SaaS Management Platform vs SAM Tool: What’s the Difference?

Traditional Software Asset Management (SAM) tools have helped organizations manage on-premises software for more than twenty years, rooted in the belief that management is primarily about handling installed software. SAM tools have been crucial within the IT Asset Management (ITAM) ecosystem, yet they weren’t created to tackle the nuances of Software-as-a-Service (SaaS).

SaaS differs significantly from on-premises software regarding purchase, delivery, access, and usage, necessitating a different management approach. According to estimates from Gartner, organizations risk overspending by at least 25% on their SaaS applications without a dedicated SaaS Management Platform. 

How do you begin to compare a SaaS Management Platform vs a SAM tool? Let’s start by defining SaaS and on-premises software.

Defining SaaS vs. On-Premises Software

To grasp the distinctions between managing SaaS and on-premises software, it’s crucial to understand their inherent differences, shaped by decades of technological evolution and market demands.

On-Premises Software

On-premises software originated in the early 1980s with the advent of personal computers. As the internet gained traction, this software began to connect to the web via on-site servers, and it continues to be managed within company-owned environments today.

The financial commitment starts with a hefty initial purchase of software licenses. While the annual cost tends to decrease over time, businesses can still expect to pay maintenance fees up to 25% of the original investment annually. Vendors often commit to semi-regular updates to ensure these systems provide value over time.

On-premises software is installed machine-by-machine, usually requiring the expertise of IT professionals for setup. A critical task for Software Asset Management teams is meticulously managing these installations to prevent overprovisioning, which can lead to substantial penalty fees during audits. 

One significant limitation is that on-premises software operates within a closed system. This makes integrating with other applications cumbersome, often requiring IT professionals to engage in complex coding. For external applications or third-party vendors to integrate, they must have specific server access, which can stifle agility and elevate security risks.

Furthermore, without effective license management, there is no safeguard against over licensing, exposing businesses to the risk of substantial true-up costs during compliance reviews. 

SaaS (Software as a Service)

Cloud-based software represents a significant shift from traditional on-premises software. Developed and maintained in an environment controlled entirely by the software provider, it liberates IT managers from hardware management and upkeep concerns.

Unlike on-premises systems, cloud-based software isn’t installed directly on a company’s hardware but is accessible via the web on any device. It is typically offered through a subscription model, where customers can access applications directly through internet browsers.

The adoption of SaaS offers distinct financial advantages. Many providers offer freemium versions and Proof of Concept (PoC) trials, lowering entry barriers and encouraging exploration and adoption across various business sectors. This accessibility has led to a rapid proliferation of SaaS within organizations, with lines of business and individual employees now responsible for purchasing approximately 83% of an organization’s software.

This shift in purchasing not only democratizes the use of software within companies but also introduces new dynamics in software management and utilization, starkly contrasting with the traditional models bound by rigid licenses and machine-specific installations.

SaaS Management Platform vs. SAM Tool: Capabilities Breakdown

Legacy Software Asset Management (SAM) tools have been the backbone of traditional software management systems, specifically designed to tackle a range of crucial tasks:

• Responding to Software Publisher Audits: SAM tools streamline the audit compliance process by providing detailed reports on software usage, ensuring that businesses can efficiently respond to inquiries from software publishers.
• Discovery of Installed Software: These tools are adept at scanning enterprise networks to detect and inventory all installed software, providing a clear view of software assets.
• Maintaining Inventory of License Entitlements: SAM tools help maintain a detailed record of all software licenses, ensuring that companies remain compliant with their licensing agreements.
• Extracting Data for Budget Planning: SAM tools assist in forecasting future software needs and budgeting by analyzing software usage and installation data.
• Preparing for Contract Renewals: They enable businesses to prepare for license renewals by providing insights into usage patterns and compliance status.
• Identifying and Tracking Outdated or Unsupported Software: These tools are essential for identifying software that is no longer supported or outdated, helping to mitigate potential security risks.
• Normalizing Consumption of Software with Complex Usage Rights: SAM tools handle the complexity of software licensing terms, such as active/passive, test/development, and failover/disaster recovery, to ensure compliance and optimize software spend.

Each of these functionalities highlights the traditional focus of SAM tools on managing and optimizing on-premises software environments, which contrasts with the evolving needs driven by the rise of SaaS.

