurement need full visibility into the SaaS stack to build IT collaboration and inform business strategy within an organization.
Armed with Zylo, Procurement and IT leaders access a complete SaaS repository, enabling the discovery of all applications, visibility into application usage, renewal planning, and increased security.
Cost Center Reporting Informs SaaS Spend Strategies
Cost Center Reports enable Zylo users to parse out application spend by cost center and identify all contributing cost centers to a particular application.
Cost Center Reports use existing cost center taxonomy from the ERP and Expense Management systems to report on which cost centers are responsible for what software and reveal opportunities to streamline purchases. These reports display applications, spend, and renewal dates across one or many cost centers.
With these reports, IT and business units quickly identify what SaaS subscriptions are in use and how they can optimize their SaaS stack. Users discover every cost center that pays for a certain application and all applications that are paid for by a particular cost center.
Additionally, discovery identifies duplicative spend across cost centers that is common in large enterprises. Cost centers inform optimization of overarching spend strategies within a particular business unit and across the enterprise.
Cost Center Reporting Informs IT Procurement Roadshows to Increase Collaboration
Without full visibility into a software stack, Procurement meets blindly with business owners. Procurement roadshows are spent focused on gathering information on what software had been purchased, reactive and missed renewals, and attempting to plan for the coming year.
As a result, procurement is viewed as a cop and another roadblock to business results rather than a necessary strategic tool. To become a strategic partner, procurement must reverse this reputation.
With Zylo, procurement teams are armed with an up-to-date report of attributed application spend. By simply displaying the Zylo Cost Center Report to a business unit during roadshows, procurement automatically provides insight into a business unit’s SaaS stack and a foundation for collaboration.
Saving time and energy, procurement teams now focus on guiding the business in strategy rather than parsing out a SaaS stack. Coupled with the Views feature, procurement teams are able to hold business units responsible by providing this level of visibility automatically in real time.
Armed with accurate and timely information, procurement is offered a seat at the table and is viewed as a strategic partner.
IT Bolsters Cross-functional Alignment
Granular level visibility into application spend enables IT to drive cross-functional alignment. Business units are able to view spend across their organization, strategize, and roll-up their individual strategy into greater IT initiatives. Cost Center Reports equip IT to partner with the organization to drive efficiencies and best practices.
Additionally, Cost Center Reporting further reveals Shadow IT and duplicative application functionality.
For instance, one of our customers recently approached a Slack renewal. With our Cost Center Reporting tool, they discovered that four different cost centers were purchasing the same software. The Zylo admin contacted the necessary parties and began driving an enterprise-agreement of Slack — driving collaboration across the business, saving money, and ensuring application security.
Drive Strategy for the Future
The ability to break down applications by cost center enables business leaders a new level of execution at the functional level that drives cross-functional alignment
A departmental level data approach allows each business to set and understand their strategy in a much clearer and faster way, enabling collaboration between IT, Procurement, and Finance to make the best decisions in a shorter amount of time.
While continuing to provide macro-level strategic solutions, Zylo is now a solution for every individual business unit that owns software. Zylo is for the business — at the macro and departmental level.
To learn more about how your organization can benefit from viewing application spend across cost centers, request a demo today.
The new year is just around the corner bringing the inevitable process of budgeting. In the age of SaaS, forecasting your company’s technology investment is especially difficult. With over $3 billion of managed cloud-based spend, our customer success team consults our customers through the budgeting process while driving collaboration among LOBs.
With this expertise, we hosted a webinar entitled “Predicting the Impossible: Forecasting a SaaS Budget for 2019”. Led by Customer Success Director, Thom McCorkle, and Customer Success Manager, Matt Renie, this webinar discussed the overwhelming reality of the challenges of budgeting for SaaS. We then provided best practices and actionable steps to accurately budget while making the most of the process.
Challenges of Budgeting for SaaS
Often overlooked and under-prioritized, SaaS is a growing industry and a large source of business spend. In fact, “Gartner expects SaaS to reach 45% of total application software spend by 2021.”* Furthermore, most companies lack a complete system of record for their SaaS subscriptions. This contributes to several identified challenges when budgeting for SaaS. In this webinar, Thom and Matt discuss five of these specific challenges:
An Unclear Starting Point
Simply put, the attempt to accurately budget for SaaS across an organization is daunting and overwhelming. Current attempts and process are often disjointed, manual and driven by rough estimates leading to inaccurate forecasts. This is inevitably caused by a lack of system of record for tracking any SaaS applications. Thus, we often hear from our customers that even beginning the process is a challenge.
