Minimizing SaaS subscription waste (Image by Octobits)
Octobits Blog – Why do we need to know the strategy and tips for minimizing SaaS subscription waste?
First things first, minimizing SaaS subscription waste means optimizing financial expenditure.
Yup, let’s see the facts. According to a 2024 report by Zylo, the average organization wastes $18M in unused SaaS licenses every year.
So, are you still in the business of wasting money with no results? If not, let’s discuss the details of how to face up to this reality.
What is SaaS Subscription Waste?
SaaS subscription waste happens when organizations spend money on software they don’t use or don’t need.
This often goes unnoticed because it’s easy to get new subscriptions and insufficient oversight leads to inefficient resource use.
The main problem is that companies have software licenses that don’t help them achieve their business goals.
These licenses might not be used at all, or they might be used with other tools that do the same thing.
Or they might be too complex for users or tied to former employees who don’t need them anymore.
This shows the need for better management practices and better visibility into how companies use software.
Companies should only invest in SaaS products that help them achieve their goals.
How to Identify SaaS Subscription Waste?
The first step in identifying SaaS subscription waste is to clearly define your organization’s SaaS ecosystem.
Yup, you should regularly audit all your SaaS subscriptions to make sure they align with your business needs.
This process involves tracking how much and how often people use the software and what they pay for it. This helps us identify inefficiencies.
Second, implement a centralized SaaS management system to give you better oversight.
SaaS management platforms can really help you keep track of which services are being used, not being used, or not being used at all.
These platforms provide the metrics you need to evaluate SaaS waste effectively, such as monthly active users, feature utilization rates, and login frequency.
Third, encourage open communication channels for employee feedback on their tools and potentially redundant applications.
It’s also a good idea to negotiate flexible contracts that can adapt to your company’s changing needs.
This way, you can scale up or down as needed and reallocate resources as necessary.
Hence, we want you to read details about SaaS metrics in “7 SaaS Metrics That Matter: Tracking Your Key Performance Indicators.”
Strategies to Reduce SaaS Costs
To cut SaaS costs in your company, you need to take a few steps in the right direction. Each one should build on the last to make sure you’re managing SaaS in the best way for your business.
The first step is to conduct regular audits. This helps organizations ensure that their SaaS licenses are still aligned with their current business needs and identify any subscriptions that they don’t use or that they could get rid of.
This auditing process not only prevents companies from spending money on unnecessary items but also shows them ways to make their spending more efficient.
If you centralize the management of these subscriptions through a dedicated tool or platform, you can streamline the process and give everyone in the organization a single point of visibility.
This centralization helps businesses keep better control of their SaaS spending by making it easier to track how much they’re using and spending.
When all the data is in one place, making more informed decisions is easier, which helps you better use SaaS resources.
Plus, tiered subscription models let you adjust services based on actual usage, so you don’t overpay for features or capacities you don’t need.
This approach requires a clear understanding of how the organization uses the system, which can be gathered from the central management system.
With this info, organizations can go into SaaS contracts with a stronger hand.
Good negotiation can get you some serious cost savings by getting better terms or volume discounts tailored to your organization’s specific needs.
This all-in-one approach ensures that SaaS spending directly contributes to the organization’s broader strategic goals, so you get the most bang for your buck while still being able to adapt to changing business demands.
Best Practices in Managing SaaS Subscriptions
It’s key to get SaaS subscriptions right if you want to keep your company running smoothly and keep costs down.
According to the “How to Eliminate Toxic Spend on Large SaaS Estates” by NPI, a comprehensive approach to SaaS management involves several key strategies.
Clear Policies for SaaS Management
It’s important to have clear, comprehensive policies in place to effectively govern SaaS.
The policies should spell out clearly how to buy, use, and get rid of software.
This makes sure that every software purchase is worth it, fits with the company’s overall goals, and follows the rules.
That way, we can avoid wasting money and having too many copies of the same software.
NPI says that one of the problems with SaaS purchasing is that it often bypasses traditional IT and procurement processes. This can lead to increased spending that isn’t monitored.
Employee Training on Software Management Implications
Training programs are roadmaps to educating employees about the financial implications of poor software management.
Ideally, you should include the costs of maintaining subscriptions that aren’t being used or aren’t needed.
When employees understand how their actions affect software costs, it creates a culture of accountability and responsible use.
This is especially important because SaaS management is often spread across different departments and the people making these decisions have different levels of skill.
Advanced Analytics for SaaS Usage Monitoring
Using these fancy analytics tools can really help you manage SaaS subscriptions better.
They’ll give you a good idea of how people are using the software across the company.
These tools help determine which subscriptions are not being used much, are not needed, or are just taking up space.
This data-driven approach helps you make smart decisions about renewing, downgrading, or cancelling subscriptions, which helps you spend your software budget more wisely.
To complete your reference, kindly refer to “Best Tools for Automating SaaS Subscription Processes: Future of Profit.”
Integration of SaaS Management Solutions
It’d be a good idea to get SaaS management platforms integrated into the current IT infrastructure so you can keep an eye on all the SaaS subscriptions.
These platforms give IT admins a single, easy-to-use view of all software usage, which makes it easier for them to manage licenses and streamline operations.
Centralization helps to reduce the risks associated with shadow IT—where individual departments make purchases without approval—and improves both security and cost efficiency.
Integrating these platforms helps us get a better view of what’s going on, which is important because many standalone SaaS management tools aren’t very accurate or even biased towards the vendors.
Proactive SaaS Spend Reduction Strategies
The white paper emphasizes the necessity of proactive strategies to minimize toxic spend, which includes the accumulation of costs due to unneeded or underused licenses.
These strategies involve regular assessments of the SaaS estate to right-size license allocations based on actual usage, often revealing opportunities to downgrade or eliminate certain subscriptions without affecting operational functionality.
What Can Octobits Do for You?
As you see, managing a company’s software subscriptions can feel like a juggling act.
It’s easy to lose track of who’s using what, whether you’re paying for features you don’t actually need, or even if you’re still paying for employees who have moved on.
So, we at Octobits bring a personal assistant for your company’s SaaS management.
You’ll see exactly who’s using which tools, how often, and how much each subscription is costing you. It’s like revealing hidden costs and inefficiencies.
But Octobits doesn’t stop at just providing insights. It empowers you to take action.
Armed with this detailed information, you can confidently make decisions about which subscriptions to optimize, downgrade, or even cancel.
It’s about giving you control, helping you streamline your software spending, and ultimately, saving your company money.
Alright, that’s enough. We don’t want to sugarcoat it. So, please run a background check. We’re here for you 24/7.
Conclusion
So, it’s all about cutting down on unnecessary expenses and making sure that every software investment is a strategic asset.
This isn’t just about cutting the budget. It’s about making sure your software spending aligns with your business goals, getting the most out of each tool, and making sure your operations run as efficiently as possible.
If you’re ready to take control of your software spending and optimize your SaaS portfolio, start utilizing the tips and strategies for minimizing SaaS Subscription waste above.
