The Key to Realizing Hard SaaS Cost Savings (+ 5 Optimization Tactics)

91.2% of IT leaders recognize the cost-saving potential of software optimization. Yet, many organizations struggle to identify cost-saving opportunities, let alone achieve realized hard cost savings.

Companies must take definitive action to optimize software expenses. This could include eliminating unused applications, rightsizing licenses, or negotiating better contract terms. The Enterprise SaaS Management Framework provides a structured approach to helping organizations transform potential savings into measurable financial outcomes. These savings often contribute to larger business goals, such as reducing operational expenditures (OpEx) or reallocating resources to fund innovation.

Good outcomes are time-bound, quantifiable, specific, achievable, and relevant. When it comes to SaaS cost savings, businesses need clear visibility into their software portfolio and a strategy to track progress. Organizations can follow a Crawl-Walk-Run approach to build SaaS Management maturity, ensuring that cost optimization efforts lead to sustainable and scalable financial benefits.

Unlocking Hard Cost Savings in SaaS

Responsible business growth demands that organizations become more prudent with their investments. Economic uncertainty has only heightened the need for companies to allocate every dollar efficiently. As software remains a top operating expense, SaaS Management is a key area for realized hard cost savings—transforming identified savings opportunities into tangible financial results.

Defining the Business Outcome

Realized hard cost savings occur when companies optimize their SaaS investments to reduce waste and directly improve their bottom line. Software consistently ranks among the top three operating expenses for enterprises, yet a significant portion of this spending is inefficient, resulting in tangible losses.

Organizations often overspend on unused licenses, redundant applications, and contracts misaligned with actual usage, all of which negatively impact financial performance.

By adopting a structured approach to SaaS Management, companies can achieve measurable ROI, translating directly into savings that enhance profitability and deliver immediate financial benefits.

Why SaaS Cost Savings Are Important

Optimizing SaaS spending is not just about cutting costs—it’s about strengthening financial health, reinvesting in growth, and ensuring sustainable innovation. Savings is often the top outcome organizations focus on when approaching SaaS Management because it provides immediate, measurable financial value. Companies that fail to manage SaaS spending effectively face serious financial risks:

• The average organization spends $49M on SaaS annually, with enterprises exceeding 10,000 employees reaching $284M in yearly SaaS expenses.
• An estimated $21M is wasted each year on unused licenses.
• Organizations without centralized SaaS visibility will overspend by at least 25% by 2027 due to unused entitlements and overlapping tools.

By prioritizing SaaS cost savings, companies can drive measurable financial outcomes while maintaining the flexibility to reinvest in critical business initiatives.

Improve Your Bottom Line

Reducing wasted SaaS spending directly impacts profitability. Organizations can lower operational costs by eliminating unnecessary licenses, consolidating tools, and renegotiating contracts while improving financial efficiency.

Reinvest in Your Business

Cost savings from SaaS optimization can be redirected toward strategic initiatives, such as digital transformation projects, talent acquisition, or expanding market presence. Rather than letting excess spending drain resources, companies can use savings to fuel business growth.

Fund Innovation

By cutting redundant or wasteful SaaS expenses, organizations can allocate more capital to research, development, and technological advancements. Many businesses are actively exploring or implementing AI solutions, and SaaS savings provide a clear path to fund these initiatives. Investing in new solutions and capabilities ensures long-term competitiveness in an increasingly digital-first world.

5 Tactics to Realize Hard SaaS Cost Savings

As organizations seek responsible business growth, they demand more from their SaaS investments. Economic uncertainty has further pushed companies to prioritize cost optimization. However, achieving realized hard cost savings requires more than just identifying waste—it demands action. Businesses must first gain full visibility into their SaaS inventory before they can execute effective cost-saving strategies.

Zylo equips companies with proven strategies and expert guidance to implement structured, repeatable tactics that lead to measurable savings. Below are five essential strategies for maximizing financial efficiency and eliminating unnecessary costs.