The introduction of the subscription economy changed how software is purchased, leading to the phenomenon of shadow IT. Today, IT organizations are unable to keep track of SaaS application spend. Even when attempting to manually track SaaS applications, companies underestimate the number of applications in their environment by 2x-3x. It is impossible to budget for applications that are not identified by an organization.
A system of record for all cloud software a company has purchased by whom and when is now a necessity. Having an active inventory of tools in use provides a huge advantage and starting point when analyzing the budget.
Identifying Cost Drivers
Discovering applications is only the beginning. Once discovered, it is imperative to understand what drives the cost of each application. This takes time and energy as each application subscription and contract is unique and requires analysis.
Furthermore, SaaS vendors are often changing the way in which they price their software. While purchasing SaaS products by user and license is still common, we are beginning to see more vendors shifting to selling Enterprise or platform agreements based on company size or different consumption models.
In order to accurately estimate the cost for a tool in the coming years, the driver of the application must be identified — taking time, effort, and continual maintenance.
After determining the cost drivers, the next challenge involves predicting changes of the cost variables for the next year. For instance, after determining that an application’s cost is driven by employee headcount, the next step is to estimate if and how this headcount will change and whether or not this will affect the overall license agreement.
Other changes in the business such as increased sales or number of customers can also impact the cost of an application, further layering on complexity and complications to the budgeting process.
For simplicity, organizations often apply a flat expected percentage increase in cost to their tools in order to provide a buffer for growth in these cost variables. However, this strategy does not provide insights into the growth thus limiting strategy and collaboration for the future.
The Question of Ownership
Finally, in the midst of this process, the underlying political question arises: Who is in control? Since 50% of an enterprise’s technology spend is bought and managed outside of IT, who else is in control of these applications and their correlated budgets?
The introduction of SaaS and the subscription economy has layered in different levels and opportunities for ownership. Without having predefined definitions of ownership, blind spots form, leading to gaps in the SaaS stack and accountability for what is purchased and utilized.
SaaS and the subscription economy enables business units to buy software directly. While this allowed individual functions to have autonomy, flexibility, and immediate responses to their technology needs, this decentralized approach brings its challenges as well. SaaS management ownership now lies on a spectrum between IT and the business: Who is in control?
With IT solely in control, IT researches, purchases, subscribes and allocates software to the business. Typically a “top-down” approach, tools tend to be standardized across the business, yet with the introduction of SaaS, shadow IT and rogue spending are more likely. When budgeting, the IT department is solely in control, creating a top-down approach with only estimated spend.
When the business unit is solely in control, each business unit buys software as needed. The business unit is thus responsible for maintaining licenses, driving strategy, and creating the budget internally. This often distracts from a business unit’s core competencies and creates unnecessary overlap across the business. This bottoms-up budgeting approach is created solely by a previous application spend analysis often leaving gaps of unidentified applications.
In reality, each business is different. Most customers fall somewhere in the middle as it is near impossible to have only one part of the business solely in control. Understanding the inner-workings of your business is key to begin to wrap arms around the budgeting challenges. Regardless of who ultimately owns the final budget, close collaboration is necessary between IT, Procurement, and the business.
In order to begin creating a budget, the first step involves gathering the appropriate data to arm oneself to make a decision. The information needed can be summarized into three categories: current applications, new application needs, and contextual information provided by different LOBs.
To start, gather your current application information. Begin by looking to the past and analyze past spend behavior: What did you buy this year? For how much? On what cadence? Then, look ahead to the future by gathering information about current contract details, the cost drivers of the application, and estimated growth of the cost variables.
After gathering information on what your organization currently owns, the next step is to estimate what other applications and features you may need in the future. Business needs grow and change, often resulting in needing different solutions. This results in either a contract expansion to include more software capabilities or a new application altogether. An organization’s budget must allocate for these changes. By gathering this information upfront, your organization will be prepared when these inevitable needs arise.
