Tag Archive: growth
How to Build a SaaS Integration Roadmap for M&A in 6 Steps
In the age of SaaS, mergers and acquisitions can present more difficult integration challenges compared to years past.
Today, cloud-based tech stacks are more numerous and complex. For example, the average enterprise now maintains nearly 600 SaaS applications, according to a recent study of Zylo customer data. The sheer volume of tools now makes tech discovery and prioritization an essential process in any M&A integration.
Fortunately, applying best practices sourced from modern SaaS management opens the door for cost-containment opportunities, risk mitigation, and increased efficiencies for years to come.
According to Harvard Business Review, between 70 and 90 percent of all mergers and acquisitions fail to provide the intended value. One of the most common reasons for failure is the inability to integrate the acquisition.
Consequently, in the case of mergers and acquisitions, taking control of the technology landscape is a game-changer, making the creation of a SaaS Integration Roadmap an absolute necessity.
1. Align the M&A Team with Business Leaders
Post-merger or post-acquisition integration success begins with the M&A team responsible for project managing technology integrations.
To ensure an effective merger of tech stacks (if warranted), M&A teams must align with business units to devise an integration roadmap.
In today’s cloud-oriented and SaaS-dominant technology environments, it’s essential to recognize that business units fund as much as 70 percent of all application acquisition, according to IDC.
In simpler terms, for many companies, IT is not the primary source of software application purchases. This acquisition model paves the way for technology ownership to be distributed among multiple business units, teams, and even employees.
To uncover critical digital change agents, identify substantial SaaS investors within each business unit. Typically these are the business leaders who frequently make buying decisions that are integral to driving tech innovation across the enterprise. Throughout the integration process, hold regular stakeholder meetings to align business and IT strategies.
2. Discover Every SaaS Application Purchased Throughout the Enterprise
Discovering the current state of technology and the types of SaaS applications used on both sides of the M&A equation is a crucial first step for any integration manager. This due diligence aids understanding of the current picture and creating an accurate timeline for completing the integration itself.
“An integration project could take a year or as little as three months – so there is a reality that needs to be found,” says Hutton Henry, CEO of Beyond M&A, a UK-based consultancy that specializes in post-M&A technology integrations. “Step one is to discover the technology and landscape for both the buy-side and sell-side of the merger.”
Even without a post-merger integration, the average enterprise underestimates the number of applications present throughout its environment by up to three times. While a company may anticipate finding 200 to 300 applications, the actual inventory is more likely to be closer to 600 applications on average. In the case of M&As, this high volume of shadow IT presents challenges, especially concerning security.
Complete a manual SaaS audit using a spreadsheet inventory or by implementing a SaaS management platform that features an accurate discovery process. To manually capture all SaaS purchases, expense reports are the first place to start. Secondly, consult heavy SaaS investors and digital change agents within the LOBs to uncover SaaS applications that may not have been accurately categorized when expensed.
After discovering all applications, the next step is to uncover the respective contracts and their associated content. Assign costs, functions, and buyers to all applications. Begin documenting these attributes in a single source of truth for all SaaS that will be integral when building a SaaS Integration Roadmap.
3. Record the Use Case for Each Application
To enter into integration decision-making with an informed mindset, collaborate with business leaders to capture the primary use case for each application. While the prima facie reason for an application’s business use case may be obvious, lack of clear mission focus contributes to “application creep.” This creep is characterized by multiple applications with overlapping functions and no clear business objective.
The fact that as many as one in three employees purchase SaaS applications via expense reimbursement, which quickly leads to a lack of central oversight, compounds this mission creep effect.
Defining each application’s use case during an M&A integration also aids an understanding of its effectiveness. According to recent Zylo data, in most businesses, 38 percent of application licenses are underutilized within an average 30-day period.
This widespread underutilization of applications cost companies money, time, and employee satisfaction. With each application use case (especially high-use applications) include the reasons for underutilization or successful utilization.
With more than two decades of experience as a global VP for SAP, Keith Hontz experienced numerous acquisitions and subsequent integrations. Now the Chief Revenue Officer for email service provider SocketLabs, Hontz says that licensing SaaS applications can represent a relatively quick cost-savings opportunity during a post-M&A integration.
“Compared to on-premises solutions, on the SaaS side of the house, it’s very easy to turn off or to switch license holders, especially if you’re a monthly subscription to another provider,” he says.
Included in the use case of each application should be the application’s potential for system-wide integration. As IT leaders look to innovate throughout the enterprise tech stack, consider not only how the application stands on its own but how it operated as part of the whole. Today, an application’s potential for integration is highly valued.
4. Identify and Mitigate Security Implications of Each Application
SaaS applications that haven’t been vetted for security pose a risk to the enterprise. Therefore, the first step to mitigating risk is gaining visibility into the current state for security posture during an enterprise-wide discovery of all applications (see step two).
“The most important aspect to keep in mind when integrating pre- or post-merger applications is to ensure that a new tech-stack cannot adversely affect your current applications, clients, and vendors in any way,” says Richard Hoehn, CIO/CTO of FreightWise. “This approach allows our dev-ops team to monitor, throttle and very quickly (either human or programmatically) disengage the two tech-stacks when something is wrong or outside of normal operations.”
