How SaaS License Workflows Cut Costs & Mitigate Security Risk

A decade ago, the biggest risk to software budgets was the over-provisioning of licenses. When vendors undertook the major task of auditing a company’s on-premises software licenses, IT leaders feared fines. Worst case scenario, vendors would uncover provisioned licenses to the nth degree, forcing the enterprise to cut a massive and unexpected check.

In the age of SaaS, it’s more likely that licenses are going to waste—with underused licenses or provisioned licenses that aren’t used at all. On average, Zylo data shows that just 53% of licenses are unused in a given month, equating to $21.3M in wasted SaaS spend per organization. For IT leaders, this poses a massive risk to their software budget.

Organizations of all sizes are often missing opportunities for cost containment and risk mitigation without visibility into usage and spending. To address this challenge, IT teams can implement strategic processes like a SaaS license workflow, which enables IT teams to optimize their licensing to save money, increase operational efficiency, and mitigate security risks.

What Is a SaaS License Workflow?

Software license management requires IT teams to regularly monitor and optimize licenses to maximize usage and adoption. Because of the sheer number of apps in the average portfolio—275—IT needs a way to scale license reclamation and downgrades. That’s where a SaaS license workflow comes in.

SaaS license workflows automate IT’s requests for user license reclamations and downgrades, taking the administrative burden off of their shoulders. Often, this functionality is found in a SaaS Management Platform (SMP), like Zylo.

Running a license workflow is also a key step in Phase One of the Enterprise SaaS Management Framework. In this phase, you build a foundation for your SaaS Management program. License workflows are an essential first step for optimizing your stack and getting quick wins that validate your program and continued investment and prioritization from executives.

Why Use a SaaS License Workflow?

Regularly reviewing usage and reclaiming unused licenses—or downgrading underused licenses—is an essential component to SaaS Management. Using a SaaS license workflow helps make that process work like a well-oiled machine, driving efficient use of software, cost savings and avoidance, and improved security. 

Let’s examine the reasons why you should use a license workflow.

Save Time with Automation

With SaaS license workflows, you can say goodbye to managing licenses in a spreadsheet. Automation eliminates the time and manual effort required to track down and survey users about whether they still need their licenses. In addition, this enables IT leaders to make more informed decisions, more quickly.

Operationalize License Management

Use automated workflows to operationalize your license management program. When you regularly reclaim licenses from users who no longer need one, you free up licenses for those who do. This ensures that you’re not buying new licenses unnecessarily—and avoiding new costs.

SaaS license workflows are also critical to integrate with your renewal process. By reclaiming or downgrading licenses prior to an upcoming renewal, you can get the right number of licenses at the right tiers for your organization. Often, this is where you can drive cost savings for the business.

Safeguard Unauthorized User Access

Catch user licenses that were not properly offboarded, or deprovisioned, when an employee left the company. If these licenses are not identified, it increases the risk of unauthorized data access by former employees.

A SaaS Management Platform like Zylo surfaces when you have users that haven’t been offboarded—with the ability to initiate a workflow with just a few clicks.

Reduce Renewal Costs

When it comes time to renew, a license workflow is critical to ensure you purchase the right number of licenses. Ideally, 90% utilization is a good target, leaving you a healthy buffer. If you find you’re at risk of being overprovisioned or underutilized, that data can be incredible leverage as you enter vendor negotiations to reduce your software spending.

When to Run a License Workflow

Timing is critical to maximize the impact of license reclamation. There are three ideal scenarios for when you should run a reclamation workflow.

90 Days Ahead of Renewal

Rule number one of SaaS license management: only pay for licenses you need. Run a license workflow 90 days before an application’s renewal date. Doing so gives you ample time to reclaim those licenses and notify the vendor.

When You’re Low on Licenses

It’s not unusual for companies to add licenses throughout the course of a SaaS contract. If you plan to onboard new employees or have requests for licenses, this is a good time to pause and examine the app’s utilization. Run a workflow to see if there are any inactive licenses you can reclaim. By doing this, you can prevent unnecessary—and costly—purchases.

