Octobits Blog – The rise of SaaS apps in businesses has brought a new challenge; SaaS waste. So, with all these great advantages come some big questions; how to reduce SaaS waste?
If you don’t manage and use your SaaS subscriptions properly, they can really hurt your company’s bottom line and operational efficiency.
So, why are we still here? Let’s dig into the details of how to manage SaaS waste properly.
What is SaaS Waste?
SaaS waste is when you spend money on SaaS subscriptions you don’t need or that you don’t use.
SaaS waste happens when an organization spends money on software-as-a-service (SaaS) subscriptions and they aren’t being used.
This can happen for a few different reasons, like having too many similar apps, not using some of the licenses you have, and buying software without the IT department’s knowledge or approval.
This waste leads to significant financial inefficiencies and security risks. Recent studies show just how big this problem is.
The “2024 SaaS Management Index Report” from Zylo says most companies waste about $18 million a year on unused SaaS licenses. For big companies, that number can be as high as $127 million.
And it gets worse because many companies only use about half of their licensed SaaS applications.
SaaS waste can take many forms:
- Unused Licenses: Paying for licenses even if they aren’t being used by employees.
- Duplicate Subscriptions: Having a bunch of tools that do basically the same thing.
- Feature Bloat: Purchasing plans with features that aren’t needed.
- Zombie Subscriptions: Subscriptions that keep renewing even when they’re not being used.
For a starter guide, kindly read “Don’t Let Your SaaS Budget Go Up in Smoke: How to Identify SaaS Waste.”
Identifying SaaS Waste in Your Organization
To make the most of SaaS, you can start by spotting where it’s being wasted within your organization.
Start by doing a full audit of all your SaaS subscriptions. This means getting a list of all your SaaS subscriptions, including the costs, usage data, and contract details.
SaaS management tools are really useful for keeping track of how applications are being used, who is using them, and for what.
This visibility helps you spot licenses you’re not using, which is a big source of waste.
Also, check for any apps you’ve got that are basically the same. A lot of companies have a bunch of tools with similar features, which adds to the cost.
Another thing to look out for is shadow IT, where software is bought without the IT department’s approval. This can lead to security risks and inefficiencies.
Also, it’s a good idea to review the contract terms, especially the auto-renewal clauses. This can help you identify opportunities for negotiating or canceling unused subscriptions.
Strategies to Reduce SaaS Waste
To cut down on SaaS waste, you’ve got to take a strategic approach to managing and optimizing your software investments.
This means doing thorough audits, consolidating tools, and optimizing usage to cut costs and improve operational efficiency.
Conducting a SaaS Audit
TThe first thing to do to cut down on SaaS waste is to do a proper audit. A SaaS audit is basically a deep dive into all the SaaS subscriptions your company has.
This process involves getting a complete list of all SaaS apps, and then documenting their costs, usage data, and contract details.
Tools helpful in tracking how often each app is used and by whom can help identify underutilized or unused licenses.
Also, a full cost assessment looks at more than just subscription fees. It includes things like training and support costs too.
Flexera’s “Maximize the value of your SaaS applications” is a good reference for making the most of your SaaS usage to support your business stakeholders.
This process is all about rightsizing subscription levels based on actual usage. It helps uncover unused or redundant applications so that all expenditures align with actual usage.
Consolidating SaaS Tools
We need to consolidate to reduce redundancies and optimize costs. Absolutely. Many organizations suffer from tool sprawl, which leads to unnecessary expenses.
If you can identify areas where different tools do the same thing and consolidate them into one, you can save a lot of money. Another benefit of a centralized SaaS management system is that it makes it easier to oversee and control things.
Also, it’s important to negotiate with vendors for better pricing and flexible contracts that align with actual usage patterns.
Think about streamlining the SaaS portfolio to cut down on duplicate apps and using your buying power with strategic vendors.
This process helps us optimize our subscriptions based on usage and secure valuable data through automated processes so that we can remove access and data when employees leave the organization.
Optimizing SaaS Usage
Optimizing SaaS usage means making sure all software tools are used to their full potential. The “How to Eliminate Toxic Spend on Large SaaS Estates” by NPI Financial gives you some great strategies for making the most of your SaaS licenses.
Training employees to use SaaS tools efficiently can help cut down on misuse and boost productivity. It’s good to review SaaS usage regularly so you can make informed decisions about renewals and cancellations.
If you can find SaaS solutions that integrate well with existing infrastructure, you can streamline workflows and enhance efficiency.
You might want to think about automating the deprovisioning of inactive subscriptions and rightsizing SaaS subscription levels based on usage data. This approach helps you identify waste from unused or inactive subscriptions.
Another good reference you need to read is “Your Silent Budget Killer: How to Stop the Leaks of SaaS License Waste.”
SaaS Management Best Practices
The best practices are crucial for ensuring that SaaS tools are used efficiently, securely, and in alignment with the organization’s goals.
Developing clear policies for SaaS procurement and usage helps prevent shadow IT and ensures compliance. Standardization of these policies promotes appropriate software use and procurement practices.
These policies should be well-documented and communicated to all team members to encourage cooperation and compliance.
Gathering employee feedback provides insights into software needs and experiences, which aids in making informed decisions about tool adoption and retention.
For example, regularly asking employees about their experience using SaaS tools can help identify unnecessary tools and consolidate them to streamline operations.
Leveraging AI and automation tools streamlines SaaS management and reduces waste by automating license management, identifying unused subscriptions, and optimizing costs.
Tools like Octobits offer features that help IT teams discover, optimize, and secure their SaaS applications.
These platforms provide visibility into the entire SaaS ecosystem, helping to identify redundancies and areas of overuse, thus enabling data-driven decisions and efficient management of software resources.
Conclusion
So what’s the bottom line? Regular audits, consolidating redundant tools, and adopting best practices can lead to big cost savings and enhanced efficiency.
Leveraging platforms like Octobits makes it even easier to manage your SaaS, giving you deep insights and control over your software investments.
But no matter how good the support systems, tools, and best practices are, don’t be afraid to do your own homework.
For a more in-depth understanding of how to reduce SaaS waste, it’s always worth doing some further research internally.
