Enterprise Application Portfolio Management in the SaaS Era

Updated on January 9, 2026

SaaS now makes up the majority of software spend—a 60:40 split with on-premises software, according to IDC. This growth and dependence on SaaS leads to challenges around sprawl, overspending, and security risks. To address SaaS in 2026, enterprise organizations must make application portfolio management a priority. 

But as any IT leader can attest, managing your SaaS applications is a different game than managing on-premises software. SaaS comes with its own unique challenges that are entirely new to application management. Thus, they require a strategy designed to address them.

What Is Enterprise Application Portfolio Management?

Enterprise application portfolio management (APM) is the practice of managing software as a strategic asset. It involves:

• Identifying applications and centralizing records for cross-functional visibility
• Governing purchasing and use of software
• Regularly assessing application business value
• Managing the full software renewal management process

This practice is important, because it:

• Aligns application utility to business needs
• Supports scalability
• Reduces software costs

7 Benefits of Enterprise Application Portfolio Management

The benefits of enterprise application portfolio management include:

• Rationalizing redundant and unnecessary applications
• Optimizing and reducing IT costs
• Eliminating license waste
• Strengthening security and compliance
• Improving operational efficiency
• Enabling digital transformation
• Improving visibility and control across decentralized software environments

1) Rationalizing Applications

For large enterprises (10k+ employees), the average portfolio has 660 applications—yet many are often redundant or duplicative. APM ensures thorough assessment of your full software inventory to determine which to keep, consolidate, or cancel.

2) Optimizing and Reducing IT Costs

SaaS alone costs the average large enterprise $284M annually, and analysts like Gartner predict spending to continue rising. With application portfolio management, organizations can evaluate what they’re spending and identify strategies to reduce overall IT costs.

3) Eliminating License Waste

Unused licenses are a source of wasted spend. With SaaS, only 45% of licenses are used, driving more than $127M in waste annually per organization. Assessing usage through APM practices ensures organizations regularly eliminate waste and avoid unnecessary costs.

4) Strengthening Security and Compliance

According to Zylo data and Netskope’s Cloud Confidence Index, nearly 60% of applications have a “Poor” or “Low” risk score—indicating riskier apps in the portfolio. Another benefit of APM is strengthened security and compliance, which is often a product of rationalization.

5) Improving Operational Efficiency

Much of the work enterprise application portfolio managers do creates efficiencies across the business, such as:

• Streamlining which applications require IT support
• Improving workflows via well-integrated software
• Boosting data reporting and accuracy

6) Enabling Digital Transformation

Done well, APM enables digital transformation. When software is aligned to your strategic goals, it adds value across the business and supports the realization of outcomes like cost savings, greater efficiency, and reduced risk.

7) Boosting Visibility and Control Across Decentralized Software Environments

IT teams no longer have full visibility of all the software in their environment. Today, Zylo data shows that IT owns 26% of spend and 16% of apps. With a complete inventory of software, application portfolio managers can maintain visibility within a decentralized ownership model.

Application Portfolio Management Process

Having operational structure before implementing APM is essential for driving desired business outcomes. As such, enterprise application portfolio management should follow this process:

1. Inventory all of your applications. Use a SaaS discovery tool like Zylo to uncover all software in use—even shadow IT. Include each application in your system of record with key metadata about the contract, usage, etc.
2. Identify application owners. Assign a clear owner to each application who is accountable for its usage, renewal, and alignment to business needs.
3. Define app lifecycles. Track each application through its full lifecycle—from onboarding to retirement—to manage cost and risk at every stage.
4. Assess usage. Use usage data and login insights to understand who is using each tool and how often. Flag underused apps for review.
5. Establish and align business priorities. Map each app to business objectives to determine strategic value. Use this alignment to guide investment or elimination.
6. Standardize technologies. Consolidate around preferred tools that integrate well, reduce friction, and support security, compliance, and efficiency.
7. Maintain an ongoing rationalization process. Create a repeatable, structured process to review applications on a regular cadence—ensuring your portfolio stays aligned to business needs and free of waste.
8. Evaluate portfolio content. Regularly review the entire portfolio for gaps, redundancies, and risk exposure—ensuring it reflects evolving business needs.

Challenges in Managing an Enterprise Application Portfolio

When it comes to managing enterprise applications, common challenges include:

• Complexity of the software environment and business
• Cost management
• Data collection and quality
• Cost and resource constraints
• Change management
• Adding SaaS to the picture

Complexity

Without coordinated governance, large enterprises face challenges managing the scale of their application portfolios. Business units across regions often adopt tools independently, leading to duplicate apps, conflicting integrations, and siloed ownership.

At the same time, contract terms, usage data, and renewal cycles live in different systems—or with different teams—making it hard to act quickly or strategically. Global complexity also introduces variations in security, compliance, and access policies, which adds friction to even routine tasks like license optimization or offboarding.

