SaaS Sprawl: What It Is and 3 Steps to Manage It

Software as a service (SaaS) can be a bane or a boon to your business. It can empower employees to purchase and employ the tools they need to maximize their efficiency and make their jobs quicker and easier, but it can also become bloated, unoptimized, and (seemingly) impossible to manage.

If you feel that SaaS is out of control in your organization, you may have fallen victim to SaaS sprawl. We’ve compiled trends in Zylo’s data set—seven years and $34B+ of SaaS spending management—to form our 2024 report, and we’re highlighting some of those insights to teach you about SaaS sprawl. Read on to learn what SaaS sprawl is and how you can mitigate its damaging effects.

What Is SaaS Sprawl?

SaaS sprawl is the proliferation of applications across a business – whether known or unknown (shadow IT). It’s a result of decentralized purchasing by IT, lines of business, and individual employees.

At its core, SaaS sprawl is not inherently evil. SaaS sprawl, on the surface, seems like the exact thing SaaS is useful for: the proliferation of applications throughout employee ranks. As with all things, SaaS sprawl is perfectly fine in moderation. The issue is that the environments which cause SaaS sprawl to occur in the first place rarely have the tools or the knowledge to keep SaaS sprawl from spreading out of control.

The key is not to wholly eradicate SaaS sprawl, it is to empower your organization with the tools to manage it and bring it within optimal ranges.

What Causes SaaS Sprawl

As you might imagine, SaaS sprawl is a symptom of an absent or inefficient SaaS management practice. In organizations where SaaS sprawl is rampant, there are rarely cohesive forms of SaaS management. One in six employees (15% of employees) expense SaaS from their acquisitions. IT owns a mere 18% of applications and controls only 31% of SaaS spend. 

This decentralized purchasing is a problem for all companies—whether they have a management platform or not. SaaS sprawl is a complex and rapidly shifting problem. On average, 6 new applications enter an organization’s environment every 30 days. That’s a lot of intake to manage constantly.

These organizations’ SaaS operations are easily optimizable; they just need the tools and language necessary to achieve SaaS management, visibility, and optimization to mitigate SaaS sprawl.

Why SaaS Sprawl Needs to Be Managed

SaaS sprawl creates numerous problems for organizations. Some of these problems are part and parcel of the environments that create SaaS sprawl, like the lack of SaaS management we mentioned earlier. This lack of management causes—and is caused by—a lack of SaaS visibility. Because the organization can’t holistically view its SaaS stack, it can’t make intelligent decisions about said SaaS stack.

But, beyond those visibility problems, there are some problems inherent to SaaS sprawl itself.

The Problems SaaS Sprawl Causes

If SaaS sprawl is such a big problem, you may be wondering what problems it actually causes. Well, they’re big ones. For one, companies often underestimate their SaaS spending and app count by 2-3X. For two, the average organization has 291 applications, with enterprise organizations having more than 600 in their stack.

SaaS sprawl is just difficult to manage. SaaS sprawl environments often lack SaaS visibility, which means application acquisitions are ephemeral and impossible to pin down—not to mention app redundancies. It brings risk into organizations in the form of unknown and unaccounted-for spending, potential security and compliance risks, and low adoption rates as a result of redundant applications (ex: your company owns ten different but identical project management tools).

We compiled some of the most topical advice from our 2024 report, which is:

• You need visibility. You can’t manage what you can’t see.
• Managing SaaS gives you more control over some uncontrolled costs, which are your 2nd largest operating expense next to headcount; its nearly impossible to budget and forecast without visibility.
• You have to make your stack efficient. Redundancies hinder productivity and collaboration and cause software bloat.

SaaS sprawl creates environments with out-of-control SaaS spending and rampant redundancies. So how does one create an environment that promotes proper SaaS management and optimization?

3 Steps to Control SaaS Sprawl

There are steps that can be taken to mitigate SaaS sprawl, and they are largely the same steps that all companies must take to achieve proper SaaS management and optimization. These steps are simple, but they can be daunting to implement. We’ll do our best to break them down for you.

Step 1: Achieve Visibility into Your Full SaaS Inventory

The foundational—and most important—first step you must take is managing your SaaS inventory. Doing so unlocks visibility across your organization’s SaaS stack. This means creating or using a system that allows you to compile your organization’s SaaS stack on a single platform and view every single application at once.

Complete visibility means you have the full picture of all of your organization’s SaaS applications, as well as what you’re spending. This allows you to actually benchmark your organization’s current SaaS optimization, adoption rate, and redundancy rate. 

There are a few ways you can go about achieving this visibility. You can try and tough it out yourself, compiling your SaaS stack on your own and maintaining it with manpower and grit. Often, that’s through a spreadsheet.

The more efficient way is to compile your stack onto a SaaS management platform (SMP) to centralize visibility. This is accomplished through an ongoing and comprehensive discovery process.

Step 2: Set Goals to Reduce SaaS Sprawl

Once you have this top-down visibility achieved, you can look at your organization’s entire SaaS stack and think holistically about what you need your SaaS stack to look like. For this, you want to set benchmarks for adoption rates, acquisition centralization, and visibility. 

Goal #1: Get 100% Visibility

As we just explained, visibility is the critical first step to reducing SaaS sprawl. For visibility, you can and should strive to achieve 100% visibility. A partial picture just won’t cut it if you want to truly solve the problem. 

With a good SaaS management platform—like Zylo’s Discovery Engine—100% visibility is completely within realistic parameters. You can find all of your organization’s SaaS, including expensed apps that are often miscategorized (which make up 51% of transactions).

Goal #2: App Reduction

Once you’ve achieved full visibility, we recommend addressing redundant applications in your stack. Or, the applications with functional overlap. When you have 10, 15, 20 project management tools in your stack, it’s easy to see the sprawl. 

Prioritize the functional areas you want to address and set a goal for what becomes standard within your organization. By rationalizing those redundant apps, you can trim down the number of apps in your stack. For instance, when Adobe began its SaaS management journey, it found 2,600 titles in its portfolio. Through rationalization efforts, the company was able to standardize 400 applications.

Goal #3: Cost Reduction

It’s all too common these days that companies are cutting operating expenses. While you’ll likely save money as you rationalize your redundant applications, it’s always beneficial to start with a goal in mind. The data within your SMP can give you insights into where your cost optimization opportunities lie, as well as shed light on what’s even possible. 

Step 3: Get to Trimming

Once you have visibility of your SaaS stack and goals to reduce your SaaS sprawl, you can look at redundancies in the stack and get cutting. This is where you’ll cut down on spending and the number of apps in your portfolio. You can identify redundant applications, figure out which ones are most used by employees, and cut all the rest.

This is the endgame of mitigating SaaS sprawl because now you’re actually reeling it in and controlling it. The first two sets are the foundations; this is the action. Trim judiciously and intelligently (the last thing you want is to cut an app that two departments rely on) but also don’t pull your punches. Cut those redundancies and tighten your SaaS stack.

If you’re inspired to acquire a SaaS management platform for your organization, look no further than Zylo. Learn how Zylo’s Discovery Engine powers 100% visibility into your SaaS portfolio. Or, see how it works by requesting a demo.