Henry notes that evaluating security can be especially important when acquiring smaller companies. “In the smaller company, the use of SaaS products is reasonably open, but it might not be safe or secure,” he says. “And that’s part of the culture in smaller businesses, everyone trusts each other – but that’s not a substitute for governance.”
Focus risk mitigation efforts on applications that contain customer, financial, and business data, especially those that fall within the scope of regulation such as GDPR. While software housing sensitive data holds inherent risk, not every application was created equal: rank and document the breach probability of each application to use in the decision-making process.
5. Pursue Strategic SaaS Consolidation and Other Opportunities
Major cost containment opportunities exist when synergies and consolidation opportunities exist across the enterprises. Crucial to this step is determining how the organization measures and defines value. As business units continue to purchase technology, IT and business leaders must align on tech-specific KPIs.
Attack the obvious first: Sunset duplicative contracts. Then, considering the data pulled in previous steps, rank applications with overlapping functionality by cost, stakeholder/user sentiment, use case, integration potential, security, etc.
Hontz says an M&A integration is an opportune time to re-evaluate business tools and execution. “It’s a great time to make decisions about which [SaaS tool] requirements [for SaaS tools] are mission-critical, which are just “nice to have,” and which represent an opportunity to streamline and simplify,” he says.
6. Build a SaaS Integration Roadmap, One Application at a Time
Armed with the nature, value, and contract of each application bought throughout the enterprises, create an integration plan for each application.
Plan for the renegotiation of the highly-ranked apps, while providing a timeline to sunset lesser apps of overlapping function. Build implementation plans for widely-introduced software. Additionally, isolate KPIs and set goals.
In the age of SaaS, technology stacks are forever growing and evolving. While the SaaS Integration Roadmap will be invaluable when driving M&A initiatives, the resulting system-of-record will remain relevant long after the initial integration is complete. To drive security and innovation, IT leaders must embrace continual discovery and monitoring.
SaaS Integration Roadmap: the Key to Leadership Visibility
The lack of leadership visibility of enterprise-wide SaaS investments presents problems for innovative IT leaders. As the balance between innovation and “keeping the lights on” becomes ever more complex for IT leaders, alignment throughout the enterprise has never been more critical.
Through careful reporting and planning, the SaaS Integration Roadmap creates alignment between IT, LOBs, and leadership throughout the M&A process. Through the roadmap, IT can meet the goals of innovation, cost containment, cross-department collaboration, and employee experience as a unified organization with a cohesive tech stack.
In the cloud age, software is purchased at ever-increasing rates, by IT leaders and business leaders alike. Procurement professionals, especially cloud-based sourcing professionals, face an unprecedented opportunity to own the category and drive value.
As Siddharth Ramesh, Manager of Corporate Procurement at VSP Global, says, procurement teams should operate as a brand within the enterprise to seize the opportunity and increase their strategic importance.
VSP Global’s vision is to provide access to affordable, high-quality eye care and eyewear. In a company like VSP, with six lines of business and operations across the world, visibility for critical initiatives are much more important.
Today, procurement teams must build relationships with business leaders to better identify and report on business outcomes. Then, by promoting the value provided enterprise-wide, Siddharth and his team can level up their brand.
By continually providing value, procurement leaders can morph into trusted advisors and trusted partners to the business units and enterprise leaders. With this goal in mind, at VSP Global, procurement teams are entrenched in business units to accelerate time to value and increase brand visibility.
Entrenched Procurement Teams Partner Better
To increase procurement participation with business units, many enterprises, VSP Global included, are staffing personable procurement professionals to place “in the trenches” alongside business leaders.
Called entrenchment or co-location, this practice is quickly becoming common practice in cloud-forward enterprises, especially when technology is mission-critical. The average tech-forward enterprise purchases hundreds of SaaS subscriptions annually: entrenchment ensures that these purchases are secure, measured, strategic, and successful.
Through entrenchment, procurement can better understand the business needs and goals. Additionally, business leaders can receive the on-demand support that enables procurement to socialize best practices for IT governance throughout the enterprise.
As the procurement maturity model centers around engagement, Siddharth recommends co-location for enterprises that are struggling to increase engagement and IT collaboration. In the form of support or education, these face-to-face engagements are enabling both procurement and the business unit to reach KPIs.
In the past, procurement teams have struggled to expand their primarily transactional relationships. For example, business units would only call on procurement to save costs at renewals. But even today, procurement leaders must start with cost savings initiatives to build trust with business units.
Increase Savings and Tackle Cost Challenges to Increase Brand Affinity
In modern procurement teams, KPIs vary beyond the traditional goal of increasing cost savings. However, to increase procurement’s strategic importance within the enterprise, procurement leaders must master reporting, benchmarking, and saving costs.
At VSP Global, Siddharth has tripled the spend under management as well as the savings. As a result, the organization has over 80% of software spend under management, leading to 12-15 percent in realized savings, an ROI of 750% when compared to the team’s operating budget.
To reach the immense level of savings in an organization that employs nearly 6,000 employees, the procurement team at VSP Global took the following steps:
- Determine metrics for tracking and benchmarking cost savings.
- Wrap metrics around known applications.
- Build relationships with known application owner.
- Optimize licensing and contracts.
