Why is SaaS Management Important?

By Kristy Hawkins

SaaS management accounts for a significant piece of today’s Shadow IT spend. With the ever-growing list of SaaS applications on the market today, and with the ease in which anyone in the organization can subscribe and purchase them, it is resulting in significant expenditure year on year that is often unmanaged. Tool vendors estimate that around 35% of SaaS spending is wasted as companies are simply not managing this relatively new area of IT expenditure. This is predominantly due to it not being centrally managed as business units can readily access and make purchases of the applications they need, by simply using a credit card. Given this, effective capabilities in this area will see a relatively rapid return on investment (ROI).

SaaS management tools are specifically designed to support an organization, ideally the IT Asset Manager, should manage all the organizations SaaS applications. The SaaS management tool is essential for an organization to manage these assets, as unlike traditional software, there is often nothing installed within the environment which makes identifying and monitoring these applications via the standard traditional approach impossible. Research has found that on average a company is using around 600 SaaS applications, all with the potential of being a security risk, and producing unbudgeted costs. In order to manage these appropriately, a SaaS management tool must allow an organization to effectively manage the SaaS application throughout its lifecycle. To do that you need to be able to discover what is in use, create a detailed inventory, normalize the inventory, and allow for optimization to support cost management.

Discovery is the key to successfully managing your SaaS applications, and in order to discover something which is undiscoverable through traditional methods it is vital that your tool can connect to API’s, gather data from expense systems, consume data from your organizations single-sign-on application, all while consuming data from standard discovery tool methods. Once applications are discovered a detailed inventory is then compiled. A key aspect of this inventory is accurate usage data, as this is a driving force within the optimization and cost saving initiative.

After the detailed inventory is compiled the tool will then normalize this data and the business can start making informed business decisions. For example, you now have visibility into what applications are in your environment, who is using / not using them, what is approved vs not approved software, and associated security risks.

Now that we know what we have we can move on to optimizing our software stack and showing real benefits to the organization. To do this, we need to enter entitlement data, and business rules for subscription usage, for example if a subscription goes unused for 30 days it can be reallocated.

Areas to look at when first going through the optimization process for quick ROI:

  • Ex-employees with subscriptions assigned to them
  • Unused subscriptions
  • Employees who have similar subscriptions across multiple vendors (e.g. WebEx and Zoom)
  • Higher, more costly, version of a subscription than is required
  • Departments purchasing on their own rather than going through the central owner of a contract and paying more
  • Multiple departments independently purchasing software when a centralized contract would produce a more cost-effective pricing model

As you can see gaining a good understanding on your SaaS applications is especially important. It is recommended that managing this area of your IT spend takes place sooner rather than later to reduce expense during this current climate.

About the Author

Kristy Hawkins is a Managing Director at Xcite Consulting. She has over 19 years of professional experience in Big-4 and in industry, leading global teams in highly complex and dynamic environments.