We launched Zylo to solve immediate challenges (e.g. visibility, spend, utilization, security, etc.) that many progressive companies were experiencing due to the rise of cloud software. We believed, and still believe, that there is no stopping SaaS from overtaking traditional installed software.
As new SaaS providers continue to innovate rapidly, the category will continue to experience explosive growth as more companies adopt open software frameworks.
Our conversations with customers and industry leaders validate that early hunch in a big way, even surpassing our expectations. In fact, one of Zylo’s large enterprise customers–a pharmaceutical company with more than 40,000 employees–recently analyzed their cloud vs. on-prem footprint. They found that, for the first time in company history, cloud-based software deployments had overtaken traditional software.
Regardless of the size of the company in which you work, SaaS is growing rapidly. Today IT and Procurement need to put strategies around this large area of internal investment. Now is the time to put the same level of rigor and controls around SaaS that have traditionally happened around all other large categories of investment in the company. Now is the time to professionally manage SaaS.
Insights from IT and Procurement leaders
At the ProcureCon Indirect West conference in Denver, Zylo hosted a panel discussion to discuss how three IT and Procurement leaders were prioritizing SaaS and driving SaaS-specific strategies across their business. We spoke with:
- Carla Di Castro, IT Procurement, Workday
Even with wide disparities in employee size and industry, processes and risks are similar: both IT and Procurement are looking to solve the same set of conceptual challenges. Let’s look a bit deeper into the biggest takeaways from our panel:
SaaS Identification is a Critical First Step
Managing cloud software is not just a large enterprise problem. While Aleta at CoA is pushing to proactively predict support needs before they arise and manually touching all new software products that are entering their environment, both Workday and SFDC use different practices to handle as much of the software purchases as possible.
Additionally, Carla is currently reviewing solutions to build a full inventory of all software across her business, and Josh is focusing on the largest and most strategic software investments across the company.
The theme here is similar: no matter how large your company is, building governance and controls around your footprint are the highest priorities for building a centralized SaaS governance model.
Cost Savings and Risk Mitigation Are the Responsibility of Both the Function and IT/Procurement
Each leader spoke about a couple underlying key tenets needed to manage SaaS risk and costs into the future. First, due to the democratization of SaaS purchasing, everyone in the company is now a buyer and needs to understand their responsibilities and risks of bringing new software into the organization.
Ongoing education must provide to new and old buyers across the company to educate them on:
- The risks of SaaS usage internally.
- The internal processes enacted to mitigate these risks.
Since nearly all SaaS solutions contain sensitive information (i.e. PII, employee info, customer info), it is important to ensure that your company is protected before leveraging a new solution.
Another key part of managing the cost and risks of SaaS software is to plan early around each of your large renewals to give you time to perform an exhaustive review. To do so, leaders must position themselves to drive a fully-leveraged negotiation.
Both Carla and Josh recommended that your review and negotiation process should begin 3-6 months ahead of a notification or termination date. Zylo regularly works with customers on a 3-6 month view of upcoming renewals, depending on software size.
ROI: Cost Savings is Not the Primary Value When Buying SaaS Applications
While Procurement teams are always concerned with driving savings for all purchases, it was very interesting to hear the additional values driven by both Carla and Josh across their businesses.
Aleta explained how Public Sector’s IT ROI requirements are net-zero, meaning that the ROI from a solution must be more than the cost of the solution itself. It seems almost common sense to utilize that approach, but when the value of so many solutions today is based on UI look/feel, productivity gains, or personal preference, the financial value of a new solution can be muddled.
Procurement approaches value from a different angle. Using SaaS as a new driver, Procurement can now be a trusted advisor to their customers, serving as a strategic voice within the business.
To measure ROI, Procurement should also be looking at higher-level metrics like the of the success of a software system’s implementation, not simply whether or not they were able to negotiate a more aggressive rate.
The Strategic Importance of SaaS is Growing
Whether a company is looking at SaaS through the lens of Finance or IT, the strategic importance of this emerging category is growing. No longer can companies see the internal business reporting drawbacks inherent to SaaS purchasing and deem this category unmanageable.