Finally, combine this data with other strategic information gathered by collaboration among different stakeholders within the organization. By providing the initial project application footprint, meetings with stakeholders can be centered around driving strategic thinking and allocation rather than gathering the quantitative data.
Best Practices: Utilizing the Process for Collaboration Opportunities
While budgeting and driving strategy is an ongoing process, implementing key best practices today will enable your organization for success far into the future.
Identify What You Have
Overcoming the first and biggest challenge should be your organization’s top priority. Thus, discovering and identifying what your organization has in its SaaS stack is the first best practice and step when budgeting. Garbage in, garbage out. Without having an accurate list of subscriptions to manage and budget for, the budget will inevitably be worthless and out-of-date from the beginning.
Zylo discovers every SaaS application across the organization and creates a single source of truth for our customers. Consider ditching the spreadsheets and moving toward a tool that unearths shadow IT and provides visibility across the organization.
Based on industry trend, SaaS will inevitably grow every year. Do not be surprised when your SaaS budget increases. By budgeting today, you will be able to unearth areas of high-growth potential and focus on reigning in these categories. Additionally, being proactive and placing guardrails on spending, especially with high spend applications will help contain growth. Remember that cost containment and visibility is the priority and best practice.
Budgeting is inevitably difficult. By putting the time and energy in discovering and managing SaaS now, the easier it will be to manage and budget moving forward. The upfront work in gathering information and budgeting today will pay great dividends in the future as the historical information will greatly ease the process in the future.
Alongside being realistic, it is important to prioritize your focus and tackle the largest and most important applications first. Typically with our enterprise customers, we recommend first analyzing the top twenty applications in your SaaS stack. While this is a great start and will cover a large portion of your SaaS spend, it is important to note that there will inevitably remain a long-tail of applications that make up material spendo of your business.
Commit and Revisit
Continual management of the budget is key. Not only is this impactful for future budgeting and making business decisions, but changes will inevitably arise, causing the analysis to be out of date if not appropriately attended to.
Without a tool like Zylo to manage these changes, the upkeep of the budget can be quite manual. Regardless, it is imperative to note how and when a budget changes, when application spend changes, and what causes these changes. These observations prove to be invaluable in the following years when future budgeting decisions are made.
Utilize the Process for Collaboration Opportunities
Finally, make the most of the budgeting process by utilizing this time to drive collaboration across the organization. Partner with, not against, different business units. Provide visibility of application spend and garner a greater understanding of upcoming business needs and pain points. Treat budgeting as a collaboration process rather than a policing practice.
It is never too late to begin to implement these practices and continue to improve in the following years. By knowing what you have, being realistic, prioritizing focus, revisiting the budget, and driving collaboration across the organization, the SaaS budgeting process becomes an incredible tool for strategy rather than a bottleneck.
For a more indepth look at the budgeting process and customer examples, download the webinar recording.
*Gartner Forecasts Worldwide Public Cloud Revenue to Grow 21.4 Percent in 2018, April 12, 2018
The year is 2018. The time is 11:47 am. You would know the exact time because you’ve been watching the clock since your stomach first growled at 10 am. While wrapping up your last project before lunch, Devin from Accounting knocks on your cubicle.
“Did you see my email? Amy from Marketing says she has a ‘Zombie application problem,’” said Devin from Accounting, complete with air quotes. “She wants to refute the expensed auto-renewal.”
As you pull up the email, Devin from Accounting mumbles something about the ever-growing, undocumented SaaS purchases of which he undoubtedly finds you, Director of IT, personally responsible.
“I’ve heard about this application before but I didn’t know Marketing was using it,” you say, scanning again over the large renewal charge that Devin from Accounting conveniently highlighted, bolded, and underlined. “I’ll take it up with Amy, review the contract, and see if there is anything we can do about these charges.”
Devin from Accounting looks down at you disapprovingly as you shrug on your coat.
“This will have to wait,” you say. “I was just headed to lunch.”
“Like it or not, the Zombie apps are coming for you,” Devin chides as he begins to evaporate. “You can’t run: you can’t hide. Take action. Take action to save yourself and this organization from the Zombie App-ocalypse. You, unfortunately, are our last hope.”