SaaS Management Platforms (SMPs) are crafted to meet the unique challenges posed by cloud-based software, expanding beyond the scope of traditional SAM tools to include:

• Discovery of Cloud-Based Software, Including Shadow IT: SMPs excel at identifying all software services accessed across the organization, including longtail apps and unauthorized or unmanaged software (commonly known as “shadow IT”), which can pose significant security and compliance risks.
• Maintaining Centralized Inventory of All SaaS Applications and Data: These platforms provide a unified view of all SaaS subscriptions and associated data, allowing for comprehensive management and oversight.
• Finding and Mitigating Financial, Regulatory Compliance, and Security Risks: SMPs analyze usage and risk assessment data to identify potential financial inefficiencies and compliance vulnerabilities, helping organizations address these risks proactively.
• Identifying and Reducing License Waste: SMPs help organizations eliminate unnecessary spending on underutilized or redundant SaaS licenses by monitoring software usage.
• Operationalizing Contract Renewals: SMPs facilitate the management of SaaS contracts by tracking terms and usage, ensuring that renewals are handled efficiently and align with actual needs.
• Benchmarking Applications, Portfolio, and Pricing: These platforms enable comparisons against industry standards for software applications and pricing, providing valuable insights to drive strategic decision-making about software investments.
• Tracking Spending and Budgets: SMPs provide robust tools for monitoring and managing financial expenditures on SaaS platforms, enabling companies to control their software budgets precisely. This feature is essential for ensuring that spending aligns with business objectives and financial strategies, allowing for real-time adjustments and improved financial forecasting. 

SMPs are tailored to the dynamic and distributed nature of SaaS environments, addressing the need for direct control over software accessed remotely and often on a subscription basis.

SaaS Management Platform vs. SAM Tool: Understanding the Differences

SaaS Management Platforms and traditional Software Asset Management tools diverge significantly in their focus and capabilities, primarily due to their foundational approaches and the technological landscapes they were designed to manage.

Core Focus and Capabilities

SAM tools originated in an on-premises software environment, fundamentally shaping their capabilities. While they include SaaS Management as part of their broader structure, it is more of an add-on than a core feature. This mismatch arises because many of the capabilities native to SAM tools—designed to manage on-premises assets—do not seamlessly apply to SaaS. Consequently, integrating SaaS Management adds complexity from both a data and configuration standpoint.

Workflow and User Experience

While SAM tools possess native workflow capabilities, these are often not user-friendly and typically require the involvement of Service Implementations (SIs) to set up and maintain. This necessity can create barriers to efficient operation, particularly for organizations without extensive IT support.

Contract Renewals and Notifications

Regarding renewals, SAM tools generally offer basic notification features but lack comprehensive tools for managing the renewal process effectively. They do not include calendars, price benchmarks, dashboards, or milestone tracking as standard features. While organizations can develop these capabilities internally using the tools available within SAM platforms, this requires significant additional effort and customization.

Depth of Integration with Usage Data

A key area where SMPs excel over SAM tools is their deep integration with usage data. SMPs are designed to provide detailed insights into how SaaS apps are used across an organization, allowing for more effective license management and optimization of software spend. In contrast, SAM tools typically provide only basic usage integration, which may not be sufficient for the nuanced needs of managing SaaS applications.

Time to Value

Compared to the heavier lift of implementing a traditional SAM tool, SMPs typically require less investment and offer a faster implementation timeline compared to traditional SAM tools. SMPs offer pre-built integrations and automated workflows, enabling quick wins like cost savings and improved compliance in weeks rather than months or quarters.

Functionality Comparison

• SMPs include comprehensive management tools specifically designed for SaaS applications. They cover everything from discovery, inventory, budget tracking, renewals, and deep usage analytics.
• SAM Tools may offer some functionality in these areas, but often in a more limited or less integrated manner, with many features requiring additional development or customization.

While SAM tools provide robust solutions for managing traditional software assets, SMPs are essential for organizations heavily using SaaS, offering tailored tools that address the unique challenges of cloud-based software management.

You Need A Dedicated SaaS Management Platform

In the battle of SaaS Management Platform vs SAM tool, which one comes out on top?

While traditional Software Asset Management (SAM) tools have evolved to bridge some gaps in managing SaaS, their modifications often fall short of the needs for effective and holistic SaaS Management. Legacy SAM tools are primarily designed to analyze software deployment, involving licensing metrics that vary by product, the application of licensing rules, product use rights, and other complex criteria such as product bundling rules and virtual operating environments.

Despite these capabilities, there’s still a strong case for using SAM tools, but they should be complemented by a SaaS Management Platform (SMP) for comprehensive coverage.

“You need to have both [an SMP and SAM tool] because you have two fundamentally different types of software in the enterprise.”

– Jason Owens, former Sr. Director, Global ITAM at Salesforce

The nature of SaaS allows departments, business units, and even individual employees to evaluate and purchase subscription-based software without traditional IT oversight. To ensure that software subscription spending delivers the intended return on investment, organizations must extend their capabilities beyond what traditional SAM tools can offer. 

This means adopting an SMP specifically designed to handle SaaS applications’ dynamic and decentralized nature. This shift is beneficial and necessary for modern enterprises to maintain control over their software assets and optimize their technology investments. 

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