When it comes to driving business growth, SaaS can be an incredibly powerful tool. It’s easy to purchase, fast to implement and often cheaper than on-premise solutions.
Yet, it’s these very same benefits that can actually make holistically managing your SaaS portfolio difficult. Without effective SaaS subscription management, it’s easy for IT teams to quickly lose track of SaaS costs, security and access.
In this article, we’ll explore why subscription management should be a priority, four specific steps you can take to get SaaS under control — and, finally, why you don’t have to go it alone.
Why Organizations Must Make SaaS Subscription Management a Priority
Let’s start off with a question. How many SaaS applications do you have within your organization?
Now that you have your number – is that based on a database you’re using to track SaaS applications – or is it just your best guess?
How many applications do you think the average organization has in 2022?
It’s 291. (More than you expected, huh? It’s more than we expected, too.)
Don’t feel bad — most organizations consistently underestimate how many SaaS applications they have by up to 3x. When it comes to SaaS, perception often doesn’t align with reality.
But why is SaaS so grossly underestimated?
It’s because of one inherent quality that nearly all SaaS tools have: product-led growth, which is a growth model that focuses on end-users. Instead of getting sourced by IT and then distributed to relevant teams or the entire organization, most SaaS applications start in an org with just a handful of licenses. The impact (and the cost) grows from there — it’s why go-to-market teams call it “land and expand.” (With the freemium model, sometimes all it takes is one license).
In a phrase: most purchased applications don’t go through a formal vetting and procurement process. Instead, they’re acquired by business units, teams and individuals — often via expense.
Take a look at the difference between applications managed by business units and employees compared to those managed directly by IT.
Those applications purchased without the knowledge of IT is what we call shadow IT — and it creates unnecessary costs and risk for organizations.
But what’s the solution? Establishing a process for effective SaaS subscription management.
Take These 4 Steps to Move Towards More Effective SaaS Subscription Management
We’ll give it to you straight: it’s time to make it a priority to move toward more effective SaaS subscription management.
But the average organization has more than 290 applications. How the heck am I supposed to get all of that in check?
It doesn’t have to be overwhelming. Here are a few key steps that’ll have you well on your way toward better SaaS subscription management.
Step 1: Discover what you have
Let’s expand on that a bit: discover and document all the SaaS applications your organization currently has in place, whether it’s a single freemium user or 500 licenses.
You can’t effectively manage SaaS if you don’t even know what you have.
The first step is to get full visibility into the applications your organization maintains, their associated costs, and which team or employee has purchased each one.
Once you have a complete picture of all of the SaaS applications in use at your organization, document all key contract details in a single system of record: who has a license, when is the renewal date, how much does it cost, and what contract details might impact the organization down the line?
This record will serve as the single source of truth for all SaaS actions and decisions that’s updated in real-time.
Step 2: Build relationships with application purchasers
IT and procurement pros often find themselves at odds with the end users of SaaS — the employees and teams that purchased the tool to make their jobs more efficient.
But it doesn’t have to be that way. Collaboration is key to effective SaaS Management, so take the time to invest in that collaboration between IT and application owners across the business.
Start by making it a priority to build relationships with the people who own vendor relationships in your organization – and keep the lines of communication open at all times. Doing so will increase visibility, security, and value for everyone involved.
It will also support your efforts downstream, as you gain a better understanding of how teams and individual employees are using (or not using) specific SaaS tools.
Step 3: Identify ways to save money
SaaS is easy to acquire. It’s also easy for SaaS costs to get out of control. But there are many effective SaaS optimization strategies that can help you cut costs and risk.
Rightsizing licenses, consolidating duplicate subscriptions, and reducing redundant applications with similar functionality are all effective ways to save your company a lot of money.
- Rightsize: Take stock of who is actively using a SaaS subscription, and who can be taken off.
- Consolidate: Ensure multiple teams within the organization aren’t using the same tool on different contracts.
- Reduce Redundancy: Identify the tools that have the same functionality, make an informed decision for which to keep and which to opt out of.
You can get more details in our Complete Guide to SaaS Management for Procurement here.
Step 4: Get proactive for the future
The average company sees approximately one SaaS renewal per day. That’s hundreds of renewals every single year.
It can be challenging to anticipate each and every one of these renewals.
That’s a problem. Surprise renewals are risky because they lead to hasty – and often expensive – renewal decisions.
Instead, start taking a more proactive approach to renewal management.
The first step is to develop a renewal calendar that alerts you when renewal dates and negotiation periods are approaching. That way, you’ll have plenty of time to gather the information you need and you’ll be better equipped to collaborate with the right application purchaser to make smart, data-based renewal decisions.
Don’t Go it Alone: Leverage SaaS Subscription Management Software
Often, when an organization is first focusing on SaaS subscription management, they take a manual, spreadsheet-based approach.
This might work for a bit — but it’s not effective.
Why? SaaS portfolios are constantly growing and evolving. Every 30 days, a typical company will see at least eight new applications enter its environment and three applications exit active use.
Instead of the manual approach, consider partnering with a SaaS discovery and management provider. These vendors ease the burden of SaaS management and make it easier for you to control costs and risks – while still providing employees with access to the SaaS applications that make them effective.
SaaS tools — and the number of applications your organization uses — will only continue to grow. Now’s the time to focus on more effective SaaS subscription management.
Ready to explore 3 strategies that can help you take back control of SaaS? Check out this guide.