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How to Make a Business Case for a SaaS Management Platform: Tips for SAM Pros

Between millions of dollars in license waste, unknown security and compliance risks, and overspending, there’s a lot at risk for your business. Often, SAM teams don’t have the right tools to keep up with SaaS Management. 

That’s where a SaaS Management platform (SMP) steps in. A platform helps software asset management teams optimize SaaS and be audit ready with comprehensive visibility and control – ultimately reducing license waste, risk to the business, and overspending.

But, selling the idea of a SaaS Management platform across departments can be difficult without executive buy-in. With SaaS Management, it is important to get this support from multiple stakeholders: ideally from your CIO and CFO, but sometimes director or VP level depending on your organization.

At Adobe, support from their CIO has proven instrumental in getting this buy-in and ongoing support of their software management program.

“Success of any company-wide program requires executive support. At Adobe, we report into the office of the CIO. My CIO provided 100% support, which helped us implement a global software optimization program.”

Ash Rai, Adobe— Ash Rai, Director, Software Asset Management and Vendor Relations

What to Include in Your Business Case

What do you need to include in your business case for a SaaS Management Platform? We’ve outlined three critical elements.

#1: Present Benchmark Data to Emphasize the Problem with the Status Quo and Explain the Opportunity

Presenting data points and illustrating the scale of the problem helps you explain why you need a SaaS Management platform. Doing so will not only address these issues but also align with your company’s strategic goals of reducing costs and mitigating risks.

SaaS Is Here to Stay

SaaS now makes up the majority of software deployment. In 2023, IDC reported that SaaS made up 60% of total software spending. This trend is expected to continue, as more software publishers move to the Cloud. In fact, Gartner predicts that by 2025, 60% of the top 20 software and SaaS providers will base their pricing on revenue, employee count, or expected usage. As such, companies must adapt their cost of ownership models and contract negotiation strategies. 

You Have More Than You Think

SAM teams often lack control over SaaS spending because SaaS procurement is now widely distributed across business units. That’s why many organizations underestimate their SaaS expenditure by 3X and the size of their software inventory by 1.7X. 

Zylo’s SaaS Management Index reveals that the average enterprise operates with 650 applications and spends $264 million annually on SaaS, a 17% increase from 2022. SaaS is a larger and more enduring problem than you think.

Portfolio size and spend

License Waste Is High

According to our research, 58% of SaaS licenses go unused within enterprises on average. That leads to an astounding $127M in wasted spending annually. A SaaS Management platform helps reveal this waste and drive substantial cost savings by optimizing license usage.

Unmanaged Risk Is Concerning

As highlighted in the 2022 Gartner Market Guide to SaaS Management Platforms, organizations using unmanaged SaaS are five times more likely to experience a cyber incident or data loss. Furthermore, 73% of expensed applications in enterprises have a “Poor” or “Low” security score, increasing their vulnerability to cyber threats. A SaaS Management platform gives you visibility to mitigate security and compliance risks.

46% of applications are expensed by employees in the enterpriseOverspending Runs Rampant

Overspending is prevalent, with organizations typically overspending on SaaS by at least 25%. Shadow IT, where employees purchase applications without centralized oversight, exacerbates this issue. In the enterprise, 46% of applications are expensed by employees, contributing to fragmented and uncontrolled SaaS spending. A SaaS Management platform reveals shadow IT, enabling you to implement governance and monitor your spending.

#2 Explain How a SMP Supports Your Company’s Goals

Implementing a SaaS Management platform can significantly enhance your company’s ability to achieve its strategic objectives, particularly those focused on reducing risk and optimizing costs. Here’s how an SMP aligns with and supports these goals:

Get Complete, Ongoing Visibility into Your SaaS Stack

Visibility into your entire SaaS inventory is critical. A comprehensive view of your SaaS stack helps you understand what applications are in use, how much you’re spending on them, who is using them and how, and potential risks. This insight is foundational for effective SaaS Management.

  • Maintain a current system of record for application ownership: Ensure accurate tracking of who owns each application to streamline management and accountability.
  • Understand the category and functionality of all applications: Categorize applications to optimize functionality and usage.
  • Report on SaaS spend by department or cost center: Detailed spending reports help identify cost-saving opportunities and allocate budgets effectively.
  • Control shadow IT by identifying employee-led software purchasing: Detect and manage unauthorized SaaS purchases to reduce risk and optimize costs.

Renew SaaS with Confidence

Renewing SaaS contracts can be a complex process. But with a SMP, you can handle renewals efficiently and effectively, ensuring you make the most of your SaaS investments. For instance, Zylo’s platform centralizes all essential information for renewals, ensuring you have everything you need at your fingertips:

  • Centralized information: Contracts, terms, owners, and usage data all in one place.
  • Comprehensive renewal calendar: Includes auto-renewals and proactive alerting to avoid surprises.
  • Price benchmarking and negotiation: Understand current market rates and negotiate to lower costs.
  • Budget visibility: Actual vs. budget comparisons to prevent overages.
  • Maximized purchasing power: Aggregate disparate purchases for better deals and optimized investments.