1) Renewal Execution

The renewal process is one of the most important moments in the SaaS lifecycle. That’s because it offers the only real opportunity to modify a contract and secure savings. 

Missing a renewal deadline increases fiscal risk and can lock businesses into unnecessary expenses for another contract term. Since 85% of SaaS spending is tied to renewals, amounting to $41.6M annually for mid-sized organizations, operationalizing renewal execution is essential.

A well-managed renewal process allows businesses to: 

• Reclaim inactive licenses
• Ensure fair pricing
• Negotiate better terms

Proactive Management

By operationalizing renewals—clearly defining ownership, timelines, and change management procedures—organizations can avoid last-minute decisions that lead to overspending. Proactively alerting stakeholders months in advance creates time for license optimization, supplier negotiations, and strategic decision-making.

Financial Predictability

Companies that execute renewals effectively also gain financial predictability. With a clear view of upcoming contract changes, they can forecast budgets, track spending trends, and identify recurring savings opportunities year after year. 

Strengthen Security Posture

In addition to cost reduction, this intentional approach strengthens security by improving access management and compliance oversight. Inactive users no longer have access to tools they don’t need, limiting the surface area of risk.

Best Practices to Follow

• Track all SaaS contracts and renewal dates: Ensure proactive management and eliminate missed opportunities to optimize SaaS spend. After renewal, update this information in your system of record.
• Create a renewal calendar: Plot upcoming contract deadlines and assign ownership to the right teams. This makes it easier to see what’s ahead and prioritize your most critical renewals.
• Use data to inform decisions: Analyze usage trends, price benchmarking, and historical spending to guide renewal discussions. That way, you can align spending with your organization’s needs and potentially reduce costs at renewal.

With the right approach, SaaS renewals become a controlled, strategic process rather than an overlooked administrative task.

2) Shadow IT Remediation

Unmonitored software purchases contribute to SaaS sprawl, increasing security risks and unnecessary costs. Shadow IT—applications acquired outside of IT, SAM, or Procurement oversight—accounts for a significant portion of an organization’s SaaS footprint. 

Today, it represents just 3.8% of total SaaS spend but 34% of all applications in use. This means a substantial number of apps are operating outside of IT’s control. As a result, it creates inefficiencies and security concerns that organizations must address. Without centralized oversight, businesses develop overlapping tools, redundant spending, and compliance vulnerabilities.

Identifying Shadow IT

Identifying shadow IT is challenging because most companies lack a structured way to audit unauthorized software purchases. While many businesses enforce software purchasing policies, violations are often tracked through time-consuming manual reviews of Accounts Payable records. 

Because of this, it’s important to have a dedicated SaaS Management Platform with robust financial discovery. It is essential for uncovering hidden spend, reducing the manual burden, and proactively preventing unauthorized apps from entering the environment.

Remediating Shadow IT

Addressing shadow IT is essential for reducing risk, consolidating software, and cutting unnecessary costs. While the primary benefit of remediation is improving security, organizations can also achieve cost savings by eliminating duplicate or underutilized tools.

• Uncover hidden SaaS spend: Shadow IT is often buried in expense reports and corporate credit card statements, requiring robust financial discovery tools to surface.
• Implement a SaaS purchasing policy: To prevent future rogue expense purchases, implement a policy to limit or prohibit them. For example, the policy may state any purchase under $5,000 may be expensed. Meanwhile, some organizations revoke credit card purchasing for a more formal acquisition process.
• Assess application relevance: Once identified, each application should be evaluated for compliance, security risk, and necessity within the broader SaaS strategy.
• Eliminate redundant tools: After mapping applications, IT and Procurement teams can take action to reduce unnecessary spending and consolidate vendors.

3) Application Rationalization

Software sprawl leads to fragmented spending, redundant tools, and unnecessary overhead. Yet, many businesses unknowingly pay for multiple applications that serve the same purpose, creating inefficiencies and higher costs. 

