As “Spring Cleaning” comes to an end, stop and ask yourself — did you consider your SaaS applications?
Many organizations are looking to trim their budgets. With that in mind, cleaning out your SaaS stack is a great place to focus. It can be like finding change under the couch cushion (except the totals can add up to hundreds of thousands of dollars). Most organizations don’t even realize they have SaaS clutter (and spend) problems. According to Gartner, organizations have over 125 different SaaS applications, costing them on average $1,040 per employee annually.
You can’t save without seeing your full stack
You wouldn’t clean your house in the dark. The same principle applies to your SaaS stack. The process of transforming SaaS sprawl to SaaS savings requires visibility. You can’t optimize what you can’t see.
This is especially relevant as shadow IT is an ongoing challenge. Shadow IT are unsanctioned applications that employees purchase, or get for free, without making their IT team aware. As tech-savvy generations enter the workforce, apps are easier to sign up for and start using, and expenses are easier to submit — shadow IT continues to increase and wreak havoc on budgets and more. We found that 75% of CIOs believe their inability to identify wasted SaaS spend is a threat to their company’s success.
Combating the risk and cost that come with Shadow IT requires discovering every single application currently or previously in use at an organization. Once you’re able to see every application, it’s that much easier to pinpoint redundancies, understand every single place your IT spend is going, and pinpoint waste and risk.
Going beyond discovery
Visibility doesn’t end there, though. No different than how you’d know a particular room will require more cleaning due to its usage, application usage is equally important.
Understanding the usage of applications at your organization, in real-time, makes it easy to see where licenses are underutilized or abandoned. This is critically important as you undertake the process of application rationalization (more on that next).
Usage alone will also only get you so far. Your team needs to have an easy way to understand the cost of each application to compare against that usage. How much is each license costing your company, and is that cost justified by how often it’s used?
Some tools, such as SaaS management platforms, have a solution for this problem. By integrating with each application, including financial systems such as Netsuite, they automatically pull usage and cost into one, centralized location. This real-time, single source of truth makes it easy to compare the total cost against the usage.
What is application rationalization?
With all of your SaaS information centralized and easily accessible, you can leverage it to make data-driven decisions. That’s important, as 73% of CIOs say their organization does not have a strategic framework for evaluating app rationalization and license usage.
Application rationalization, put simply, is an evaluation process for applications. It helps IT understand what apps to keep, cease, or expand in usage. It’s like going through your home and deciding which clothes and clutter you’re ready to get rid off.
In practice, it’s a multi-step process that leverages the information you’ve gathered to make educated decisions to save costs and reduce redundancies across your organization.
How to use data to compare applications
This involves finding the difference between widely used applications and applications used rarely or by small groups of employees. Once you have the required information on usage rates and license amounts, savings opportunities will reveal themselves. It’s also important to understand the purpose of applications and how they’re used by respective teams to ensure that you’re not cutting impact along with cost.
Some solutions make this process easy, grouping applications by their type and purpose. Maybe you’re paying for two similar project management applications, such as Monday and Asana. Viewing the usage of each one side-by-side lets your IT team see which app is used more often, compare their costs, and helps you come to a data-driven decision on which application to cut.
How to optimize SaaS application licenses
No different than those old t-shirts in the back of your closet, application licenses can quickly grow dust if not used efficiently. Except, in the case of these licenses, that dust is an added cost for your organization.
Another important part of application rationalization involves license management. Rather than buying a new wardrobe every season, let’s up-cycle — it’s time to reclaim underutilized licenses and re-assign them.
Once you have usage information, it’s easy to reach out to employees who rarely use their licenses for certain apps and ask if your team can reclaim them for future use (some solutions even let you automate this process). From there, you can recycle existing licenses for new employees and even reduce your license count when the opportunity arises.
This active optimization helps clutter from starting in the first place, saving you time and cost now — and lessening the need to spring clean SaaS sprawl in the future.
Turning practice into a process
While cleaning out the clutter in your home may only make sense seasonally, the practice of optimizing your SaaS stack is an ongoing task that grows easier the more consistent your actions become — turning into an almost automated process over time.
Some SaaS Management Platforms make this easy, by providing automated recommendations for opportunities to cut costs through notifying you of underutilized licenses and redundant apps.
Even outside of automation, your team can more easily track spending when you’re gathering real-time information in a centralized location. Having the opportunity to view your total SaaS spend in one easy place, versus collecting that information manually once or twice per year, makes it easy to see when you’re rising above your allotted IT budget. It also makes it way easier to collaborate with Finance, Procurement, and other interested stakeholders on a consistent basis.
After all, the easiest way to clean out clutter and wasted spend is to avoid it building up at all — the same rings true for your SaaS stack.
Uri Haramati is co-founder and CEO of Torii, whose automated SaaS management platform helps modern IT drive businesses forward by making the best use of SaaS. A serial entrepreneur, Uri has founded several successful startups including Life on Air, the parent company behind popular apps such as Meerkat and Houseparty. He also started Skedook, an event discovery app. Uri is passionate about innovating technology that solves complex challenges and creates new opportunities.
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