Have you thought about getting a start on SaaS management?
Every year, more and more SaaS products promise to save your organization time and money (not to mention saving you from headaches).
But there’s a flip side to this: Every year, it gets harder to keep track of all the SaaS vendors you’re contracted with, let alone assess the value that you’re getting from them.
If you take a look at Chief Marketing Technologist’s image on the ever-expanding landscape of marketing software, you’ll know what we’re talking about. The SaaS landscape for marketing technology has grown exponentially every year since they began tracking, now numbering more than 8,000 solutions. In 2014, there less than 1,000. And while marketing teams have traditionally used more varied and numerous digital technologies, other departments’ growing use of SaaS have followed similar trajectories.
A prime example of the explosive, rapid growth of SaaS in businesses: The number of applications for marketing technology now surpasses more than 8,000 solutions – in 2014, there were less than 1,000. (Credit: chiefmartec.com)
It’s one of the reasons growing organizations have started focusing on SaaS management: a uniform process for identifying and optimizing your SaaS spend.
In this post, you’ll get an understanding of how to build the foundation for SaaS management and charter a SaaS management journey.
Common Starting Points for Pursuing a SaaS Management Strategy
SaaS management begins when you admit that you have a problem.
Maybe you realize you don’t have a clear map for which products your company’s using (and how much they use them). It could be as simple as being unable to tally overall SaaS spending without spending a dozen hours tracking everything down.
Either way, at Zylo, we typically see the need to start a SaaS management program or process take root with a series of questions:
- How many SaaS applications do we actually have?
- How much are we spending on subscription software overall? Who’s doing the spending?
- Do employees get the full value from the software subscriptions, licenses, or seats they’ve been provisioned?
- Are they using SaaS applications that we don’t know about?
Attempting to answer these questions typically reveals a big problem: the unmanaged growth of SaaS creates uncontrolled costs and increased risk. A lack of insight into SaaS spend and usage results in inefficient purchasing, reactive renewal processes, poor forecasting, and constant change.
Why Start with SaaS Management?
SaaS management reduces the cost and risk of SaaS applications by introducing visibility into cloud-based application contracts, usage, and spend. Answering the questions above isn’t always easy. But by viewing your organization’s SaaS applications through the lens of a lifecycle, managing SaaS becomes more manageable
Zylo has implemented SaaS management with hundreds of organizations and developed a comprehensive approach that addresses SaaS applications in terms of their lifecycle of usefulness across the organization as a whole. By taking the time to start SaaS management within your own org, you can turn the challenges of relying on SaaS into an opportunity to control costs, manage risk, and empower a distributed workforce.
Chartering a SaaS Management Journey
There are two parts to starting SaaS management within your org: laying the foundation and then jumping in with discovery, optimization, and planning.
If you know that you need SaaS management but you’re not quite sure where to start, start with the foundation: what is your goal (or your organization’s goals) for introducing SaaS management?
Some of the goals we’ve seen customers identify and focus on include:
- Cost reduction: What are the true costs of our SaaS stack?
- Risk assessment and reduction: Are we compliant and secure as we innovate?
- Productivity for employees: Are the tools we’re using best for our team and best-in-class?
- License optimization: Do we need as many seats as we have?
- Software ROI: Are we really getting value out of all of our tools?
- Digital transformation: Will these tools support the shift we’re planning for?
- Streamlining infrastructure: Are our tools contributing to enterprise IT sprawl? How can we continue to rationalize software investments and drive innovation?
You might have one goal or you might have many. Just make sure your efforts map to what you’re trying to do from the start.
After you establish your main goals, there are four lifecycle stages to create an effective SaaS management program:
- Discover -Uncover all the SaaS applications currently in use. Look at usage and spend numbers to understand the baseline.
- Optimize. Identify ways to cut SaaS spend and increase efficiencies.
- Plan. Proactively manage SaaS renewals and forecast future SaaS spend with data-driven insights.
- Govern. Provide visibility and control across your organization to accurately manage all SaaS applications into the future.
