More than 10 years ago, venture capitalist Marc Andreessen predicted software would eat the world.
“My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy,” he said, mentioning at-the-time young companies like LinkedIn and Twitter.
He was obviously right. But now that prediction needs an update for 2021 and beyond: Software has eaten the world – and now Cloud is eating software. And rapidly!
According to Bessemer’s Cloud Industry Update for 2020, cloud-based software will account for a majority of all software globally within the next five years, and the vast majority of all software — over 75% — within this decade.
Other data confirms this explosion in cloud-based SaaS software. In fact, according to our Zylo 2020 Benchmarks Report, SaaS spending grew by 14% from 2019 to 2020. Similarly, Gartner predicts global SaaS spending to surpass $140 billion by 2022, a 16% increase from 2020, thanks in part to an assist from the COVID-19 pandemic forcing many organizations to pivot to remote work.
Bottom line: SaaS is an unstoppable force. It’s growing exponentially. It’s the future. Is your software asset management system keeping up? Now’s the time to get the ball rolling and establish the needed processes to effectively manage this ever-growing aspect of tech while keeping your software spending in check.
SaaS Presents New Challenges to Software Asset Management Systems
When it comes to tracking cloud apps in your software asset management system, you may need to rethink your approach, because SaaS brings an entirely separate set of challenges compared to on-premise software.
In many instances, these apps fly under the radar of your IT or procurement teams, which invites a wide range of unnecessary problems and security risks. Consider these three challenges to effective SaaS management:
- Challenge 1: App Proliferation, aka SaaS Sprawl: Unlike the old-school, on-premise software, SaaS is extremely easy to purchase, install, and update — no IT help required. Because most SaaS purchases only require a credit card and internet connection, anyone in the organization becomes a potential SaaS buyer. It’s so easy that many companies fail to realize they employ over 650 SaaS tools on average, and underestimate the figure by two to three times.
- Challenge 2: Decentralized Purchasing: It’s now so easy that individual employees and lines of business seek out and purchase the tools they need, often without a friendly heads-up to IT or procurement. Product-led growth strategies (offering a basic version of the software for free to acquire new customers — i.e. Spotify, Canva, Zoom, etc.) also contribute to employees bypassing typical IT protocols. Sure, it helps teams work faster and more efficiently, but it invites risk by bringing unvetted software into your organization.
- Challenge 3: With SaaS, You Can’t “Set It & Forget It:” When it comes to effective SaaS management, you simply can’t “set it and forget it.” New software frequently enters the organization, and requires continual monitoring. In fact, a typical company will see at least 10 new applications enter its environment and 4 applications exit active use every 30 days.
The key to streamlining SaaS governance requires tracking all of your SaaS licenses in a single software asset management system. And clear data and insights makes it easier to shift your mindset from playing defense against software audits to proactively focusing on optimization efforts.
It’s Time to Transform Your Software Asset Management System
We’re quickly entering a new era of software asset management, one that requires continuous surveillance of the hundreds of tools that enter and exit your organization. When you think about “software,” you need to reflexively think about SaaS, because software looks fundamentally different today than just a few years ago.
Software asset management systems must evolve to keep up. And with SaaS quickly becoming the dominant form of software globally, you need to start now so you can reduce costs with better data, quickly make high-impact decisions, limit chargebacks, and see all of your software data in a central system of record.
At Zylo, we’re committed to helping you level up your software asset management systems. Reach out to one of our SaaS experts to learn how you can start maturing your software asset management system today.