Table of Contents The Goals of SAM and SaaS Management are...
Think about cleaning out your refrigerator.
You open the produce drawer and find a wilted bag of spring mix you never found time to eat. Then comes the now-spoiled gallon of milk that’s only missing a few sips. As you move to the top shelf, you discover three different containers full of leftover pizza.
The dreaded fridge-cleanout often becomes a moment of reckoning, where you realize how much food (and hard-earned dollars) go to waste. You find multiple containers of the same food, and ultimately pledge to keep better track. Then, next month rolls around. Rinse and repeat.
Now, use this analogy to consider software license tracking and management, especially software-as-a-service (SaaS). In fact, SaaS is now so easy to obtain — and increasingly purchased by individuals, not IT or procurement teams — it becomes nearly impossible to fully understand your complete inventory, manage renewals, or identify underutilized or duplicate licenses.
Zylo’s SaaS Management Index shows that, today, the average company with over 1,000 employees has more than 600 software applications, and 40% of those licenses go unused in a typical 30-day period. It adds up to roughly $2.32 million in waste, money that could be better spent on more widely utilized software, hiring new employees, or growing salaries.
To make things worse, untracked SaaS significantly increases the chances of surprise renewals, with the average company now undergoing one SaaS renewal each business day, or 20 per month.
With Gartner forecasting SaaS adoption to accelerate over the next decade, organizations need to deploy strategic software license tracking initiatives to proactively manage software renewals and control costs.
Discover your existing licenses
More likely than not, you pay for a ton of SaaS. Most organizations underestimate the number of existing licenses by two to three times. It’s due to the dramatic increase in the decentralized purchasing of SaaS, mainly because it’s so easy to obtain with only a credit card and business email. In fact, it’s so easy to acquire that lines of business (LOBs) and individual employees frequently purchase software on their own, which makes it overly difficult to centrally manage your software licenses and prepare for renewals.
Consider these stats on SaaS acquisition:
- IT increasingly owns less of an organization’s SaaS spend and manages less of the organization’s apps.
- IT now owns 27% of SaaS spend and 23% of apps. That’s a 35% decrease in spend and 9% decrease in quantity from last year.
- Individual business units increasingly own more SaaS spend.
- LOBs now own 65% of SaaS spend, a 22% increase from last year.
The first step to keeping tabs on your SaaS involves identifying every SaaS application across your organization, then establishing software license tracking protocols in a centralized system of record. A SaaS Management platform, such as Zylo, makes it easier to keep track of your software licenses.
Use the 3 R’s of SaaS Management
When it comes to software license tracking, and effective SaaS Management in general, Zylo recommends a three-pronged approach: Rationalize your SaaS purchases along your goals, rightsize according to need, and renew only when it serves business goals.
#1 Rationalize your SaaS purchases to align with business goals:
- Discover your baseline inventory. SaaS discovery starts by getting a complete inventory of your applications. Make sure to categorize each by function, and take note of renewal dates and terms. A SaaS Management platform can automate renewal tracking.
- Determine your standard toolset. You’ll likely discover redundant SaaS applications that serve a similar function, such as project management or web conferencing tools. Take the opportunity to establish the preferred SaaS tools you want to use across the application, then communicate company-wide adoption. SaaS Management tools make it easy to whitelist these standard tools.
- Remove non-mission-critical tools. Retire any tool that doesn’t contribute to an organizational goal or help employees work more efficiently.
- Eliminate shadow IT. Reduce or remove applications and subscriptions that fall outside of IT control, or remain tied to departed headcount.
#2 Rightsize licenses based on utilization and need
- Remove unused licenses and applications. Remember, 38% of your SaaS tools likely remain unused over the average 30-day period, meaning a third of your SaaS spend goes to waste and contributes zero value for your employees or organization.
- Zylo’s License Management Workflow Dashboard provides actionable, data-driven insights to make it easier to rightsize your licenses. Here’s how the rightsizing process works for Zylo’s workflow feature:
- Analyze application data to discover users who underuse or no longer need licenses.
- Send users an alert, asking if they’re willing to give up their licenses.
- Easily deprovision inactive users, or those who voluntarily returned their license.
- Transfer unused licenses to other users or eliminate them completely to reduce costs.
- Consider this example of the ROI of license rightsizing: Carta, an ownership and equity platform, uncovered over $50,000 in savings by rightsizing SaaS licenses for its video conferencing, DevOps monitoring, and CRM applications.
#3 Proactively manage your renewals
- Establish a centralized renewal calendar to automate software license tracking, and never miss another auto-renewal.
- Set automatic alerts to begin the renewal process long before the deadline.
- Make sure to analyze usage data so you come well-equipped to negotiate lower rates based on your actual usage of each application.
Use Zylo Insights to optimize software license tracking
Rather than overwhelming you with mounds of useless data, Zylo Insights seamlessly provides recommendations to more easily manage and track your software license.
Zylo Insights prioritizes actionable recommendations to empower rightsizing and savings initiatives. In a single dashboard, you can see all of your suggested optimization recommendations — prioritized by impact — and act on these insights directly from the Insights dashboard.
Zylo Insights prioritizes two key recommendations to drive SaaS optimization:
- Usage Insights, which offer recommendations to downgrade or deprovision licenses based on actual usage.
- Portfolio Insights, which provide a complete view of your SaaS stack – surfacing newly discovered subscriptions and shadow IT, recently expired contracts, and redundant subscriptions.
With a dedicated software license tracking initiative in place, your organization can not only avoid auto-renewals, but come to the table fully prepared to negotiate better terms. You’ll possess key insights to make data-driven decisions to deprovision or rightsize licenses, so your organization maximizes efficiency and reduces SaaS costs.
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