Among the top three most redundant application functions are online training classes, project management, and team collaboration. Our 2025 SaaS Management Index report found that organizations stand to realize significant cost savings via rationalization. Depending on how aggressive you want to reduce apps, average savings are between $477K and $2.8M.

Strategic App Rationalization

A strategic approach to application rationalization involves a comprehensive, long-term assessment of all software in use. This includes categorizing applications, defining company-wide standards, and identifying long-tail apps that fall outside of approved tools. Once a clear framework is in place, businesses can systematically remove duplicative applications during renewal cycles.

Rationalization benefits both IT and finance leaders. CIOs can improve employee experience by ensuring teams use standardized, approved applications that integrate seamlessly with other tools. CFOs benefit from reduced SaaS sprawl, lower software costs, and stronger financial oversight.

Best Practices to Follow

On a tactical level, application rationalization enables organizations to identify redundant tools at every renewal. It incorporates a demand management approach that ensures teams evaluate whether an application should be renewed or consolidated with an existing solution.

• Change management is critical to ensuring rationalization efforts are successful and widely adopted. Ensure stakeholders are bought in and understand the importance of this initiative.
• Tackle rationalization one category at a time, engaging with key stakeholders or owners of those applications to understand use cases and business criticality.
• Full visibility into all applications is essential for making informed decisions while minimizing disruption. 
• Determine which apps—the ones that made the cut—should become a company-wide standard. That way, you can direct users to existing apps that fit their needs and reduce redundancy in the future.

4) License Reduction at Renewal

Many organizations continue to pay for unused or underutilized SaaS licenses, leading to wasted spending (an estimated $21M each year!) and inefficient resource allocation. Rightsizing licensing at renewal ensures businesses only pay for what they use, eliminating unnecessary costs and aligning subscriptions with actual demand.

License reduction at renewal involves assessing utilization data before contract renewals to determine if the current license count meets business needs. From there, companies can run workflows to survey inactive users, giving them the option to retain or release their licenses. Alternatively, inactive users can be removed automatically, allowing organizations to scale license optimization without manual intervention. This process drives measurable cost savings while improving operational efficiency.

Why License Reduction Is a Powerful SaaS Cost-Saving Strategy

Reducing excess licenses is one of the most impactful and quantifiable outcomes of effective SaaS management. Organizations that optimize licensing at renewal can:

• Avoid overprovisioning by purchasing the correct number of licenses, preventing unexpected costs throughout the year.
  
• Increase ROI by aligning software investments with actual usage and eliminating waste. If an application isn’t delivering value, renewal is the time to adjust spending.
  
• Ensure scalability by adjusting license counts to match evolving business needs as companies grow, shrink, or restructure.
  
• You need centralized licensing and usage data to make informed decisions.
  
• Best practice is to reclaim licenses 90 days prior to renewal to help inform needs for the upcoming year.

With the average company wasting millions on unused licenses each year, proactive license reduction is a critical cost-saving strategy. 

5) App Price Negotiation

Negotiating SaaS pricing effectively requires more than just asking for a discount—it demands a data-driven strategy. Companies that draw insights from license usage and industry benchmarks can secure better pricing, reduce costs, and maximize value from their software investments. 

In fact, organizations that use Zylo’s SaaS Negotiator service achieve an average savings and cost avoidance of 5.36% of total SaaS spend, equating to $2.6M, with some reaching 15% ($7.4M).

To negotiate effectively, organizations must assess what they should be paying for each SaaS tool based on actual usage and pricing trends. Price benchmarking provides visibility into what similar companies are paying for the same SKUs to understand whether their current price is in line with the market or not. If it’s greater, that becomes leverage in vendor negotiations to bring it down to a fairer price.

Best Practices to Follow

Proactively engaging vendors with the right data ahead of renewals leads to better financial outcomes. 

• Review license usage 90 days before renewal and delivering that data to the vendor early strengthens negotiation positioning.
• Use a benchmark tool like Zylo to ensure visibility into what other companies of similar size are paying for specific SKUs.
• Follow a negotiation playbook to prepare well in advance and identify key levers to reduce costs.

