As the economy slows, with the threat of a potential recession on the horizon, nearly every company is looking for ways to reduce their operational expenses (OpEx). Many businesses look to software investments, the second largest OpEx behind labor.
OpEx refers to the recurring expenses an organization pays to run the business, such as employee wages, supplies, utilities, and administrative expenses. CapEx, on the other hand, includes capital expenditures meant to increase the long-term value of a business, like real estate, vehicles, and machinery.
Before the explosion of SaaS over the past decade, many companies treated their on-premise software as a CapEx, because it was a fixed expense for the duration of their contract. Due to the dynamic, subscription-based aspect of cloud software — with the average organization seeing 8 new SaaS applications enter their environment every 30 days — organizations increasingly see the financial benefit of treating SaaS as an OpEx.
And it makes perfect sense when you consider the significant investment — with the average organization spending $65M on SaaS each year. Can you confidently say you’ve maximized SaaS investments and cut all waste?
Check out these facts, based on Zylo data from processing over $30B in business software spend:
- 40% of software licenses are wasted
- $2,500 to $7,000 is spent annually per employee on software
- Companies overspend on software by 15% on average
Bottom line: Without a dedicated SaaS Management strategy, you’re likely overpaying for SaaS tools, while a considerable number of applications sit idle.
SaaS Management Platforms Spotlight Savings
A SaaS Management platform produces quick wins from low-hanging fruit by providing full visibility into all your SaaS applications, including shadow IT, employee-expense purchases, and any software miscategorized in expense reports. In fact, Zylo data shows 55% of expense spend is miscategorized in reports, leaving plenty of opportunity for savings.
For Jon Alves, Category Manager, Technology at Momentive, Zylo’s SaaS Management platform helped the organization understand their true SaaS investment and provided a starting point to optimize the spend moving forward.
“Whether it’s for license management or your expensed applications where you’re seeing multiple users expensing the same solution, or maybe one user who’s expensing multiple solutions, it gives us a place to start and to guide conversations that otherwise don’t have much support,” Alves said during Zylo’s SaaSMe Event. “We’re able to even provide screenshots of these opportunities, and of course once you get into them, you can dig a little deeper and go beyond what’s at that surface level.”
Once you discover your full SaaS inventory, Zylo’s SaaS Management platform produces insights with actionable recommendations to find instant savings and efficiencies by shining a light on unused, duplicate, or redundant applications — and the corresponding opportunities to eliminate, downgrade, or consolidate.
For example, Keith Sarbaugh, Vice President, IT Infrastructure, Architecture and Operations at Biogen, said his organization identified and recouped $400,000 immediately after implementing their program with Zylo. Talk about OpEx savings!
SaaS Management Platform + Ongoing Strategy = More Savings
While many organizations are looking for an immediate OpEx reduction, the real magic happens when you execute a company-wide, ongoing SaaS Management practice with your platform serving as the foundation. For instance, Alves said Momentive achieved millions in savings from executing an ongoing SaaS Management strategy via Zylo’s platform and managed services. Effective SaaS governance helps companies reduce costs, enhance security, and ensure utilization.
“After three years, we canceled 222 applications, which in aggregate is around $7 million in spend that we removed from our tech stack,” Alves said. “And this is just the foundation that we built.”
In addition, a SaaS management practice paired with a platform like Zylo helps organizations track and prepare for renewals. By setting alerts for renewals, companies can mine usage data, consider future needs, look into price benchmarks, and enter negotiations better prepared.
Discover OpEx Savings with Zylo
Rather than eliminating positions or scaling back key initiatives to lower OpEx, take a deep look inward and discover tangible savings by eliminating unused tools, consolidating redundant SaaS, and effortlessly managing renewals.
Zylo’s SaaS Management platform finds and eliminates waste by providing full visibility of software licenses — even those purchased by individual employees or miscategorized in expense reports — as well as usage data and renewal timelines. Paired with our Managed Services team, we’ll help you negotiate the best contract terms and stay on top of renewals, freeing up time and resources while delivering guaranteed savings. In fact, Zylo customers who use both the platform and services see an average ROI of 6X. But don’t take it from us. See how customers like Versapay, Talkdesk, and REA Group are finding success reducing OpEx with Zylo.
Ready to discover how Zylo helps businesses of all sizes lower OpEx while powering effective SaaS Management? Book a free demo today with one of our SaaS Management Experts.