Optimize License Spend and Cut Waste

Finding and reducing license waste is challenging without visibility. A SaaS Management platform helps you identify unused licenses, prioritize optimization opportunities, and remove waste from your stack.

  • Understand the usage of all applications across all departments to optimize their allocation.
  • Uncover opportunities to reduce spend by identifying redundant subscriptions and duplicate applications to streamline costs.
  • Identify where employee expenses can be migrated to an existing enterprise agreement to leverage better pricing and terms.
  • Identify all unused licenses to reprovision or remove from inventory to cut unnecessary spending.

Mitigate Audit, Security, and Compliance Risks

Managing risks associated with SaaS is essential for maintaining enterprise security and compliance. A SaaS Management platform helps you: 

  • security detail cloud confidence score, powered by NetskopeMaintain a current system of record for application ownership to ensure accurate tracking and compliance with licensing agreements.
  • Identify actionable SaaS purchasing inefficiencies to improve overall management.
  • Connect employee user data from the HRIS tool to provide a holistic view of SaaS usage and spending per business unit. 
  • Understand the category and functionality of all applications: Detailed understanding aids in compliance and risk management.

By mapping these objectives to the outcomes of a SaaS Management platform, you can demonstrate to executives how adopting such a platform supports your company’s strategic goals by driving both cost efficiency and risk reduction.

#3 Be Prepared to Answer These Questions

When proposing the adoption of a SaaS Management platform, you will need to address common questions from executives to build a compelling business case. Here’s how to effectively answer these crucial questions:

Why Can’t You Do This Already?

The limitations of traditional SAM tools may be holding you back. A SaaS Management platform is necessary because legacy SAM tools and spreadsheets fall short in several critical areas:

  • Lack of Comprehensive Visibility: Traditional on-premises software tools do not provide the necessary visibility into SaaS applications and their usage. These tools are not designed to track the dynamic and decentralized nature of SaaS spending across an organization.
  • Inefficiency and Inaccuracy: Manual spreadsheets are prone to human error, quickly become outdated, and lack the automation needed to manage a constantly changing SaaS environment. This leads to inaccuracies and inefficiencies in tracking software assets.

“On-premises software tools don’t give you the SaaS Management and SaaS visibility that you need. You can’t run with just one tool in the software asset management space.”

Jason Owens– Jason Owens, Senior Director, Asset Management at Salesforce

Why Should We Prioritize This Over Other Company Initiatives?

In reality, you’re not prioritizing this over other initiatives, as SaaS Management is a critical lever to achieving numerous different strategic initiatives. SaaS Management can drive significant strategic benefits, supported by benchmark data:

    • Cost Reduction: With 58% of SaaS licenses going unused, resulting in $127 million in wasted spending annually, optimizing license usage presents a substantial cost-saving opportunity.
    • Risk Mitigation: Unmanaged SaaS applications increase the risk of cyber incidents. Organizations using unmanaged SaaS are five times more likely to experience data loss or a security breach. Additionally, 73% of expensed applications have poor or low security scores (SMI), highlighting the urgent need for better management.
    • Operational Efficiency: By gaining complete visibility and control over the SaaS stack, organizations can streamline operations, reduce redundant applications, and improve compliance, all of which contribute to overall efficiency and strategic alignment.

What Is the Return on Investment, and How Long Will It Take to Get to Value?

Understanding the potential return on investment (ROI) and the time to realize value is crucial for gaining executive buy-in. Based on current benchmarks, optimizing SaaS licenses and reducing waste can result in significant cost savings. 

Zylo customers typically see an average 6X return on investment. The improvements in cost savings and compliance can be observed within weeks, instead of months or quarters. 

Jason Carney, SVP, CRO, CSO, and Business & IT Asset Management at FIS, noted, “Zylo enabled us to provide value we’ve never been able to before. All of a sudden, we are armed with data to allow the business to make a better decision. Within 6 months of a 2-year project, we are already at over 80% of our savings target.”

By answering these questions clearly, you can build a strong case for a SaaS Management platform, demonstrating its alignment with strategic goals and potential for significant ROI.

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Bring SaaS Under Software Asset Management Control with Zylo

Establishing control over your SaaS environment is essential for reducing costs, mitigating risks, and ensuring compliance. Zylo offers a comprehensive solution tailored for Software Asset Managers, providing the tools to manage and optimize your SaaS portfolio effectively.

  • Gain a centralized and accurate system of record for all SaaS applications, enabling better management and oversight.
  • Utilize detailed data insights to identify unused licenses, eliminate redundant applications, and optimize spending.
  • Ensure compliance and reduce audit risks by maintaining accurate records and monitoring usage and security metrics.
  • Act on real-time data to make informed decisions that drive cost savings and operational efficiencies.
  • Compare your SaaS spend and usage against industry benchmarks to identify areas for improvement and best practices.
  • Simplify chargeback processes by accurately attributing SaaS costs to the appropriate departments or cost centers.

Want a deeper look at how Zylo can transform your SaaS management practices? See how we can help you bring SaaS under control by exploring Zylo for Software Asset Managers. Or, request a demo to take a deeper dive into how it works.