- Report savings back to business units.
- Explore creative opportunities to drive value.
- Promote continuous discovery with and through application owners.
When procurement leaders employ a SaaS system of record, they can uncover common areas of mismanaged software spend. From the elimination of forgotten renewals to the consolidation of duplicative applications, cost savings opportunities abound.
Additionally, in the subscription economy, the buying model for software (especially infrastructure), provides many unforeseen challenges when forecasting budgets and containing costs. Procurement and IT experts can aid business units in understanding what decisions will greatly influence pay-as-you-go services, therein containing costs.
Through cost savings initiatives, procurement leaders can build trust with business units. Then, business leaders and procurement experts can derive KPIs that drive business value beyond cost savings.
Push Beyond Cost Savings to Expand Procurement’s Influence
Proving your procurement team’s cost savings prowess is only the start. While the business can see the value of cost savings initiatives immediately, the procurement maturity model prioritizes much more than cost savings.
Tasked with taking a holistic view to enterprise technology, procurement teams must meet compliance standards, ensure secure data flow, and promote procurement best practices — all in a timely manner.
To reach this world-class level of maturity, procurement leaders must have strong relationships throughout the enterprise. These relationships enable procurement leaders to work with and through legal, IT, and Finance to advance procurement best practices and business outcomes.
At VSP Global, Siddharth has had the pleasure of helping their procurement function grow and meet the demands of the growing enterprise. As they have staffed entrenched procurement experts and helped software buyers meet their business goals, other functions have taken notice.
By continuously providing cost savings, timely support, and business value, Siddharth and his team now own their internal brand to strengthen the strategic importance of procurement at VSP Global.
The importance of SaaS vendor management is growing. In fact, today, enterprise SaaS spend represent more than $10,000 per employee per year. To gain some insights surrounding this growing category, I sat down with Mike D. Kail, CTO of Everest, and discussed common challenges and opportunities.
Consumerization of Enterprise SaaS Benefits the End User
SaaS use is expanding. Gartner projects a nearly 18 percent growth in the category this year alone. And the consumerization of enterprise SaaS applications spurs that growth.
Many SaaS products design software focusing on the end user first. With an emphasis on end-user experience, software applications have become easier to implement and use. Consequently, business units are adopting and utilizing SaaS at higher rates.
Additionally, enterprise cloud-based subscription software boasts the rapid deployment of updates and new product features. Compared to traditional on-premises software update deployments, IT teams no longer manage burdensome semi-annual updates that disrupt the business.
Frequent application updates, informed by user sentiment and behavior, provide increasing value from the enterprise software purchase. As a result, more IT and business leaders are moving to cloud-based software.
Involve the User and Seek Feedback
Today, SaaS vendors and enterprise technology managers prioritize the end users. IT teams can no longer afford to select applications and force adoption. IT leaders must factor user experience and satisfaction into decision-making for the acquisition and long-term management of SaaS tools.
Understanding how the user experience affects adoption and utilization can prevent the growth of shadow IT by providing users the tools they’re more likely to continue to utilize. With the plethora of easily accessible SaaS choices, users dissatisfied with a software experience often acquire tools on their own. This rogue SaaS acquisition inevitably leads to the growth of shadow IT.
Ensure Forecastable SaaS Vendor Pricing
Enterprise SaaS pricing should be forecastable and well defined. Many SaaS tools for the enterprise begin with a basic price, such as a basic subscription or license fee. But many also include variable costs based on consumption metrics. Examples include maximum storage thresholds for data or content storage services like Box and Dropbox or contact list count maximums for customer relationship management tools such as Salesforce.
Having a forecastable price includes defining and documenting the consumption metric, but also monitoring usage to ensure there are no surprises if and when a threshold is crossed and additional costs are incurred. Without direct and continuous measurement, either through the SaaS application directly or via tools like Zylo’s SaaS management platform, CIOs and technology managers risk costly surprises when the true-up occurs.
Answer SaaS Vendor Integration Questions Early
When purchasing a new SaaS tool, it’s important to be aware of how exactly it will integrate into your current technology environment. Enterprise SaaS especially advertises the cost advantage of economies of scale as the tool deploys to a greater number of users or transactions.
Will the application require a third-party manager or implementation specialist to integrate the new SaaS tool into your existing software stack? If so, the savings produced by scaling can sometimes be negligible when weighed against the cost of hiring to implement.
Getting answers from SaaS vendors to key questions about the process and costs associated with integrating, adopting, or on-boarding the new tools is an essential step.
Beware SaaS Vendors Selling to Siloed Business Users
When enterprise SaaS vendors circumvent procurement processes and sell directly to teams or users, shadow IT proliferates. However, decentralized software acquisition can cause wasted spend and administrative burden.
In an enterprise environment, the symptoms of leads to:
Redundant functionality. Teams or individuals may purchase different applications to perform the same function. Redundant functionality can create disparity among teams and lack of available support.
Duplicative app purchases. Teams or individuals may purchase the same application in discrete instances. Disparate purchasing of duplicative SaaS applications creates an operational burden. Leaders recommend the consolidation of all users into a larger, more cost-effective enterprise-grade deployment of a single application instance.