Stage 1: Discover
From software development to consulting, discovery is a critical ahead of iteration or (in this case) optimization. Introducing SaaS management is no exception.
Most businesses dramatically underestimate – by two to three times – the actual number of SaaS applications the organization maintains. The average inventory quantity across all business sizes is 651.
The goal in this stage is to simply identify the current status of your organization’s SaaS application footprint. It’s a full inventory that will give you the accurate and in-depth understanding you’ll need to move forward.
You should ask (and answer) as many questions about your SaaS inventory as possible. These should include:
- How many applications does your organization use?
- Who’s buying them within the organization?
- Is there an approval process? What does it look like?
- How do we vet new applications for compliance within the current process?
- How much are we spending — on each application and for all SaaS costs?
- Are we paying for redundant functionality? (In other words: are two applications doing the same thing?)
- How do we account for these costs? Are we purchasing applications via both Accounts Payable and expenses?
- What are the contract details for each SaaS vendor? Do we have term notification dates and auto-renewal clauses?
Stage 2: Optimize
With up-to-date and exhaustive data about your current SaaS inventory and spending, you can build a SaaS system of record.
But where do you start?
If your org is like most, you maintain hundreds of SaaS applications. Instead of going the panic mode route by worrying about every single one all at once, focus on where the cost reduction opportunity is the greatest.
To make inroads on optimization from the start, create a list of the top 10 SaaS applications by total spend.
For each of the 10, investigate whether or not savings opportunities exist. Potential cost reduction opportunities include:
- Rightsizing licenses: Ask and answer questions like:
- Are all users actively utilizing their licenses? If not, eliminate or redistribute unused licenses.
- Are there former employees or others that no longer need their licenses?
- If the vendor has premium or upgraded license features, are these being utilized or can they be downgraded?
- Redundant applications.
- How many SaaS applications overlap in functionality? If there’s overlap, choose the application or applications with the most value (ideally the most in-use features), and sunset other tools.
Redundant SaaS applications – those with identical or highly similar functions – are a common outcome of the decentralized purchasing and ownership that has made SaaS a $100-billion category.
- Consolidate duplicated subscriptions. It’s more common than you’d think for a business to purchase an application only to have an internal team or employee buy the same software separately (known as “multi-sourced” applications). Your inventory should quickly determine which applications have been procured more than once. Consolidating these subscriptions under a enterprise-level agreement typically nets significant savings on per-user costs.
Stage 3: Plan
In this stage, you can plan to review each SaaS product ahead of its renewal. Because you know how much each tool costs, the number of seats you’re utilizing, the contract details, and its renewal date, this simply because an exercise in mapping out periodic reviews of each tool.
This might be more often than you’d think — Zylo recently found that the average business experiences three SaaS renewals every business day.
Because most SaaS applications and subscriptions typically feature automatic renewals by default, multiple subscriptions renew every business day in most organizations.
The subscription model should ensure continual service, but that’s not the point of SaaS management. The purpose behind implementing SaaS management is to demonstrate the ROI of each SaaS application under the hood.
By planning ahead, you ensure you can take the time for review ahead of each respective renewal date.
Stage 4: Govern
The final stage of implementing SaaS management is to establish a process to manage SaaS applications effectively so all your hard work doesn’t go out the window after a year or two.
If you didn’t already have one in place, setting up effective governance for SaaS management means establishing an organization-wide process for software procurement — and communicating this to all relevant stakeholders.
We recommend establishing three levels of governance within your organization to allow flexibility while maintaining the benefits of SaaS management:
- IT managed applications: For SaaS applications that are widely deployed throughout the organization or those that are essential business functions.
- IT supported applications: For SaaS applications that IT will touch only for implementation or troubleshooting.
- Unmanaged applications: For SaaS applications that IT neither manages nor supports. Every organization will strike its own balance in terms of how individual users may acquire and maintain their own SaaS applications.
With these parameters in place, your SaaS management will be set up for long term success. What’s stopping you from jumping in?
To see how Zylo’s SaaS management platform simplifies getting the most from your organization’s software investments, schedule a demo of Zylo today.