Cost Management

Between the complexities just mentioned and the size and spend of enterprise software portfolios, it is difficult to scale cost management. Organizations don’t have visibility into what is being spent, where to allocate costs, and where spend inefficiencies lie. That makes it especially difficult to forecast, budget, and reduce unnecessary costs.

Data Collection and Quality

When data is inaccurate, incomplete, or disconnected from other systems, decision making suffers. It can result in missteps such as:

• Renewing a contract with too many or too few licenses
• Making rationalization choices based on partial data
• Misinterpreting the business value of an application

Individual poor decisions together compound the costs and risks to the business, making trustworthy data paramount.

Cost and Resource Constraints

Organizations often cite resource constraints such as insufficient budget, headcount, or executive support as to why they struggle to drive outcomes. Alongside these constraints, a lack of prioritization—especially within the capabilities of your existing resources—can stall progress.

Change Management

Without change management, organizations will experience difficulty getting other stakeholders bought in. Often, that’s because they don’t understand what is in it for them and why it matters to the business. On the other hand, users can become resistant to change if their preferred tools are decommissioned after rationalization.

Adding SaaS

Adding SaaS into your APM practice is more common, but it requires a different playbook than on-prem. With SaaS, knowing where to start and what best practices to follow can be unclear. Sometimes, that means teams delay SaaS Management or programs get off to a slow start.

The Unique Challenges of SaaS Require Nuanced Solutions

While on-premises software management has long been under IT’s purview, SaaS Management is still an emerging practice. Applying traditional APM to SaaS requires a nuanced approach due to challenges like:

• Decentralized purchasing and shadow IT
• SaaS sprawl
• Redundant applications

Decentralized Purchasing and Shadow IT

Nearly everyone at your organization can buy SaaS, which often makes a majority of it unknown to IT. This lack of visibility makes it difficult to understand what apps you have, who is purchasing them, and how much they cost.

The rise of SaaS was in part due to its ease of access—that one in six employees can expense SaaS in only a few clicks. There’s little to no barrier to acquiring new applications when the need arises.

This is why IT now only manages 26% of spending. In contrast, business units and individuals are now responsible for remaining 74% of SaaS spending. Ownership has spread across the business, making it increasingly difficult for IT teams to track applications.

This has led to shadow IT, applications operating within an organization without proper oversight. In addition to driving up spend, shadow IT also poses serious security risks when data used in those applications are not thoroughly vetted before being purchased. 

To minimize the impact of decentralized purchasing, many organizations take a Freedom within a Framework governance approach. They allow employees to use tools they’re familiar with while ensuring acquisition policies are followed.

SaaS Sprawl

SaaS sprawl is the proliferation of software across a business due to unchecked portfolio growth. Implications to the business include:

• Unsanctioned purchasing leads to excessive and unnecessary spending
• Security and compliance risks go undetected
• IT operations teams get spread thin

According to the 2025 SaaS Management Index, enterprises add an average of 12 new apps each month equating to 22% annual portfolio growth. This SaaS sprawl originates from decentralized purchasing. When organizations fail to contain this growth, it results in overspending, larger risk footprint, and operational inefficiencies.

The real kicker is the cost implications of SaaS sprawl. On average, enterprises spend $284M on SaaS annually. In addition, according to Gartner, the average organization overspends by 25%. As portfolios continue to expand, hidden costs swell—and only become worse left unmanaged.

By including SaaS in your organization’s APM practice, you get total visibility over your organization’s portfolio. Track costs back to their source and rationalize the value versus investment of an application.

Redundant Applications

Applications that perform the same or similar function are common in SaaS portfolios today—driving unnecessary costs, data and collaboration silos, and operational inefficiencies.

The goal of APM should not be to completely eliminate all redundant applications. In fact, some redundancy can be healthy. According to Chris Asing, former Head of Business Technology at Redis, redundancy may be ok if it is a better choice for a department’s use case. 

For example, one workflow tool that works for IT may also work for Marketing. However, Marketing already uses another workflow tool that integrates with the right tools in its stack and would prefer to keep it.

As Asing shared on SaaSMe Unfiltered, “While it may be duplicative, it’s actually serving that function significantly better than my product would be serving their function, because the products themselves haven’t matured.”

Application portfolio managers must take a strategic approach to reduce redundant software. Those who find success often start by evaluating a single category and then replicating the process across other categories. They also ensure change management is part of the process to help prevent redundancy in the future.