On a Regular Cadence

As we’ve touched on, workflows help operationalize license management. Set a schedule for running workflows—considering weekly, monthly, or quarterly depending on your license usage patterns. Regular license reclamation ensures you continually optimize your license count and avoid overspending.

How to Set Up a SaaS License Workflow in 3 Steps

Step 1: Examine Usage Data and Identify Inactive Users

As you begin your SaaS Management program, it’s important to start small. At Zylo, we recommend doing that by prioritizing your applications, organizing them into three tiers. 

Below is a quick overview of the application tiers:

• Tier One – Essential, enterprise-wide “birthright” applications. Often, they’re either centrally managed by IT, core strategic solutions, and/or those that involve the highest spend.
• Tier Two – Applications critical to business processes that are supported rather than owned or managed by IT. Multiple departments may use Tier Two apps, and they often integrate with your Tier One apps.
• Tier Three – Applications are those adopted by individual employees and/or departments. Typically, they’re intended for specific needs and use cases. They don’t directly integrate with core systems, nor do they require IT support.

Review usage data and identify inactive users for your Tier One apps. Typically, the best candidates for license reclamation or downgrading are apps with low utilization and/or an upcoming renewal date. Once you’ve nailed down workflows with Tier One apps, scale that across Tier Two apps, then Tier Three. 

What is considered low usage? Depending on the intended use of the application, for instance, a daily use app vs monthly use, the timeframe you use may vary from 30 days to 90 days, respectively. Determine what users qualify for the workflow based on your usage thresholds. 

Step 2: Send a Notice to Users

Once your workflow is initiated, send users a proactive email notification requesting to deprovision or downgrade their license. Often, SMPs will include an email template where you can include key information and personalize the message to users. Ensure the right context is included in the email, such as:

• Application name
• License type
• Last activity date
• Steps to return their license
• Reasoning for the request (e.g., if you have a goal to save 10% on SaaS costs this year, let employees know how giving up their license supports that.)

For this to be successful, you must have a change management strategy in place. Similar to gaining program buy-in, users should understand why license reclamation workflows are essential to the business. IT leaders should open lines of communication with lines of business leaders to drive enterprise-wide strategies and initiatives such as license workflows.

Step 3: Deprovision or Downgrade SaaS User Licenses

Once you’ve collected the responses from all of your users, you know which need to be deprovisioned or downgraded. Depending on your SMP, you can download the list and share it with the team members responsible for deprovisioning. Alternatively, you can automate this step using something like Zylo’s Okta Actions.

Use a SaaS Management Platform to Automate License Workflows and Deprovisioning

Using a SaaS Management Platform (SMP) is essential for automating license management practices across hundreds of applications in your portfolio. It gives IT leaders visibility into license usage, powers operational efficiency, increases security, and drives software value across the business. 

Gain Visibility into License Usage

Analyze real-time utilization data of each user, or at scale, application by application. Access and use historical license management reporting to drive informed provisioning decisions and strategies. For instance, Zylo’s direct integrations and Usage Connect make it easy to centralize this data for easier analysis and decision making.

Ensure Security with Better User Management

An SMP helps IT leaders keep an eye on potential security risks as it relates to users who have not been properly offboarded. Even with the best offboarding process in place, this serves as a failsafe. With this visibility, IT teams can quickly revoke permissions and user access that were missed.

Automate for Greater Efficiency

With a SaaS Management Platform, you can set utilization thresholds for each application so there’s understanding of what usage and value is expected from that app. With those thresholds in place, the SMP will automate notifications to let you know when an app has fallen below the threshold. If an app falls below appropriate usage levels, that’s your cue to run a SaaS license workflow.

Increase SaaS Business Value

As we like to say at Zylo, pay for what you use, use what you pay for. When you have visibility into license usage and automate license management, you can improve the business value of your SaaS investments. 

Automate Software License Management with Zylo

SaaS license management and optimization have never been so advanced, effective, and efficient. Today, Zylo’s License Management solution helps you measure usage, maximize efficiency, and drive adoption across your SaaS portfolio. Take a quick guided tour of the solution here, or request a personalized demo for a deeper dive.