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Ben Pippenger: Uncovering & Addressing Hidden SaaS Purchases

hidden saas purchases

09/30/2022

There’s a growing and escalating issue around the increasing number of SaaS applications and spend at companies today. Much of that is attributed to hidden SaaS purchases – or shadow IT. In this episode originally recorded with SAP Concur, Zylo Co-founder Ben Pippenger discusses how to uncover shadow IT and where to start addressing it.

Episode Summary

The problem with hidden SaaS purchases isn’t just that you don’t know about them. It also results in hidden costs, security and compliance risks, and makes it difficult to manage – among other challenges.

On the bright side, using a SaaS management tool will give you full visibility into what applications are hiding in the shadows, how much you’re spending on them, and who is purchasing them.

Zylo Co-founder Ben Pippenger explains, “There’s a lot of problems we can solve by just bringing that level of visibility to then drive change within an organization to make them operate better.”

Read on for the key takeaways from Ben’s conversation with SAP Concur on the importance of having complete visibility of your SaaS estate. 

This episode was originally run on the SAP Concur Conversations podcast.

Guest Spotlight

Name: Ben Pippenger
What he does: Co-founder & Chief Business Development and Strategy Officer at Zylo
Connect with Ben online: LinkedIn 

Episode Highlights

There are Inherent Risks with Hidden SaaS Purchases

“There’s security risk, there’s compliance risk, there’s spend risks, there’s employee productivity issues that can come from this. Some of our data shows that within the average large organization, 90 SaaS applications are purchased by more than one employee. So you just think about the wasted time and wasted spend there just on that one stat alone, where you’ve got a whole bunch of apps that individuals are going and buying on their own. So what results in that? Well, they’re probably agreeing to some click-wrap agreement that no one’s really reviewed. They’re just checking the box to go forward. Who knows if those applications are compliant with your own internal controls and regulations and policies and standards that you’re trying to live up to in order to deliver your services to your customers. Who knows what sort of data’s being brought into those applications, and where that data’s being hosted around the world?”

All Companies Need SaaS Management, But the Problem Often Gets Overlooked

“I like to say that any company using software likely needs a SaaS management system. And so really, that’s every company, because you think about the evolution of going from on-premise and data centers to the cloud. When people think about that problem, they oftentimes think about the cloud providers like, ‘How do I get something I built and hosted myself onto an Azure, or onto an AWS, or onto a GCP or onto any of those clouds that are out there? How do I make that migration?’ which is a big problem, and there’s people there that help you solve those problems and optimization around those things. But SaaS is just as big of a problem that oftentimes gets overlooked because within organizations there’s not really a centralized owner for SaaS or for software. But the spend is higher when you look in totality across what people are spending on SaaS applications versus cloud. It is a big problem.”

It’s Easy for SaaS Purchases to Sneak by in Expense Reports

“Based on just how you were just talking about hidden software spend. So 55% of apps we find are not attributed as software purchases. So 55%, over half of the applications, are not categorized correctly inside of expense. So it’s a lot.That’s why we find so much. That’s why we’re finding all these applications inside of employee expense, because it’s an employee putting it in and they may not know, or if there’s no purchasing policy, like we talked about earlier, they’re unclear on how to put it in there, or they might be trying to hide it. To be honest, they might be trying to just sneak the expense in. So it is something definitely to be aware of.”

SaaS Management Must Also Include Your Finance Team

“It’s for finance teams too, just the practice of going around and forecasting and budgeting what spend’s going to look like. That’s super hard to do with software, and it’s a big expense. So we oftentimes will help with that too, where finance teams want to understand what are people actually buying and what does usage actually look like, and how does that go into planning mode for growth within the company so we know we’re budgeting appropriately for upcoming years.”

Misclassification of SaaS in Expense Reports is an Expensive Problem

“We see a lot of subscriptions that come through for things like music services, and video games, and some other services that I probably wouldn’t mention on a podcast that pop-up… We have seen some pretty crazy stats where single employees were expensing thousands and thousands of dollars of software through the expense report process. And those are obviously things we call out really quickly. And there could be lots of different reasons for that. It could be a department head that’s just expensing stuff. But usually if that’s occurring, the procurement teams and the buying teams want to get their arms around that pretty quickly, because they can likely get better rates and better deals and things going through all the right processes.”

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ABOUT THE AUTHOR

Author

Cory Wheeler

As Zylo’s Chief Customer Officer, Cory is responsible for helping our customers drive ROI and SaaS Management success with Zylo. He helps companies of all sizes effectively discover, optimize, and govern their SaaS through Zylo’s platform and services. Prior to founding Zylo, Cory spent 15 years in finance and procurement, managing categories and sourcing teams at Arthur Andersen, BearingPoint, and both Takeda and Astellas Pharmaceuticals. He built the procurement organization at ExactTarget, and managed the integration with the Salesforce Marketing Cloud procurement organization in 2015. He and his family reside in Indianapolis, IN, where they can be found cheering for the Purdue Boilermakers and Chicago Cubs.

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