Software as a Service (SaaS) has changed how people buy software and who buys it. The result is a dramatic increase in the amount of software used daily by teams.

New research indicates that SaaS spending is topping $13k per employee per year. Of that spend, around $4K is wasted. That means a company with 150 employees is losing $600K a year. 

If you’re fond of analogies, out-of-control SaaS spend is like ivy. At first, a little ivy on a tree seems harmless. But over time, ivy prevents bark from adequately interacting with air and microorganisms, and can kill a healthy tree pretty quickly.

Similarly, unoptimized SaaS spend seems harmless at first. Employees solve their problems and maintain productivity, despite using IT solutions outside of approved and controlled processes. It’s okay to overlook a little inefficiency.

The problem is that employees are using an average of 35 applications more than 1,100 times a day. As an organization scales, what started as a few other apps becomes a full-blown jungle of different platforms spread across various functions.

If your heart rate is up just thinking about it, don’t worry. Here are the three steps you need to take to achieve SaaS spend optimization.

Identify Your Total Expenditure

If you asked a CFO how much each team in an organization spends on SaaS products, how quickly would you get a response? They’d likely have to don their Sherlock Holmes cap and start investigating. If you rewind to a decade ago, it would have been a much easier process.

This difficulty comes from what’s known as Shadow IT. Shadow IT refers to software applications used within organizations without explicit organizational approval. If you don’t know something exists in the first place, it’s impossible to tote up your total SaaS expenditure.

In some scenarios, finance asks organizational leaders what apps they’re using. They might even ask how they’re being used, and by whom. This questioning typically leads to the creation of a spreadsheet to track your organization’s SaaS spend. It’s a very manual process and one that involves continually playing catch-up.

Using a SaaS management platform like Augmentt, you can automate the process for your clients using our advanced log file analysis framework. We allow you to quickly identify every SaaS application being used on your client’s network across the entire employee base.

Know Your SaaS Usage

Knowing what your client’s employees are using allows you to tot up your total expenditure. But it doesn’t tell you whether this usage is efficient or not. Theoretically, you might have all the right SaaS tools that can help you scale your business and give your employees what they need to do their best work.

The first thing you’ll likely find is that users have access to duplicative apps, like Zoom and Hangouts, or Dropbox and Google Drive. You can quickly discover those apps and determine whether you can eliminate one of the duplicates.

Beyond duplicates, you can tell SaaS usage by employees. Are your clients getting the most from each license they’ve provisioned? Are they provisioned at the right feature tier for each user? And are they spending the right amount of money on each SaaS license or application?

This is another process that is a complete nightmare to do manually. You want a platform like Augmentt that can provide out-of-the-box SaaS usage reporting across your entire organization.

Implement Proactive Policies

While the above steps help you identify your total expenditure and help you identify saving opportunities, it helps to get ahead of the problem.

You should help clients identify critical applications, services, and processes to establish them in a “no-fly zone,” making them off-limits for shadow IT.  For instance, a sample blogging or task management site is likely to be less of a security threat if compromised than a database storing private customer data in the cloud.

Beyond policies like the above, it’s critical to carry out regular evaluations to look at areas like SaaS budget, employee usage, and security.

We hope you found the above SaaS spend optimization process, and if you want to learn more about how a SaaS optimization tool can help automate the process, get in touch.

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