Enterprises use an average of 651 SaaS applications. How to effectively govern software assets?
According to Zylo research, enterprises use an average of 651 SaaS applications, with annual spending reaching millions of dollars, but executives generally underestimate actual usage. Remote work has driven a surge in SaaS adoption, with spending growing 14% in 2020 and the number of applications doubling in growth rate. Lack of visibility leads to duplicate subscriptions and diluted purchasing power. The article lists ten types of redundant applications and introduces Carta's case of achieving immediate savings of $50,000 through SaaS management, optimizing renewal negotiations, and establishing an employee self-service catalog.
According to research by SaaS management platform Zylo, enterprises use an average of 651 software-as-a-service (SaaS) applications, spending millions of dollars annually on subscriptions and licenses. If this number surprises you, you're not alone. In a survey last year, executives underestimated their SaaS inventory by two to three times. This indicates that organizations are losing control over their SaaS strategies.
Today, it's easier than ever for employees to download applications and expense them, whether or not they are approved by IT. While some SaaS applications are beneficial for innovation and productivity, too many applications lead to unnecessary expenses and weaken the company's purchasing leverage. To regain control, SaaS management strategies should be integrated into technology management and procurement processes.
Costly Inefficiencies
As expected, remote work has driven a surge in SaaS adoption. According to Zylo's research, SaaS application spending grew by 14% in 2020, and the growth rate of application numbers doubled compared to 2019. While many new tools may be critical to an organization's workflows, some are not.
With thousands of SaaS applications to choose from, the options have never been more abundant. Trials through free trials are a great way to discover new tools and boost productivity. But many organizations struggle to keep up with the growth in application numbers, or even lack visibility into them. Each month, at least 10 new applications enter an enterprise's technology environment, while 4 applications exit active use.
Enterprises that fail to monitor and manage this influx may face unnecessary spending from duplicate subscriptions or redundant applications. Here are two examples of how a lack of visibility impacts organizations:
- A marketing employee purchased a subscription to an application already used by the customer service department. Due to a lack of visibility, the enterprise may unknowingly pay for multiple subscriptions.
- Organizations use multiple project management tools with the same functionality, serving different departments. This weakens purchasing leverage and makes cross-departmental collaboration more difficult.
These challenges are becoming increasingly common, especially in large organizations. Here are the most common types of redundant SaaS applications in enterprises:
- Training/Learning Management Systems/E-learning
- Digital Asset Management
- Project Management
- Team Collaboration
- Recruiting
- Web Conferencing
- File Storage and Sharing
- Business Intelligence
- Digital Analytics
- Sales Intelligence
Manual SaaS Discovery
To the extent that enterprises track their applications, they often use spreadsheets, which is an inaccurate and cumbersome process. In a typical scenario, the IT department surveys departments for SaaS tools, reviews accounting receipts, and checks reports from cloud access security brokers. For large organizations, this process can take six to nine months and quickly becomes outdated.
Manual SaaS discovery cannot keep up with the ever-increasing pace of SaaS adoption. To make informed decisions about application inventory, budget accurately, and cut unnecessary purchases, establishing a continuous SaaS management strategy can help.
Equity management platform Carta has implemented such a strategy. It partnered with a SaaS management solution to improve application visibility and achieve cost savings. The company saw an immediate return on its investment and realized several benefits:
- Immediate savings of $50,000 by right-sizing SaaS licenses.The company saved $18,000 on a web conferencing application by downgrading features and removing unused accounts. The SaaS management solution found that a quarter of purchased accounts were not assigned to users, and another 14% of accounts had paid features that were never used.
- Improved renewal planning and negotiation.By identifying adjustment opportunities before renewal, companies can negotiate more strategically with vendors. Preparation often involves initiating an RFP process to evaluate similar applications and ensure pricing remains competitive.
- Established self-service for employee SaaS tools.Carta and its SaaS management solution created an easily accessible catalog listing approved best-of-breed SaaS applications. This catalog informs Carta employees about all available SaaS solutions, prevents unnecessary purchases, and increases usage of existing tools.
SaaS Management
The future of software is SaaS. As investment in cloud-based tools increases, proactively managing SaaS becomes increasingly necessary and complex. SaaS management solutions provide real-time visibility into application inventory, usage, and spending without extra effort.
With these insights, you can maximize SaaS return on investment, budget accurately, and provide employees with the tools they need.