How to Respond to SaaS’s Dynamic Environment

SaaS portfolios create an incredibly dynamic digital environment with needs changing daily. To ensure all applications are compliant and drive business outcomes, SaaS-conscious APM must be an ongoing practice. It requires:

• Always-on visibility into all software, spend, and usage
• A governance framework that sets clear expectations at all levels of the organization
• Cross-collaboration from IT, software asset management, procurement, and FinOps
• Using a SaaS Management Platform to manage and optimize assets (more below)

Enterprise Application Portfolio Management Best Practices

Applying application portfolio management best practices helps you make the most out of your portfolio. Top best practices include:

• Align technology and business roadmaps/strategy
• Understand needs of current users
• Centralized data
• Prioritize applications
• Assign ownership (data ownership)
• Prioritize SaaS over on-premises software
• Communicate impact / Report on impact
• Automate processes

Align Technology and Business Strategy

Technology plays an integral role in the success of your business. Evaluate each software title in your portfolio to understand what value it is driving.

Centralized Data

Use a SaaS Management platform to centralize all of your SaaS applications, spend, contract, and usage data. Then, ensure all the right stakeholders have access to the right dashboards for ongoing visibility and collaboration. Unify SaaS and on-premises software data for a more comprehensive view in a CMDB or business intelligence tool.

Understand Needs of Current Users

Data alone doesn’t tell the full story. Talk to users and application owners to understand:

• The value they get out of the tool
• What use cases it solves
• Expectations for license usage

Prioritize Applications

It’s ineffective to optimize all of your applications at once. Prioritize which applications need the most attention, such as those owned by IT or the greatest cost investment. Taking this approach allows you to generate results early in your program, which provides proof points for executive and company-wide buy-in.

Assign Data Ownership

Your decisions are only as good as the data you have. To manage SaaS, data management must be ongoing to ensure it is accurate. This requires assigning ownership to an individual or team that are responsible for ensuring that:

• App owners get updated
• Integrations are intact and working
• Adding metadata, contracts, and integrations for new software

Prioritize SaaS over On-Premises Software

Most application portfolios are already SaaS-heavy, and that trend will continue. By prioritizing SaaS Management over on-prem, your organization benefits by way of:

• Faster implementation timeline for management solutions
• Time to value in weeks or months instead of quarters or years
• Greater agility across global teams

Optimizing SaaS is where you’ll drive the most impact—financially, operationally, and strategically.

Hear from Keith Sarbaugh, CIO at Zoetis, on why SaaS must be prioritized.

Report on Program Impact

To ensure ongoing support from executives, regularly report on your program’s impact to the business. Depending on your strategic goals, that could be sharing cost-savings to date, reduction in number of applications, or lowering the percent of expense purchases.

Automate Processes

Because portfolios are so large, managing them manually is not scalable. Use a SaaS Management Platform to automate more administrative or operational tasks, such as:

• App discovery and categorization
• Alerts to detect new and risky applications
• Survey users for license reclamation or downgrades
• Reminders to stakeholders at key renewal milestones
• Assign APM tasks to team members in an ITSM system

The Future of APM and the Use of AI

AI is reshaping the software stack, and application portfolio management leaders must take control before the stack takes control of them.

AI tools are entering the business at record speed. Many operate outside formal procurement, run on consumption-based pricing, and evolve weekly. That pace—and unpredictability—introduces significant cost, security, and compliance risks into your portfolio.

Traditional APM approaches can’t keep up. Managing quarterly reviews or relying on static app categories won’t work when tools are adopted in hours and priced by usage.

To stay in control, application portfolio leaders must:

• Implement continuous usage and spend monitoring
• Flag AI tools early, especially those with usage-based billing
• Automate app evaluations based on utilization, redundancy, and value
• Update budgeting and forecasting models to account for consumption volatility
• Build governance that scales with decentralized AI adoption

AI is forcing a new operational model—one that’s faster, noisier, more fragmented. Without a system built to manage that velocity, portfolios will sprawl, costs will spike, and oversight will slip.

Leaders who evolve their APM practices now will be the ones who stay ahead—cutting waste, minimizing risk, and making smarter, faster decisions in an AI-powered future.

Use a Comprehensive SaaS Management Platform to Manage Applications Your Way

Zylo offers a comprehensive SaaS Management platform that empowers enterprises to create effective application portfolio management systems that account for the challenges of SaaS. Better yet, you will have the flexibility to manage SaaS in the way that best suits your organization.

Zylo will enable your enterprise to: 

• Establish complete SaaS portfolio visibility
• Optimize available licenses
• Rationalize your SaaS portfolio 
• Manage Renewals 
• And build a system of governance and compliance across your business

With these tools, you will be able to utilize data-driven insights for better ROI without sacrificing the utility SaaS offers. This will free you and your organization from the burden of the challenges we’ve discussed, taking a working flow that previously would have taken months to a matter of hours. 

Schedule a demo with us today and see how we can help your organization manage your SaaS assets, and save without sacrificing utility. 

FAQs About Enterprise Application Portfolio Management