You stare into the empty space once occupied by Devin from Accounting: that escalated quickly.
Will you take on the challenge? Or will you change careers: maybe something more fun like bartending … or maybe Marketing? Definitely Customer Success: they have the most fun.
No, in the age of SaaS, escape is futile. Bolster your Zombie App search and destroy strategy (after lunch) with:
Zylo’s Zombie App-ocalypse Survival Guide
RULE ONE: ACCEPT IT
Devin from Accounting is not the only one grumbling over the proliferation of mismanaged SaaS applications. Because LOBs (Lines of Business) are responsible for 50% of enterprise tech spend, undocumented SaaS applications have gotten a little out-of-hand, causing Zombie Applications.
The Zombie App-ocalypse is upon us; we might as well accept it. Today, two types of Zombie applications are most often seen in the enterprise:
Zombie App #1: Forgotten Auto-Renewals
The most popular Zombie application is a result of a forgotten auto-renewal. An application will be bought within a LOB but then forgotten or abandoned. Yet, the auto-renewal lives on. Until someone catches the expense and officially offboards the application, the auto-renewing app wastes money and poses security risks (especially if the app contains sensitive data).
Zombie App #2: Adoption of Banned Applications
Less popular but similarly dangerous, some Zombie apps are caused when an employee adopts an application that had previously been offboarded or banned from the enterprise. These Zombie apps are especially dangerous if the reasons for the initial ban were security issues.
RULE TWO: GEAR UP
Unlike the loud and aggressive Zombies of World War Z or Zombieland, undead SaaS applications are silent but deadly to tech budgets and security. To destroy these quiet killers, you’ll need to uncover all the applications purchased throughout the enterprise: enter Zylo.
First, Zylo will be your method for discovering all applications. Then, Zylo’s actionable insights (from spend value to utilization metrics) will give you a full view into your enterprise’s SaaS use. Finally, with an average of two renewals a day across the enterprise, Zylo’s renewal calendar will be as cherished to you as Twinkies were to Woody Harrelson in Zombieland.
Without Zylo, organizations sometimes attempt to quell the App-ocalypse with one-off initiatives to seek and destroy Zombie apps. However, with limited data, finite resources, and absent ongoing monitoring, Zombie applications have a habit of reappearing, straining the organization.
Zylo’s matching model discovers and classifies applications any time an application is expensed. Policy owners instantaneously receive alerts, containing and ending the proliferation of Zombie applications.
RULE THREE: BUDDY UP
In scary movies, everyone knows that catastrophe occurs as soon as the group scatters. While reality is no scary movie, the rules still apply: buddy up or perish. In the Zylo platform, each application is assigned a buyer. Your buddy in the fight to survive the Zombie App-ocalypse is the buyer of each application.
At least three months before a SaaS renewal approaches, begin conversations with your application buyers. Notify the buyer of the renewal, warn of the current Zombie App-ocalypse, and offer assistance. Through proactive renewal management, you can prevent the birth of Zombie applications at the source: the buyer.
The purpose of tech is to drive value throughout the enterprise, not to grow waste and risk. Consequently, Zombie Apps are terrifying for both the LOB and IT. Healthy collaboration between IT leaders and LOBs is essential to survival.
Survive, Nay Thrive through the Zombie App-ocalypse
When you equip yourself with the right tools, knowledge, and people, you will more than survive the Zombie App-ocalypse: your efforts will give you a competitive advantage.
In the age of SaaS, an enterprise tech stack is hugely influential to the overall success of the business. When you prepare your organization to manage Zombie applications, you prepare the organization to drive innovation and prepare for growth.
To learn how Zylo will help you survive the Zombie App-ocalypse (and beyond), request a demo.
In the age of SaaS, mergers and acquisitions present unique challenges compared to years past. With large tech companies purchasing over a thousand SaaS applications throughout the enterprise, massive tech discovery and integration operations are in order.
Modern SaaS management opens the door for cost containment opportunities, risk mitigation, and increased efficiencies for years to come. In the case of mergers and acquisitions, taking control of the technology landscape is a game-changer — and the creation of a SaaS integration roadmap is necessary.
Build a SaaS Integration Roadmap in 6 Steps
(1) Align the M&A Team with Business Leaders.
