Guide to SaaS management: What it is, best practices, and more

SaaS Management

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Written by
Perin Adams
Published on
January 25, 2022
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Key takeaways: 

  • Keeping track of SaaS purchases has become a headache, and only proper SaaS management practices can control the rise of shadow IT and its associated risks.
  • SaaS management helps discover, organize, and streamline SaaS applications used across an organization. The visibility it sheds on the SaaS stack helps weed out unnecessary SaaS apps and optimize spend.
  • Organizations need SaaS management to address lack of visibility and control, ineffective SaaS license management, and improper spend management. 

The democratization of purchasing power has increased the need for SaaS management. Since anyone with a company credit card can purchase a SaaS solution, it gets harder and harder to keep track of SaaS applications that are in use. 

There’s no way to identify whether the acquisition of a SaaS application was through the procurement process or shadow IT. Shadow IT is the process of making purchases outside the company's pre-defined procurement policy. 

To prevent instances of dark purchasing and its associated security risks, organizations need to implement proper SaaS management practices. If you’re looking for ways to implement a SaaS management process in your organization without putting a damper on the spirit of your functional managers, you’re in the right place. 

This blog will cover everything you need to know about SaaS management, including what it is, why it’s important, and some tips and best practices for effective SaaS management.

What is SaaS management?

SaaS management is the process of streamlining the decentralized and unmanaged SaaS usage in an organization. In addition to shedding much-needed light on SaaS portfolios spread across business units, SaaS management helps optimize SaaS usage and weed out unnecessary SaaS apps. 

Also known as SaaS operations management, it empowers the procurement team and the IT team to perform an array of tasks, including managing application licensing, controlling SaaS spending, streamlining SaaS subscriptions, enforcing procurement policy adherence, and automating existing IT workflows and processes.

The impending need for SaaS management

SaaS management: person looking at numerous bills

As the rate of SaaS adoption continues to increase every day, it’s critical to streamline and segregate SaaS applications. An ideal SaaS management lifecycle helps procurement and IT department heads identify overlap, mitigate security issues, optimize SaaS costs, and simplify SaaS renewals. 

Listed below are three reasons why every organization needs a rock-solid SaaS management process. 

1. Lack of visibility and control

As shadow IT continues to gain popularity among end-users, nearly 40% of SaaS purchases occur without the IT team's permission. What's more, the end-users who purchase SaaS applications on a whim don't perform the necessary due diligence, as they’re focused on solving their real-time problems immediately.

Procurement and IT leaders need to have full visibility into the SaaS ecosystem to know which applications are yielding a good return on investment (ROI), and which applications business units can survive without. 

End-users may use API integrations to exchange data with your existing software stack (like Salesforce, QuickBooks, and more). If the application they use isn’t thoroughly vetted for data security, they may end up exposing your organization's confidential data and paving the way for cybersecurity risks.

2. Ineffective SaaS license management

With SaaS sprawl on the rise, the chances of mismanaged SaaS licenses increase with it. When not all SaaS purchasers in an organization undergo proper software asset management training, they increase the risks of underutilized licensing.

Poor licensing management poses a ton of risks for the business. For instance, when software licenses aren’t managed correctly, proper employee offboarding may not happen. There are chances that a former employee could still have access to one or more of your SaaS apps, exposing your organization's confidential information. 

Unused licenses, on the other hand, pose a different type of problem. Some end-users purchase more licenses than necessary to accommodate the needs of their growing team and future colleagues. However, most SaaS applications offer a pay-as-you-use pricing model, which helps administrators to add users if and when required. Unused licenses just eat away at a department's budget without offering any benefits. 

3. Improper spend management

When it comes to buying organization-wide applications like Microsoft Office, G-Suite, or Dropbox, the IT team can spearhead the provisioning and control the spend effectively. However, the procurement team and the IT team may not know of the existing niche SaaS needs in various departments. If there’s no SaaS management plan in place, the buying frenzy of end-users results in unchecked SaaS spends.

Usually, every organization allocates a budget to individual departments when it comes to IT asset purchases. However, when SaaS purchases are made without proper approvals, there’s no way to track spend except by going through each individual's credit card statement, which is easier said than done. 

Some culprits for overspending in SaaS are:

  • Signing up for a free trial with a credit card and forgetting to cancel the subscription after the trial is over.
  • Investing in SaaS applications that accomplish the same thing. For example, while Microsoft Planner is the preferred project management tool, teams may choose to use Trello or Notion just because they’re easy to use.
  • Purchasing SaaS apps for one-time use. The sales team may end up investing in a webinar tool just to hold one webinar every year.

SaaS management best practices

3 people working together

If you’re facing troubles with SaaS management, then you’re not alone. Today, it’s the most common problem that small businesses and enterprises face. However, these four best practices to track and manage SaaS spends can help you win the battle against unmanaged SaaS stacks.

1. Identify the existence of SaaS apps

You don't have to invest in an elaborate IT asset management solution to identify SaaS applications used across your organization. All you need to get started is a simple SaaS stack template. Rather than doing a complete overhaul of the purchasing process, start with simple steps.

You can start by collecting information on the top five tools each department uses. Send a survey to functional department heads or employees with a business credit card requesting information on the SaaS apps they subscribe to.

Once you get the initial information about SaaS applications, dig in a bit deeper and request more information. Collect pertinent data like subscription fees, renewal dates, number of licenses, and more. You can always cross-check this information with their business credit card statements.

2. Understand SaaS usage data

Before you get your shears ready to trim SaaS spend, you need to understand the utilization levels of existing SaaS applications. Now that you have your list of SaaS applications, send individual surveys to users to identify how often they use a particular SaaS app and how it impacts their work and productivity.

Some of your colleagues may have used a particular application only during the onboarding phase, and then forgot all about its existence. This survey can remind them about their unused license and help them decide whether or not they still need access to that specific tool.

3. Discover redundancies and overlaps

Armed with the master list of SaaS applications used across the organization and insider information on SaaS usage levels, you can step into the process of identifying overlaps and redundancies. To do this, you’ll need to perform an exhaustive analysis of each application and its potential use cases.

Two of your teams may end up using two completely different tools to fulfill the same use case. To resolve such overlaps, analyze and find out which is the best among those two tools, or if there’s a third best option available. Then talk to all stakeholders, present them with your findings, and convince them to make a switch.

4. Trim down unnecessary SaaS spend

Instead of outright removing licenses of SaaS applications, try finding opportunities where you can redistribute the same licenses to other employees. Sometimes, end-users may subscribe to premium plans when they can meet their needs with a free plan. Find such instances, and downgrade the plan. 

However, before you do this, check SaaS agreements for early termination penalties. Planning ahead for SaaS renewal management can give you control over your SaaS spend and help negotiate SaaS contracts to get a better deal.

Regain control with SaaS management

Unmanaged SaaS applications pave the way for dark purchasing, overspending, and unnecessary security risks. Discovering the list of existing SaaS apps, evaluating their usage levels, identifying redundancies and overlaps, and weeding out unnecessary subscriptions is the smart way to streamline SaaS management.

If your procurement team and IT team have too much on their plate already, you can outsource your SaaS management needs to an expert like Vendr. Contact Vendr today to get started.

Perin Adams
Perin Adams
LinkedIn icon
GTM Business Systems
Perin is the GTM Business Systems Analyst at Vendr, responsible for analyzing and optimizing the company's go-to-market systems and processes.

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