Security risks. When individuals or teams deploy software without approval from a central IT team, vetting processes are frequently skipped. To mitigate security risks and privacy threats, include IT in all SaaS purchases.
By approaching SaaS acquisition in partnership with IT and procurement and choosing tools that can bring value to the entire organization, teams avoid creating silos and the “pirate ship” mentality.
Prioritize the User To Improve SaaS Vendor Relationship Management
Enterprise software decisions about what software to buy can no longer occur in complete isolation. The modern enterprise technology leader holds responsibility for filling the gap between what the user wants and needs, what the vendor offers, and how to square the difference when implementing the technology into the existing organization.
This requires creating continuous feedback loops where user experience and inputs influence the decision-making. Many modern tech leaders accomplish this task via the creation of user feedback groups, surveys, and other feedback tools, or by applying the principles of “management by walking around,” a.k.a speaking and listening to user concerns directly in a transparent way.
These learnings can then be applied to SaaS vendor relationships to influence acquisition decisions and renewal road amps.
What’s Next for SaaS Vendor Management
Enterprise SaaS vendor management is a practical art still not yet fully matured. However, many principles of enterprise leadership apply to this relatively new practice. Technology leaders who focus on the needs of the user, who keep maintaining value for the organization as a top priority, and who lead through partnership are the most likely to be successful in the effort.
To learn about how Zylo hcelps technology leaders discover, manage, measure and govern SaaS applications in enterprise organizations, schedule a demo today.
Zylo team members joined analysts and scores of technology leaders at Next Generation ITAM in St. Petersburg, Fla., to connect and learn more about trends and developments in the world of IT asset managers.
The theme of the conference was, “What should we be doing to manage new technologies?” Many information technology managers including specialists in hardware and software exist in a world that requires continual learning and updates to identify the “next big thing” in technology and adapt the best methodologies to manage it in their work.
As noted by ITAM Review analyst AJ Witt, many in the ITAM world have identified managing the cloud and specifically software-as-a-service (SaaS) as prime upcoming challenges.
A New Enterprise Software Landscape
As IT managers have successfully adapted to other technological shifts in tools or processes, they’ve transferred applicable best practices of the previous regime to help address the new status quo.
And in some ways, this methodology can be true for software asset management (SAM) practitioners who seek to address the new challenges of SaaS.
If you thought that SaaS and SAM were akin, you’re not mistaken, they are similar. They are both software. They are used by the business. They can be deployed to multiple users. And they can both be professionally managed.
But there are some key differences that must be addressed when developing a professional SaaS management strategy.
You Can’t Manage the SaaS Applications You Don’t Know About
With SAM, enterprise software enters the front door of the business with a formal invitation in hand. Technology leaders, sourcing teams, and stakeholders have made an informed decision to purchase a software asset and deploy it within the organization’s framework.
Most SaaS is purchased differently. While some enterprise SaaS products do get formally invited into the business via a planned purchase and deployment strategy – an enterprise-grade CRM such as Salesforce for example – many more SaaS applications enter the business through the “side doors,” that is, applications are purchased and implemented in the business by team members.
This software is purchased and implemented without approval, input, or agreement from IT. This is shadow IT and it’s frequently hidden throughout the enterprise. Zylo data shows many large organizations underestimate the number of SaaS applications deployed within the business by two to three times.
One reason for the increasing prevalence of shadow IT within the enterprise: Rapid growth and specialization within SaaS applications leading to highly niche team-specific tools for Marketing, HR, and other teams.
Because SaaS applications are purchased and implemented in the business in a decentralized way not addressed by traditional SAM, SaaS management requires a new unique approach.
You can’t manage what you can’t see. For that reason, the first step to professionally managing SaaS approach must focus on accurately revealing all shadow IT within a business with a discovery process.
Managed vs. Unmanaged SaaS Applications
When compared to the maturation of SAM practices, the concept of professional SaaS management is just beginning to take shape for many organizations. However, a key contrast between the two approaches is the very question of continuing to centralize ownership for all software within a business.
For many enterprise organizations, once shadow IT has been revealed through a discovery or visibility process, assigning ownership of applications is the next logical step. In a SAM model, IT would be the logical owner for most if not all applications.
But because SaaS is so widespread, as well as relatively inexpensive, quickly adopted, and easily implemented, for many professional IT managers, the new question for managing SaaS is not “How can IT effectively manage all business software applications?” but rather “Should IT manage all business software applications?”
Within a responsibly managed framework that emphasizes vetting for security, data, and financial risks and focuses on the benefits of organizational agility rather than rigidity, SaaS ownership can be decentralized.
Managed applications would continue to fall under the supervision and direct support of central IT controls, whereas unmanaged applications would receive an initial vetting but then fall under the control of business units or teams who utilize them.
The thresholds for determining which applications are managed or unmanaged are likely to vary widely by organization, but some of the emerging criteria include:
- Being mission critical to business operations, data, or security
- Being mission critical to customer experience
- Spanning multiple cost centers or teams
- Meeting or exceeding certain cost thresholds
- Having consumption metrics that require close monitoring to prevent significant cost overruns
It’s important to note that in this SaaS management scenario, an unmanaged application does not mean it is an unseen or unmonitored application. SaaS managers will need a SaaS discovery and visibility platform that keeps unmanaged applications within sight for IT managers.
