SaaS visibility: What it is and how to improve it

Do you know how much your company spends on SaaS each year?

For many organizations, the answer approximates a hesitant “more or less.”

If you’re like most companies, you know what you spend on your biggest accounts (like your payroll platform and your CRM tool). But when quantifying shadow SaaS spending or the actual utilization of the licenses you pay for, you’re probably a little less than sure.

Using dedicated software vendor management tools to increase SaaS visibility is critical for reducing data security risks, lowering costs, and maximizing return on procurement investment.

Learn what’s driving the need for enhanced SaaS visibility in modern businesses and how SaaS management software improves your knowledge of software spending.

What is SaaS visibility?

At the highest level, SaaS visibility is how your company accounts for the money it spends on software tools.

This includes all major contracts used across multiple departments and out-of-contract spending like overage fees and purchases made on a department leader’s corporate card.

Good SaaS visibility programs focus on ways to lower costs or improve ROI. They look for opportunities to cut licenses that aren't in use or ways to help users get more out of a tool that’s already being paid for.

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What’s behind the need for visibility into SaaS spending?

Decentralized purchasing creates shadow SaaS

A lot of SaaS buying takes place outside the confines of the traditional procurement environment. We call this decentralized purchasing.

This decentralization occurs primarily because purchasing SaaS licenses is straightforward — any department leader with a corporate card can sign up for a subscription.

Because monthly software prices are typically low, this can easily go unnoticed as a recurring credit card charge.

Because department leaders know exactly what they need from a SaaS tool — a VP of sales knows precisely the features they require from a sales engagement platform — they typically don’t need to consult other team members before buying.

As such, much software purchasing occurs without IT, finance, or procurement knowledge. This is known as shadow SaaS and is a critical focus point for improving SaaS visibility.

Overlapping licenses create unnecessary spending

Because software purchasing is often decentralized and branch or department leaders make decisions without consulting others, it's not unusual for a company to pay for multiple tools that offer the same functionality.

For example, perhaps your company is scaling and just added a customer support team. The support team leader purchases an SMS messaging platform to help their team communicate with customers.

Unfortunately, your marketing team already uses an SMS messaging platform for their activities, and now you’re paying for both.

In this case, you lose the opportunity to access economies of scale you’d have if all departments used the same tool and you negotiated a better per-user price. You also bear the extra hidden costs of additional vendor management and potential supplier risks.

Without SaaS visibility protocols in place, savings opportunities like these go unnoticed.

License underutilization

One of the often overlooked aspects of SaaS visibility is the monitoring of license utilization.

It's not enough to know that all purchasing decisions were made through the right channels (though this is a good start).

You also need to know who uses software licenses and how often. If nobody is using the tool, you’re unnecessarily harming company profitability.

There are a few different ways in which license underutilization occurs:

• An individual activates a subscription, they leave the company, and the contract continues to renew after they’ve gone
• A certain number of purchased licenses are unused
• Some team members use their licenses only rarely
• Some users don’t take advantage of all available features

Good SaaS visibility practices also include a process for monitoring license utilization. For large organizations, this might involve investing in a dedicated license utilization platform to monitor user activity. For most companies, however, requesting this information from your software vendor will suffice.

SaaS security risks

All relationships with a third-party vendor include some risk.

Being wary of software purchases is particularly important due to the introduction of SaaS security risks, such as the possibility of a data breach or a case of non-compliance with data protection regulations.

Improving SaaS visibility means creating risk identification and mitigation strategies during the sourcing phase and reassessing and regularly updating your understanding of current security risks.

IT teams should also control user access via each SaaS platform’s security controls. For instance, setting role-based permissions ensures that sensitive data is only visible to those with the authority and requirement to see it.

Uncompetitive pricing

If SaaS visibility is poor, it's hard to say whether you’re paying a competitive price for the software you use.

When SaaS purchasing is decentralized, decision-making authorities tend to agree to the list price of a given software tool rather than finding strategic opportunities to negotiate (as an experienced procurement leader would).

Plus, SaaS contracts generally renew automatically if they aren’t properly managed. This means you lose an opportunity to renegotiate based on factors like increased user count.

Implementing a SaaS visibility strategy involves creating a contract management process to catch such opportunities.

How SaaS management software improves visibility

Improving SaaS visibility requires access to all your SaaS spending and contract data in a central hub.

SaaS vendor management tools like Vendr help you achieve this by implementing the following practices.

Create a standardized purchasing process

SaaS management solutions help ensure that purchasing policies not only exist but are followed to the letter.

Whether SaaS applications are purchased by department leaders or a centralized procurement team, set up a custom workflow to guide the person responsible through a series of steps.

These steps might include the following:

• Sign-off from the CIO (meaning shadow IT simply can’t exist)
• A risk identification matrix to align with software security policies
• A review of existing SaaS contracts to eliminate overlapping licenses

Creating such automated approval workflows improves compliance with internal purchasing policies and speeds up the purchasing process by preventing bottlenecks.

Set up automated notifications

Use your SaaS management app to create automation rules that notify you or another stakeholder when:

• An overlapping purchase is discovered (allowing you to step in and consolidate licenses)
• An existing SaaS app comes up for a contract renewal (helping you renegotiate the contract ahead of time)
• A purchase request requires approval (speeding up the approvals process)

This prevents procurement leaders from having to “check in” on software purchasing progress, knowing that they’ll get a notification when their input is required.

Use price benchmarking data

SaaS buying platforms like Vendr allow you to use price benchmarking data when sourcing a new vendor or renewing a contract.

This tells you what others pay for the same tool, not the headline price. This gives you a competitive advantage that helps reduce costs and improve profitability.

Increase SaaS visibility with Vendr

Vendr is the software buying platform that helps procurement and IT teams improve SaaS visibility, cut costs, and drive ROI on procurement spending.

With Vendr, you have complete visibility over the tools in your SaaS ecosystem with the ability to:

• Configure custom approval workflows that improve compliance and speed up sourcing
• View software savings in real time
• Monitor SaaS vendor performance against benchmarks
• Track active users to improve visibility over license utilization
• Get ahead of contract renewal negotiations with automated alerts