SaaS contract negotiations should be proactive, structured, and informed by real data. Learn how to benchmark pricing with Zylo’s price negotiation strategies and unlock savings in renewals.

How Zylo Helps You Achieve This Business Outcome

Realizing hard cost savings from SaaS requires visibility, automation, and actionable insights. Many organizations struggle with fragmented data, reactive renewal management, and a lack of centralized negotiation benchmarks. Zylo provides the tools and intelligence needed to gain control over SaaS spending, optimize contracts, and continuously track cost savings.

Real-Time Spend Visibility and Insights

Without full visibility into SaaS usage and spending, companies risk unnecessary costs and financial blind spots. Zylo provides real-time insights into software expenses, helping businesses identify cost-saving opportunities before they become missed chances.

AI-Powered Financial Discovery

SaaS sprawl makes it difficult for companies to track all their software spending. Zylo’s AI-powered discovery continuously scans Accounts Payable records, expense reports, and other financial sources to uncover all applications in use across an organization. This creates a single source of truth for SaaS Management, ensuring nothing is overlooked when identifying cost-saving opportunities.

Automated Alerts

Managing a SaaS portfolio requires constant monitoring, but manual tracking isn’t scalable. Zylo’s Automated Alerts help organizations stay ahead of spending risks and renewal deadlines by notifying stakeholders about:

• New purchases: Identify unexpected software acquisitions before they create budget issues.
• Budget overage risk: Flag potential overspending before it impacts financial planning.
• Low license availability: Ensure teams don’t run into shortages that disrupt workflows.
• Upcoming renewals: Give decision-makers time to assess usage and negotiate effectively.

SaaS Cost-Saving Insights

Visibility is only the first step—knowing where to take action is what drives results. Zylo’s Insights analyze SaaS usage and spending patterns to automatically surface cost-saving opportunities. Whether it’s rightsizing licenses, identifying redundant applications, or flagging low utilization, Zylo pinpoints the quickest paths to realized hard cost savings.

Access SaaS Price Benchmarks

Securing the best price on SaaS licenses requires market intelligence. Zylo’s Benchmarks provide SKU-level pricing comparisons, allowing organizations to see what similar companies pay for the same tools. These insights can be used during contract negotiations to drive down costs and ensure fair pricing.

Operationalize Renewal Management

SaaS renewals are often rushed, leading to missed cost-saving opportunities and reactive decision-making. Zylo’s Renewal Management solution empowers organizations to proactively plan, prioritize, and negotiate renewals with confidence. Key benefits include:

• Full visibility into upcoming renewals, helping teams stay ahead of contract deadlines
• Centralized contract context that improves decision-making and negotiation outcomes
• Automated alerts that reduce last-minute renewals and allow time for strategic planning
• Actionable reporting that reveals savings opportunities and tracks performance over time

Track and Report on SaaS Cost Savings

Executives need to see measurable financial outcomes from SaaS optimization. Zylo’s Savings Center helps businesses track, validate, and report on realized cost savings as they occur.

For organizations driving strategic savings initiatives, custom dashboards provide a real-time view of spending reductions, renewal outcomes, and optimization efforts. Zylo’s Executive Dashboard simplifies reporting by automating cost-savings summaries, making it easy to share progress with stakeholders.

Achieve Hard SaaS Cost Savings with Zylo

Optimizing SaaS spending is no longer a luxury—it’s a necessity. By taking a proactive approach to renewal execution, shadow IT remediation, application rationalization, license reduction, and price negotiation, organizations can transform potential savings into tangible financial outcomes. Gaining full visibility, leveraging automation, and using data-driven insights allow businesses to control costs, reinvest in growth, and drive innovation.

See why Zylo has been named a leader in the Gartner Magic Quadrant for SaaS Management Platforms. Take a tour to discover how Zylo can help your organization maximize cost savings and optimize SaaS investments.