Although IT managers wouldn’t necessarily oversee day-to-day operations or even support these applications, their costs, utilization, ownership, renewal date info, and other essential attributes could be continually monitored.
Perpetually Licensed vs. Perpetual Auto-renewal
While a traditional SAM focuses on monitoring their software assets to prevent over-deployment of licenses and subsequent surprise costs at true-up, the subscription basis of SaaS demands a different focus.
Since SaaS is subscription-based and not an on-premise asset, you only provision the licenses you need, which creates more flexibility for the business around costs.
However, regardless of how many licenses are utilized, proactive monitoring and management is needed to prevent new costs incurred by SaaS application auto-renewals.
Zylo data shows that enterprise organizations must manage two SaaS renewals every business day on average, underscoring the difference between checking in on an annual enterprise agreement to prevent cost license over-deployment.
Again, creating a strategy for SaaS application renewals requires a strong visibility process to reveal application data like vendor notification periods, application cost, and actual renewal dates. Ideally, an IT asset manager or team would have access to a centralized source of record that visibly lists all information about all applications within the business.
The Big Picture
While integrating new asset types and processes may be par for the course for ITAM teams, the unique attributes and rapid growth of SaaS use within enterprises demand not only the advancement of the existing discipline of ITAM and specifically SAM, but new practices, models, and methodologies specifically designed for professionally managing SaaS.
Today, you may not find many job posts for the title of “Software-as-a-Service/SaaS manager” or “SaaS application manager,” but future prospects for the role are becoming increasingly clear. At Zylo, we believe you will soon see jobs with the title SaaS manager from tech-forward organizations as their cloud and SaaS investments continue to grow.
The adoption of SaaS shows no signs of slowing and more organizations now recognize the unique complexity of SaaS-related challenges and the need for specific job functions that can address them. In this post, we’ll explore what the job description for the role of a SaaS manager might look like and how this role will make SaaS-reliant organizations’ tech portfolios more effective.
Differences Between Software Asset Management & SaaS Management
SaaS has changed how enterprises acquire and use software, and SaaS use continues to grow. Analyst firm Gartner predicts that the total SaaS market will grow from $85 billion in 2019 to $113 billion by 2021, underscoring that more organizations are buying and using SaaS products. SaaS is currently the largest segment of the cloud-based software market, a trend that’s expected to continue.
In enterprise organizations, practitioners of software asset management (SAM) have commonly managed software to safeguard against license over-deployment and track end-user utilization. In an on-premise environment, the focus has typically been on IT-purchased, with an emphasis on the centrally managed provisioning of licenses and users. Therefore, the job description for on-premise license managers may not match the unique challenges of SaaS.
SaaS positions any user in the organization as a software buyer — department heads, lines of business, individual employees, not just IT leaders or sourcing teams. In fact, more than 50% of all IT software purchases now occur outside of the IT team’s purview.
The decentralization and democratization of enterprise software purchasing create unique questions and challenges:
But enterprise SAM practitioners may find their current toolset ill-equipped to answer these questions: SaaS can appear in multiple discrete instances across an organization, not under a centrally managed system. To survive in an increasingly cloud-forward world, enterprises must expose, document, and actively monitor cloud-based systems with professional SaaS management.
SaaS Manager Job Description
When SaaS managers become more commonplace, a sample description of job roles and responsibilities description might include:
- Collaborate with IT, sourcing, and business stakeholders to identify and document all SaaS applications and subscriptions throughout the organization.
- Create an ongoing transparent and continuously updated inventory of SaaS instances accessible to department heads and cost center owners.
- Create documentation around evaluation, integration and governance within IT best practices for application adoption, license provisioning, security, privacy, and user on- and off-boarding.
- Determines KPI measurements for SaaS application adoption, usage and sentiment, and delivers reporting to stakeholders across the organization.
- Evaluate and monitors SaaS application inventory across the organization for optimal cost-effectiveness, including the elimination of application or cost-center redundancy.
- Manage SaaS application life cycles including the creation of a SaaS renewal calendar; build a documented, collaborative evaluation process; and develop action plans for upcoming renewal dates
- Develops ongoing partnerships with IT, sourcing, vendor management and individual department managers to lead digital transformation and increase organizational ROI, effectiveness and agility.
- Helps stakeholders find the most effective tools to increase business effectiveness, including Marketing, Human Resources, Finance, and IT.
- Leads teams to independently evaluate their best practices and adopt a value-driven mindset when purchasing new SaaS applications.
- Optimizes licensing agreements with a focus towards leveraging enterprise license agreements (ELAs).
Who Already Tackles Enterprise SaaS Management?
Portions of the above job description likely sound familiar to enterprise technology leaders or sourcing teams. For many organizations, it’s likely that multiple professionals or teams fulfill some or all duties listed above, including CIOs, enterprise technology architects, ITAM professsionals, and vendor management or sourcing teams.
In its State of SaaS Management benchmarking report, Zylo found that enterprises underestimate the total number of SaaS applications by two to three times on average. The average mid- to large-sized enterprise also experienced two to three SaaS application renewals per day.
When comparing stats like these against the billions that Gartner has projected enterprises will invest in SaaS applications, enterprises should take the opportunity to contain costs and improve the value of their SaaS investments by focusing on SaaS management sooner rather than later.