When acquired by (or merging with) a tech giant, what the M&A team says goes. However, according to Zylo’s study, as over 50% of SaaS spend is found outside of known software expense types, leaders of all business units are highly influential over the success of the enterprise-wide integration. To ensure an effective merger of tech stacks, M&A teams must align with business units to devise an integration roadmap.
To uncover key digital change agents within the enterprise, identify heavy SaaS investors within the business units. Business leaders who are frequent buyers will be integral in driving tech innovation across the enterprise. Throughout the integration process, hold regular stakeholder meetings to align business and IT strategies.
(2) Discover all SaaS Applications Bought Throughout the Enterprise.
According to Gartner (via CIO), shadow IT makes up 30-40% of IT spending at large enterprises. In the case of M&As, this shadow IT presents security risks, cost containment challenges and barriers to proper integration.
Either an enterprisewide SaaS audit or the implementation of a SaaS management platform is necessary to uncover all applications bought within the enterprise. By poring over expense reports, many SaaS applications can be manually captured on a spreadsheet. Then, IT can consult the heavy SaaS purchasers, identified through the financial scrub, to capture missed SaaS applications purchased within their departments.
To complete the discovery phase, uncover the contract of each application purchase. Identify and document the cost, function, and buyer of each application in the master SaaS audit spreadsheet. Moving forward, this spreadsheet will serve as the SaaS single source of truth, integral with building a SaaS integration roadmap.
(3) Record Use Case for Each Application.
The actual use of each application will drive the decision to combine enterprise contracts, consolidate applications of overlapping function or sunset underperforming applications. Therefore, to enter into informed integrations, collaborate with business leaders to capture a use case for each application.
On average, applications are underutilized to the tune of 40%, according to our study. Rampant underutilization of applications cost businesses money, time and employee satisfaction. With each application use case (especially high-use applications), it’s important to include the reasons for underutilization or successful utilization.
Included in the use case of each application should be the application’s potential for systemwide integration. As IT leaders look to innovate throughout the enterprise tech stack, consider not only how the application stands on its own but how it operated as part of the whole. Today, an application’s potential for integration is highly valued.
(4) Mitigate Security Implications of Each Application.
Unknown SaaS applications pose a risk to the enterprise. Therefore, the first step to mitigating risk is an enterprisewide discovery of all applications (in other words, back to step one).
Secondly, the use case of each application will inform what data is housed in the application. Focus risk mitigation efforts on applications that contain customer, financial and business data. While software housing sensitive data holds inherent risk, not every application was created equal. Rank and document the breach probability of each application to use in the decision-making process.
(5) Address Consolidation Opportunities.
Major cost containment opportunities exist when synergies and consolidation opportunities exist across the enterprise. Crucial to this step is determining how the organization measures and defines value. As business units continue to purchase technology, IT and business leaders must align on tech-specific KPIs.
Attack the obvious first: sunset duplicative contracts. Then, considering the data pulled in previous steps, rank applications with overlapping functionality by cost, stakeholder/user sentiment, use case, integration potential, security, etc.
(6) Build the SaaS Integration Roadmap, One Application at a Time.
Armed with the nature, value and contract of each application bought throughout the enterprise, create an integration plan for each application. Plan for the renegotiation of the highly ranked apps while providing a timeline to sunset lesser apps of overlapping function. Build implementation plans of widely introduced software. Additionally, isolate KPIs, and set goals.
In the age of SaaS, technology stacks are forever growing and evolving. While the SaaS integration road map will be invaluable when driving M&A initiatives, the resulting system of record will remain relevant long after the initial integration is complete. To drive security and innovation, IT leaders must embrace continual discovery and monitoring.
SaaS Integration Roadmap: the Key to Leadership Visibility
The lack of leadership visibility of enterprisewide SaaS investments presents problems for innovative IT leaders. As the balance between innovation and “keeping the lights on” becomes ever more complex for IT leaders, alignment throughout the enterprise has never been more important.
Through careful reporting and planning, a SaaS integration road map can create alignment between IT, LOBs and leadership throughout the M&A process. Through a road map, IT can meet the goals of innovation, cost containment, cross-department collaboration and employee experience as a unified organization with a cohesive tech stack.
