The shift to the cloud has created a massive shift in how businesses and their employees purchase, manage and renew software assets. Ten years ago, business department leaders submitted requests to Procurement or IT for every software purchase.
Today, software-as-a-service (SaaS) can be purchased by any employee with the click of a button. However, the prevalence of automatic renewal clauses in SaaS subscriptions makes charting a holistic renewal strategy a critical task.
SaaS use is growing rapidly – and will continue to do so for the foreseeable future. Gartner projects that SaaS will account for 45% of total application software spending by 2021. That spending is increasingly decentralized:
For many organizations, this shift to decentralized SaaS makes sense when compared to on-premise software asset management, due to the fact SaaS tools:
- Offer lower per-solution cost
- Provide proof of concept prior to purchase
- Be implemented more easily
- Scale with the business
However, regardless of company size or experience, the growing adoption of SaaS also challenges business leaders to find new ways to safeguard value, demonstrate ROI, and prevent risk with this large area of investment.
An especially challenging aspect of managing SaaS across a business is developing a SaaS renewals strategy. A sound SaaS renewal strategy will:
- Reduce the financial impacts of missed renewals and redundant purchases
- Increase visibility and awareness of an organization’s entire SaaS portfolio
- sImprove organizational security and data protection
SaaS Renewal Strategy Goals
An effective SaaS renewal strategy will:
- Identify SaaS app ownership and spend across the organization
- Prevent missed renewal dates and associated costs
- Empower LoB owners to be more decisive, effective and strategic with SaaS purchases and use
- Improve value by eliminating redundant spend and emplacing enterprise agreements where needed
- Manage future renewals proactively
Gain Visibility into All SaaS Spend
The first step in creating a SaaS renewal strategy is to accurately inventory and display every SaaS application the organization has invested in. This includes company-wide enterprise solutions such as Salesforce, Workday, or G Suite, as well as apps purchased by individual lines of business, units, departments, or employees.
The goal of this step is to understand the current SaaS investment and the best opportunities to improve or recover value due to SaaS subscriptions that may be redundant, underutilized, or unnecessary.
Most companies underestimate the actual number of apps used by employees by two to three times, which can create significant budget discrepancies.
Discovering all SaaS-related transactions often requires collaborating with Finance and IT teams to comb through purchase orders, expense reports, and other data, which can be a lengthy spreadsheet-driven exercise. While the exercise’s outcome can provide accurate information for collaborative decision-making, the data becomes outdated quickly.
As the adoption of SaaS grows, many organizations have turned to SaaS visibility and management solutions such as Zylo, which can create an accurate, continuous system of record for SaaS purchases by integrating directly into expense systems. This provides business leaders with continuous visibility and up-to-date data for transparent, collaborative decision-making for all SaaS investments.
Identify SaaS Ownership & Usage
The next step to crafting a sound SaaS renewal strategy is determining the department and owner for each SaaS application as well as relevant metrics to demonstrate utilization. To assign this information, look at the business unit and individual expense records and app dashboards, if available.
Capturing utilization metrics can be more difficult than creating an accurate application count across the enterprise. While some vendors supply utilization dashboards, the data provided is often ill-defined and non-standardized.
Enterprises that work with Zylo often find that 40% of software licenses are underutilized. Technology leaders can identify significant savings opportunities by right-sizing their SaaS subscriptions, reprovisioning unused licenses, eliminating unused or underused subscriptions, and negotiating renewals under more cost-effective enterprise terms.
Research each application’s use and function within the organization prior to engaging in collaborative discussions with individual business unit owners.
GUIDING QUESTIONS FOR COLLABORATION
• Who owns each app investment?
• Are there multiple purchases of same or similar solutions?
• Do all apps show utilization that justifies cost?
• Which apps are underutilized? Can licenses or seats be reprovisioned?
• Who owns decision-making in each unit for app investments?
• Which apps could be consolidated and optimized for value under enterprise contracts?
Map & Manage Renewal Timelines
The prevalence of automatic renewal clauses in SaaS subscriptions makes charting a holistic renewal calendar an essential task for technology leaders. After identifying the organization’s current SaaS landscape, and considering ownership and utilization, document all subscription and contract renewal dates for the organization’s SaaS technology stack.
The goal is to proactively manage renewal decisions. Reviewing original contracts or purchase agreements for individual apps may be necessary to view full details.
Without a renewal management plan, opportunities to contain costs during renewal negotiations are frequently missed. With clear foresight into upcoming renewals, sourcing teams and their counterparts can focus on value optimization for their future SaaS footprint.
Hold regular planning meetings with SaaS ownership stakeholders to highlight and create a plan of action for any application renewal date occurring in the next six months. Doing so can help LoB owners chart the weekly, monthly, or quarterly actions needed to inform decision-making for applications up for renewal.
Use a SaaS Renewal Playbook
With insights into accurate SaaS stack visibility, ownership and usage, and renewal calendars in place, the last step in creating a renewal strategy is the formal documentation and deployment of a SaaS renewal playbook across the business. A SaaS renewal playbook should:
- Outline the process for building and maintaining a system of record for all enterprise applications, including necessary data to display
- Identify application ownership roles, including responsibilities for intra-departmental stakeholders, business unit leaders, and individual employees
- Identify utilization metrics and benchmarks for owned applications
- Outline the evaluation process for purchasing new applications
- Document application onboarding including steps necessary to ensure compliance with IT security, data protection or other measures
- Prescribe renewal calendar ownership
- Demonstrate criteria during application renewal evaluations
- Document application off-boarding steps, if necessary
When technology leaders deploy a SaaS renewal playbook, they can collaboratively enable their departmental counterparts to proactively manage their applications and create previously unrealized value in the renewal process.
Bolster your SaaS renewal strategy when you book a demo of Zylo’s SaaS management platform.
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