There’s little doubt that investment in SaaS applications for business will only increase. But how will enterprise technology leaders proactively answer the challenges that accompany this unyielding trend? For leaders with an eye toward increased awareness of their investment, right-sizing application use, and continuing to create best practices for governance, now is the time to consider developing the SaaS application management specialist role.
In his years of acting as a Transformational CIO/CDO & Board IT Advisor, Wayne Sadin has seen many companies struggling with 10-year-old technology and 25-year-old ideas. For their entire careers, IT leaders have held the belief that “change makes errors” and, therefore, have not modernized.
While many IT leaders are opposed to change, they are not the only ones at fault for stalled digital transformation efforts. The company’s leadership, from the c-suite to board members, have also failed to prioritize digital transformation initiatives.
Digital Transformation Begins with the CEO
Google Trends shows that everyone’s favorite buzzword — digital transformation — first started trending in late 2015. Three years later, the trend continues. Digital transformation is on the mind of many business leaders.
Because many CEOs gained their business experience years ago, before technology was as vital and complex as it has become, too often, Wayne sees that CEOs are intimidated by complexity, by jargon, and by the ‘geek-speak’ that peppers CIO conversations. If the intimidation results in poor relationships between these leaders, companies can struggle to advance.
Therefore, CEOs and CIOs must build open communication through respect for the other’s expertise. While the CEO will know what business goals must be accomplished, the CIO will know how technology can help the company meet those goals.
While CIOs have the technical know-how, CEOs are at the heart of digital transformation efforts because a digital transformation requires a company-wide culture shift. From board members to employees, the CEO must be able to “sell” tech innovation initiatives and investments to bring about the necessary change.
Empower Employees to Source Digital Solutions
In many companies, tech innovation has become bottoms-up, rather than top-down. As a result, business units have expensed software-as-a-service (SaaS) and other cloud-based applications rather than pursuing a lengthy adoption process with IT. In fact, over 50% of SaaS spend lives outside of known expense types.
Wayne says the resulting shadow IT inherently carries a host of problems:
- Stranded data
- Difficult interfaces
- Poor customer experience
- Unnecessary security exposure
- Redundant applications
- Technical debt
Each problem brought on by shadow IT hampers the success of the employees, departments, and the company. Therefore, while the CIO will be most equipped to uncover shadow IT and mitigate the inherent risks, poor technology practices inevitably ladder up to the CEO.
Therefore, the CEO and CIO must also align with business leaders to ensure that employees are following best practices when purchasing, adopting, and utilizing SaaS applications. Often leaders enforce these best practices through the support of corporate learning strategies, management systems, and well-established goals and expectations.
Unlock Full Visibility to Reach Strategic Transformation
According to Gartner, Inc., “SaaS remains the largest segment of the cloud market, with revenue expected to grow 17.8 percent” in 2019.* However, as mentioned before, in the average company, over 50% of SaaS spend lives outside of known expense types. In short, over 50% of SaaS revenue growth is the result of shadow IT.
A SaaS System of Record is a company’s first line of defense against the problems caused by shadow IT. This record will help IT measure the impact of tech across the company, especially the SaaS subscriptions bought by business units.
Additionally, a SaaS System of Record can help leadership identify what departments strongly adopt best practices for SaaS purchase and use. This full visibility into each department’s SaaS use also enables IT to wrap metrics around digital transformation initiatives at a macro and micro scale.
Full visibility further advances digital transformation efforts:
- Eliminating the Unknown. Discover all shadow IT bought throughout the enterprise to secure the enterprise, mitigate tech waste, and drive enterprise-wide initiatives.
- Assigning Ownership. With cost center reporting, IT can show what SaaS applications each department is purchasing to drive best practices at the source: the SaaS buyer.
- Determining KPIs. Wrap metrics around each cloud-based investment to assign goals and drive value.
As digital transformation efforts continue, relationships between CIOs and CEOs will continue to evolve. However, visibility, communication, and alignment will ensure that C-level executives across the business effectively use technology to meet business goals today and into the future.
*Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17.3 Percent in 2019, 12 September 2018.
It’s the big leagues, the dream: going public. However, the initial public offering (IPO) process requires serious work before you begin ringing bells and clinking champagne glasses. To get your house in order, you must consider your tech stack, data security, compliance, SaaS-related financials, quality assurance and ongoing tech strategy.
During the IPO process, the U.S. Securities and Exchange Commission (SEC) and other third parties will want comprehensive reports on how you run your business. In the digital age, a big part of how you run your business is what runs your business. Today, that “what” is software as a service (SaaS).
Companies that already have sound SaaS discovery, adoption and governance strategies are ahead of the game. Expansive enterprise SaaS knowledge prepares CIOs for the arduous filing process and for potential growth down the road. Having an IPO-readiness checklist for SaaS enables enterprises to prepare the enterprise-wide SaaS investment for the IPO process.
SaaS carries inherent compliance worries for IT, as well as severe data security risks if not properly managed. When combined with the rigorous IPO process, the weight of SaaS can be even greater. Secure your investments, free up IT resources and better prepare for future growth through this IPO-readiness checklist.