To learn how Zylo, the leading SaaS Management Platform, can help you build and execute your SaaS Integration Roadmap, request a demo.
With more and more “to-your-door,” “have-it-now” services available than ever before, we’ve created a culture where anything is accessible at any time. Of course, this mentality has naturally seeped into our professional lives, allowing employees to download and purchase the systems they need as they need them—often without the knowledge or approval of IT.
The resulting lack of transparency between individual business units and IT can create huge security risks, improper licensing, wasted funds, and ineffective business strategies. Companies are underestimating the number of applications they use by two- and three-fold, while more than 50% of SaaS spend is being found outside of known software expense types.
CIOs are charged with uncovering this shadow IT, building relationships with buyers in each business unit, and driving the SaaS strategies behind each application. But exposing all the applications throughout a large enterprise is like finding a needle in a haystack, while consuming all your team’s time and resources.
What can the modern CIO do to stay ahead of the growing challenge of managing SaaS?
Best Practices for Managing Your SaaS Enterprise-Wide
Enterprises across multiple industries are facing many of the same challenges when it comes to managing SaaS: lack of visibility, increased security risk, application redundancy, reactive vs. proactive app renewals, etc. CIOs repair these issues by implementing foundational tactics that open up communication between IT and lines of business (LOBs) and set the organization up for future success as they become more and more cloud-minded.
(1) Discover All Applications
The first step to driving increased value in your software investments is taking inventory of all the applications in your technology stack. If you’re attempting to do this manually, start by identifying the typical areas of your largest spend. (Infrastructure as a service, business intelligence, and accounting and finance often top the list with the biggest areas of spend by application function.) From there, get ahead by asking yourself:
- Do we have a process to continually uncover new SaaS apps purchased?
- Do we have a process for mitigating risk and containing costs?
- Who owns each major application investment?
In conducting a discovery, you’re not only identifying each of the applications currently in use in your organization, but also areas of application function overlap. Because of disparate strategies and lack of collaboration, multiple departments will purchase different solutions to solve the same problem. While overlapping functions aren’t always a negative, working with the business will allow IT to determine what each application is used for within a department and help advise if there are similar solutions that could be rolled into one enterprise-wide agreement.
(2) Empower LOBs to Professionally Manage SaaS Applications
While SaaS purchasing by LOBs creates greater efficiencies and productivity for individual business units, it also puts IT in a tough spot, leaving them to ensure security for the new apps and forecast future technology budgets without proper knowledge of all the software in use across the organization. Simply taking inventory of your company’s app use and throwing policies at your stakeholders will only widen the gap.
You need a true partnership with stakeholders throughout the company that supports LOB education and empowerment. To maintain agility within the enterprise, don’t just seek to manage all purchased applications. Instead, create tiers of governance and control based on each application’s cost and impact across the business. Empower LOBs to responsibly manage small and safe technology investments in order to maintain speed and agility. Then, prioritize the central management of large, sensitive, and strategic applications.
(3) Drive Enterprise-Wide Strategies
When IT and LOBs are aligned, it makes way for greater strategic alignment: work together to keep costs and governance in check without stifling the freedom and efficiency of individual business units. Your SaaS management strategy should balance the priorities and values of the enterprise as a whole, as well as each LOB, taking into account:
- Spend management
- Utilization/license management
- Redundancy management
- Transactional volume
Remember—the goal is ROI. Regardless of who’s using what where, the priority of all departments must be to ensure each cloud investment drives ROI, whether in cost reduction, increased productivity, usability, or security.
(4) Prioritize the Professional Management of SaaS
Enterprises are moving toward a cloud-first mentality. Gartner asserts that more than 50% of all enterprise-level software adoptions are SaaS applications or other cloud-based solutions. Some mid-market and small enterprises are even further ahead, adopting cloud-first or cloud-only software.
The reality is that annual or semi-annual audits of your SaaS footprint aren’t enough, especially in an age where innovation is lightning fast and security is at risk. Now is the time to get a better handle on your existing tech stack: forecast new investments, prepare for growth, mitigate risk, and control costs.
In a time when many organizations are still determining where SaaS fits into their overall IT approach, it’s crucial for enterprises to begin driving their SaaS strategy into the future.