A SaaS system of record is part of an asset management strategy that allows enterprises to optimize their investment in SaaS applications.
More businesses than ever use SaaS tools. Gartner predicts that total SaaS revenue will reach nearly $100 billion in total revenue in 2020, a 16% increase from 2019. For many organizations, this explosive growth creates new challenges to discover, manage, and optimize their SaaS application portfolios.
What is a System of Record
A system of record is a data management concept used to describe an authoritative data source for a given category.
For the category of SaaS, a system of record would constitute the central authoritative data source for SaaS applications deployed within an organization, including SaaS spend, licensing, utilization, and function.
Why is a SaaS System of Record Needed?
Due to the explosive growth of SaaS, it is more complicated than ever for businesses to know precisely which SaaS applications have been acquired and put into use across the organization.
In many cases, SaaS application procurement and sourcing occurs via decentralized purchasing by individual business units, teams, and employees – without IT oversight. According to IDC, more than 60% of all business technology spending in the US now occurs outside of IT department budgets. Zylo data shows that more than 50% of all software spending occurs outside IT’s budget.
Without a centralized system to record and manage all SaaS applications, critical information on application cost, usage, ownership, and other details quickly becomes obscured or fragmented. Without this information in a unified and accessible format, it is nearly impossible to manage SaaS applications proactively as a holistic business resource.
The goals of a SaaS system of record are to consolidate and display all information about every SaaS application within the business in a single source of truth.
With this information readily available, teams who manage SaaS applications can identify shadow IT, drive cost savings, measure application value, and reduce risks.
How to Create a SaaS System of Record
Every application in the environment needs include the following information:
- Application cost, spend, and total contract value
- Contract information including the current number of licenses or seats, and renewal dates
- User adoption and utilization data
Once the primary data points for a system of record are established, documenting additional application information enables greater SaaS optimization:
- Application ownership – Identifying ownership, including cost center, business unit, team, and individual employees, helps ensure collaboration with the appropriate stakeholders
- Organizational impact – Improve measurement and management of SaaS applications by categorizing each SaaS application based on its business impact
- Application function – Identify redundancies by documenting application function
- Level of governance – Identify which applications are centrally managed and supported by IT
No two enterprises will organize a system of record in the same way. As a first step, determine which metrics are most important to measure and manage SaaS in the organization. Then, prioritize filling out details and application profiles for the 25 applications with the highest spend.
After the initial setup is complete, set aside time each month to monitor, update, and maintain the SaaS application inventory via the system of record.
SaaS Optimization Benefits
Activating a discovery process and system of record unlocks numerous SaaS optimization opportunities.
No More Searching
The most obvious benefit to a system of record is the system itself. It acts as the authoritative source for all SaaS application information. When data is easily and quickly retrievable, a system of record negates frustrating searches for information in multiple locations and provides more in-depth information for strategic decisions.
A discovery process that is a “one and done” exercise fails to address the ongoing acquisition of new SaaS tools and applications. That is, even after establishing new processes and governance for SaaS application acquisition, new incoming application purchases frequently go unnoticed.
Zylo data shows that many organizations underestimate the number of actual applications in use by two to three times.
However, when coupled with a continual SaaS discovery process, a system of record becomes a real-time inventory of applications. This system can then provide new, updated information on SaaS applications as soon as it becomes available.
Clear Ownership Attribution
Unclear ownership of SaaS applications creates confusion and frequently leads to missed opportunities for optimization.
Clearly defined and documented ownership allows those tasked with SaaS management to communicate and collaborate directly with application stakeholders.
A system of record with defined ownership details can also enable a SaaS management strategy that employs distributed access with varying views, roles, and permissions.
Minimized Functional Overlap, Redundant Instances
Making all applications available in a single holistic view frequently reveals many overlaps and redundancies.
SaaS application overlaps occur when multiple tools compete to achieve the same function. Examples include numerous web conferencing applications such as Zoom, Google Hangouts, or GoToMeeting. Other examples include multiple cloud storage applications such as Box, DropBox, and Google Drive.
Duplicate applications occur when teams or users purchase one-off versions of the same tool unbeknownst to IT.
Significant savings often occur by eliminating overlaps and redundancies, selecting a go-to application for organization-wide use, and then negotiating an enterprise license agreement contract that accounts for all users.
Rightsized SaaS Licenses
By including utilization and license count information for each application in a SaaS system of record, enterprise SaaS management teams can identify opportunities to rightsize license and seat counts.
Rightsizing licenses – striking a balance between license surplus and scarcity – helps ensure teams and users have the software tools they need, when needed, and helps guarantee that practical value from each application.
Proactive Subscription Renewal Management
A system of record also optimizes SaaS management by empowering teams to take a proactive approach to subscription renewals. Too often, automatic renewals (a hallmark of SaaS applications) take application stakeholders by surprise.
By storing all renewal information in a system of record, SaaS management teams can create renewal plans. These plans include contacting contact application stakeholders and prompting them to make a renewal decision before the notification period.
Proactive renewal management and planning frequently creates significant cost savings when compared to reactive renewal decisions on short deadlines.
When renewal planning also takes into account utilization information, license rightsizing goals, and factors such as user sentiment scores, application stakeholders can also enter renewal negotiations informed with data specific to their unique deployment.
Improved SaaS Security Through Visibility
When undiscovered and undocumented, it’s impossible to vet SaaS applications for security or compliance with organizational protocols.
When applications are visible within a system of record, regular security and compliance audits ensure adherence to these processes.
SaaS Optimization Via Organizational Collaboration
Creating a source of truth through a system of record unlocks a fundamental SaaS optimization process: organizational collaboration.
By its very nature, a SaaS system of record sets minimum standards and criteria for every application within its inventory. The system structures and templates knowledge, data, and information about SaaS applications in practical, repeatable ways.
Moreover, presenting information on SaaS application inventory status in a consistent, uniform manner enables cross-functional collaboration. This contributes to improving the value and effectiveness of SaaS applications as a technology resource overall.
Explore the benefits of a SaaS system of record for your organization. Request a demo of the Zylo SaaS management platform today.
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