1. Discover all applications purchased throughout your enterprise.
Based on our customer data, the average enterprise underestimates the number of applications purchased throughout the enterprise by up to three-fold. In the case of mergers and acquisitions, this high volume of shadow IT, or IT applications that are used without the IT department knowing, presents challenges — especially in the case of security.
In this case, a manual SaaS audit is necessary. To manually capture all SaaS purchased, expense reports are the first place to start. Secondly, consult heavy SaaS investors and digital change agents within the line of business (LOB) to uncover SaaS applications that may not have been categorized correctly when expensed.
Once applications are discovered, uncover the respective contracts. Assign costs, functions and buyers to all applications. Begin documenting a SaaS single source of truth, or a single unified view of company data, that will be integral when preparing for IPO.
2. Lock-down SaaS-related financial reporting.
When going public, enterprises must meet the complex financial reporting and data security requirements of a public company. Many enterprises are looking to SaaS management platforms to guarantee the accuracy of the enterprise’s real-time system of SaaS truth. This real-time snapshot of SaaS-related financials provides a clear picture of application data, renewal cycles and actionable insights.
During the filing and review process, the SEC and bank underwriters will require all financial statements to ensure compliance with applicable accounting standards. By discovering and locking down your SaaS-related spend ahead of time, you can shine a light on shadow IT and build a comprehensive record to be referenced at any time during the filing process.
3. Measure and prove data security of all vendors and apps.
Even the most well-known, credible enterprises are susceptible to data breaches, causing widespread panic (and shares) to plummet. Today, companies preparing for IPO are put through rigorous tests to ensure data security of all vendors and applications.
One of the most common compliance frameworks for SaaS companies is service organization control 2, or SOC 2. Reaching SOC 2 compliance ensures the highest security and privacy of cloud-based customer data storage. Additionally, detailed SOC 2 audits allow for deep insights into the root causes of attacks, further preparing your company to go public.
4. Define quality assurance procedures and ongoing developments.
Lastly, detail how your enterprise measures and maintains quality assurance for future developments. In preparation for IPO, ask:
- How do business units adopt and implement SaaS applications?
- How does IT document and manage changes to SaaS?
- How does the enterprise manage SaaS vendors?
- How does IT ensure systems security?
- What is the enterprise-wide protocol following a data breach?
If answers are unknown or incomplete, create an internal process for capturing and documenting all the implications of the enterprise’s SaaS footprint. A comprehensive SaaS system of record that documents application details, utilization and user feedback will not only prepare you for the IPO process but arm your enterprise with the insights necessary for future growth and development.
Ensuring overall enterprise IT health, including SaaS, is now crucial to preparing your company for IPO. By proactively following this IPO-readiness checklist for SaaS, full visibility and security of your enterprise-wide SaaS investment will be made possible.
In the age of SaaS, mergers and acquisitions present unique challenges compared to years past. With large tech companies purchasing over a thousand SaaS applications throughout the enterprise, massive tech discovery and integration operations are in order.
Modern SaaS management opens the door for cost containment opportunities, risk mitigation, and increased efficiencies for years to come. In the case of mergers and acquisitions, taking control of the technology landscape is a game-changer — and the creation of a SaaS integration roadmap is necessary.
Build a SaaS Integration Roadmap in 6 Steps
(1) Align the M&A Team with Business Leaders.
When acquired by (or merging with) a tech giant, what the M&A team says goes. However, according to Zylo’s study, as over 50% of SaaS spend is found outside of known software expense types, leaders of all business units are highly influential over the success of the enterprise-wide integration. To ensure an effective merger of tech stacks, M&A teams must align with business units to devise an integration roadmap.
To uncover key digital change agents within the enterprise, identify heavy SaaS investors within the business units. Business leaders who are frequent buyers will be integral in driving tech innovation across the enterprise. Throughout the integration process, hold regular stakeholder meetings to align business and IT strategies.
(2) Discover all SaaS Applications Bought Throughout the Enterprise.
According to Gartner (via CIO), shadow IT makes up 30-40% of IT spending at large enterprises. In the case of M&As, this shadow IT presents security risks, cost containment challenges and barriers to proper integration.
Either an enterprisewide SaaS audit or the implementation of a SaaS management platform is necessary to uncover all applications bought within the enterprise. By poring over expense reports, many SaaS applications can be manually captured on a spreadsheet. Then, IT can consult the heavy SaaS purchasers, identified through the financial scrub, to capture missed SaaS applications purchased within their departments.
To complete the discovery phase, uncover the contract of each application purchase. Identify and document the cost, function, and buyer of each application in the master SaaS audit spreadsheet. Moving forward, this spreadsheet will serve as the SaaS single source of truth, integral with building a SaaS integration roadmap.
(3) Record Use Case for Each Application.
The actual use of each application will drive the decision to combine enterprise contracts, consolidate applications of overlapping function or sunset underperforming applications. Therefore, to enter into informed integrations, collaborate with business leaders to capture a use case for each application.
On average, applications are underutilized to the tune of 40%, according to our study. Rampant underutilization of applications cost businesses money, time and employee satisfaction. With each application use case (especially high-use applications), it’s important to include the reasons for underutilization or successful utilization.
