SaaS Stack Management
Learn what’s involved in SaaS license management, why it's important to master, and how to overcome six common challenges associated with the practice.
The average company today has over 250 SaaS licenses.
That’s 250 contracts to oversee, 250 vendor relationships to manage, and 250 risk analyses to conduct on a regular basis.
Managing SaaS licenses, then, is a critical practice in which all procurement managers should be proficient.
Learn what’s involved in SaaS license management, why it's important for scaling companies to master, and how to overcome common challenges associated with the practice.
SaaS license management is a practice that oversees the various SaaS licenses of a company. This management practice holds and aims to provide more visibility into software vendor relationships. It’s a subset of software asset management (SAM), also known as IT asset management.
A license is, essentially, a permit to use a given SaaS product.
Before SaaS became commonplace, companies would buy software outright (known as perpetual licensing). They’d pay a one-off invoice and then own the product into perpetuity, installing and hosting the software on their own servers.
While this legacy model still exists, the SaaS subscription model is much more common. In this scenario, you pay a monthly or annual fee which grants you a license to access the platform.
SaaS license management is concerned with the supervision and administration of these licenses, overseeing:
The primary benefits afforded by a comprehensive SaaS license management program include:
Companies can cut software costs by identifying areas of overlapping spend or eliminating inactive user licenses.
Monitoring software utilization closely helps reduce SaaS security risk, for instance, by limiting access to certain features through user permission sets.
Procurement teams focusing on SaaS license management are better positioned to negotiate favorable terms (for example, negotiating a lower per-user price as you’ve doubled your headcount in the last 12 months).
License underutilization—when software licenses aren’t used often or at all—is a key problem in SaaS subscription management.
Here are a few common examples of license underutilization IT teams might be familiar with:
To overcome this challenge, SaaS license management teams must regularly track and report on license utilization and take appropriate action:
It’s not uncommon for organizations to pay for multiple products that offer similar features, resulting in overlapping spend.
This often occurs when SaaS purchasing is decentralized or occurs outside of the official procurement process. Then, different department heads purchase licenses independently.
For instance, your sales and finance team leaders each purchase project management tools without consulting one another or following the established approval workflow.
While overlapping spend can be identified manually, this is a cumbersome and labor-intensive process, especially for large enterprises with hundreds of SaaS licenses.
What’s more, it’s not always obvious where software apps overlap.
If your finance team bought an Asana subscription, and your sales team purchased ClickUp, it’s clear that both are project management platforms and can be consolidated.
But it might not be immediately obvious that ClickUp can be used to build a sales CRM, and therefore it might overlap with your existing CRM tool.
To spot and solve all areas of overlapping spend, talk to Vendr. Vendr works with you to analyze your tech stack and suggests opportunities to consolidate licenses and reduce your total SaaS expenditure.
Want to get started on your own? Download our free SaaS stack template.
SaaS applications purchased outside of established procurement processes (or at companies where such processes don’t exist) run the risk of non-compliance with internal IT regulations.
As a result, it may put your company at risk of a data breach or even endanger your compliance with legislation like GDPR, the European data security requirement.
First, you’ll need to assess all existing software licenses against internal and external regulations to ensure all expectations are met and to create a clean slate.
Then design, document, and distribute a strict procurement process to prevent non-compliant purchases going forward. For example, you might build a quick software compliance checklist for procurement managers and/or have new software purchases approved by the CIO before committing.
Learn how in our dedicated guide: How to build a procurement process at any stage of growth.
SaaS licenses that aren’t managed closely open companies up to a number of different vendor risks, including:
Implementing your SaaS license management practice involves adopting a set of risk management protocols. Create risk profiles for each of your SaaS vendors and include a thorough risk evaluation when vetting new suppliers.
For example, consider using a risk matrix like this one from Smartsheet, to understand the likelihood and severity of different risks.
Automated approval workflows can also help minimize this risk by ensuring all purchases are run past a senior leader. This is especially critical if procurement is decentralized and department heads are responsible for sourcing their own products.
Discover how to implement approval workflows here: Approval Workflows: Everything You Need To Know To Get Started.
Unmanaged SaaS licenses also present a significant security risk from an internal perspective.
The most common example is when all users are given unrestricted access to a software platform that houses sensitive data, such as your company CRM.
Sharing customer information with anyone on your team is a risk, regardless of seniority. It is, of course, a necessary risk: Marketers and salespeople can’t succeed in their roles without access to this data.
Part of SaaS license management is managing and restricting access to certain types of data, functions, and processes within software platforms.
While some SaaS apps may allow permissions to be managed individually, this is particularly inefficient for larger companies.
The solution here is to create role-based permission sets. For example, all of your Sales Development Reps would, by default, get access to the same data and functions, and anything that isn’t required for their role would be restricted. These permission sets make managing and restricting access simple.
Reducing your software expenditure is a key goal of SaaS license management, and taming runaway spending is a key aspect.
Runaway SaaS spending happens when your monthly bill continues creeping upward with a given vendor.
It can occur for a number of reasons, the most common being:
The best way to curb runaway spending is to manage all of your software vendor relationships in a centralized platform like Vendr.
Vendr helps you:
Managing SaaS licenses manually is ineffective and inefficient, especially in large or growing organizations.
Team up with Vendr, the SaaS management platform that streamlines software purchasing and helps you manage SaaS across the entire procurement lifecycle.
Use workflow automation to optimize your approvals process and ensure stakeholders make compliant SaaS purchases. Receive automated notifications when licenses are up for renewal, and leverage our teams’ software-buying expertise to secure the best deal possible.
Reduce shadow IT spending by instantly identifying areas of overlapping spend and consolidating software usage.
Use our free savings analysis to discuss exactly how much you could save by implementing a more effective SaaS license management practice
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