Included in the use case of each application should be the application’s potential for systemwide integration. As IT leaders look to innovate throughout the enterprise tech stack, consider not only how the application stands on its own but how it operated as part of the whole. Today, an application’s potential for integration is highly valued.
(4) Mitigate Security Implications of Each Application.
Unknown SaaS applications pose a risk to the enterprise. Therefore, the first step to mitigating risk is an enterprisewide discovery of all applications (in other words, back to step one).
Secondly, the use case of each application will inform what data is housed in the application. Focus risk mitigation efforts on applications that contain customer, financial and business data. While software housing sensitive data holds inherent risk, not every application was created equal. Rank and document the breach probability of each application to use in the decision-making process.
(5) Address Consolidation Opportunities.
Major cost containment opportunities exist when synergies and consolidation opportunities exist across the enterprise. Crucial to this step is determining how the organization measures and defines value. As business units continue to purchase technology, IT and business leaders must align on tech-specific KPIs.
Attack the obvious first: sunset duplicative contracts. Then, considering the data pulled in previous steps, rank applications with overlapping functionality by cost, stakeholder/user sentiment, use case, integration potential, security, etc.
(6) Build the SaaS Integration Roadmap, One Application at a Time.
Armed with the nature, value and contract of each application bought throughout the enterprise, create an integration plan for each application. Plan for the renegotiation of the highly ranked apps while providing a timeline to sunset lesser apps of overlapping function. Build implementation plans of widely introduced software. Additionally, isolate KPIs, and set goals.
In the age of SaaS, technology stacks are forever growing and evolving. While the SaaS integration road map will be invaluable when driving M&A initiatives, the resulting system of record will remain relevant long after the initial integration is complete. To drive security and innovation, IT leaders must embrace continual discovery and monitoring.
SaaS Integration Roadmap: the Key to Leadership Visibility
The lack of leadership visibility of enterprisewide SaaS investments presents problems for innovative IT leaders. As the balance between innovation and “keeping the lights on” becomes ever more complex for IT leaders, alignment throughout the enterprise has never been more important.
Through careful reporting and planning, a SaaS integration road map can create alignment between IT, LOBs and leadership throughout the M&A process. Through a road map, IT can meet the goals of innovation, cost containment, cross-department collaboration and employee experience as a unified organization with a cohesive tech stack.
To learn how Zylo, the leading SaaS Management Platform, can help you build and execute your SaaS Integration Roadmap, request a demo.
Procurement is changing. As new technologies and best practices emerge, the field of procurement has been abuzz about these changes and how to adapt. But what sets top teams apart from those who trail behind is the ability to use and derive value from the right technology investments.
As the gap between procurement team performance widens, the pace of change of emerging technology like SaaS procurement systems, cognitive technologies, AI, and more makes it crucial that procurement teams make time to pay close attention to it.
The good news is that IT procurement teams are uniquely positioned to harness this digital transformation, both across the business and within the procurement function.
New Procurement Technology in the Age of Digital Transformation
New digital opportunities are changing the way buying and selling are done within the organization. To adapt, procurement teams must change the way they secure enterprise IT.
Emerging technologies make IT procurement strategy easier, more intuitive, and future-forward in an age that demands more speed and agility. In fact, the use of technology is one of the key factors used by benchmarking firms to measure the maturity of procurement organizations.
Digital Tech and SaaS Solutions
Digital technologies (particularly SaaS) help procurement teams drive greater simplicity and automation, allowing them to work smarter and more efficiently than ever before. Now, procurement can focus on adding true value back into the business instead of just looking for cost savings. SaaS in the modern business era is a no-brainer, really. It provides:
- A lower per solution cost
- Simpler implementation
- The ability to test before purchasing
- Seamless scalability
It makes sense that the best way to manage your organization’s SaaS footprint would be through a SaaS-based platform too.
Purchasing decisions are no longer made by a single entity within the organization. SaaS management solutions help you have greater visibility into your collective spend, measure the value it provides across the organization, and proactively develop a strategy for managing SaaS going forward.
AI and Cognitive Technologies
Is AI just for robots and high-tech platforms? Not at all. It’s making the work of professionals across all sectors more efficient, helping them make smarter, faster decisions. In procurement, it’s primarily being used in spend and contract analytics. But there’s much more still to come.
Gartner reports that “The reality of AI is that most organizations won’t create significant value unless they deploy the technology on top of the right platform, data, and processes.” Yet currently, most organizations only manage part of their spend with procurement technology.
Cognitive technologies are a product of the field of AI that refer to solutions that replace human involvement. These technologies are set to disrupt procurement drastically in the next 5-10 years—so much so that a new category of “cognitive procurement” is emerging. A 2017 Deloitte survey of 480 procurement leaders from 36 countries even found that procurement leaders believe the impact of robotics and automation will increase from 50% to 88% by 2020, and up to 93% by 2025.
The Zylo Discovery Engine
At Zylo, the Zylo Discovery Engine is the process that runs against each and every transaction that is imported into the Zylo platform. The model identifies transactions that are for cloud-related providers and then further classifies those transactions for the actual subscription they correspond to. This way, Zylo can immediately deliver value to customers.
The ultimate goal for anyone in procurement is to become a trusted advisor that seeks out value. With new technology applied to basic procurement principles, we can get closer to finding true value than ever before.