The latest SaaS Spend Management Report from G2 is out. In this article, we’ll examine some of the report’s top leaders, consider emerging trends, and discuss the importance of spending management in cloud applications.
Note: Get your copy of the report here
What is SaaS Spend Management?
Fiscal health is like physical health.
It requires attention and care. But, it also requires some critical feedback and visibility.
Without the occasional checkup and bloodwork, it’s hard to know what changes to make for your health. In the same way, without critical data, it’s hard to maintain the fiscal health of your company. Unfortunately, cloud apps make it hard to centralize data.
Cloud apps make it hard to centralize data.
That’s because apps are often unsanctioned, unmonitored, and even unknown to you. Teams like Finance, Procurement, and IT have parts of the story, but it’s scattered and incomplete.
Just like that fractured story, SaaS Spend Management isn’t cohesive. It’s not a single tool but a series of activities first dependent upon examining hidden data.
SaaS Spend Management can include:
- License renewal management
- License optimization
- Centralized procurement process
- Virtual card management
- Vendor negotiations
- Application lifecycle management and rationalization
- App Comparison
However, these capabilities need the data hiding within SaaS apps.
With that in mind, here are three emerging trends in the G2 that relate to the constant fight to extract data and take insightful financial actions.
Three Trends for SaaS Spend Management
Trend 1: The Leaders are Often Complimentary
Typically, reports such as these offer very similar products within a category.
For example, G2’s SaaS Operations Report only lists tools that automate cloud app tasks. Companies probably only select one of these platforms to use in their organization.
The SaaS Spend Management grid is very different. Many of the top vendors are complementary. Companies might use two or more of the tools and gain distinct advantages.
For example, the two leading vendors on the SaaS Spend Management grid are:
- Torii
- Mesh Payments
Torii is a SaaS Management Platform that is best for:
- Complete visibility into apps (sanctioned and shadow IT)
- SaaS operations automation
- Optimizes license management
- Enhances security and compliance
- AI Contract renewal management
Mesh Payments is best for:
- Automates manual payment tasks
- Streamlines expense management
- Assign virtual and physical cards
- Instant transaction reconciliation
These are different tools with different priorities.
How can two very different tools fall into the same G2 category?
That question leads us to our next trend.
Trend 2: SaaS Spend Management Isn’t a Platform (Yet?)
Some platforms perform many tasks considered SaaS Spend Management, but no single tool currently addresses the entire process. As we’ve alluded to, this is because cloud apps are adopted in a fractured manner.
Cloud apps used to be a novelty, a unique delivery mechanism for some apps like Salesforce and Concur. But today, our work revolves around these apps.
In fact, almost every business task today incorporates or requires a cloud app, so different teams and individuals constantly test and adopt new tools. As a result, modern organizations have adopted decentralized apps that circumvent the sanctioned procurement channels.
This unsanctioned and decentralized adoption isn’t necessarily wrong (many tools are incredibly productive), but it does put kerosene on the flames of budget creep and shadow IT.
With that decentralized adoption, we see the importance of our third trend.
Trend 3: The Future of Spend Visibility Depends on App Visibility
Companies such as Airbase, Mesh Payments, and Tropic provide essential spend management tools but can’t discover unsanctioned apps. In fact, in our recent SaaS Benchmark Report, we found that the average company has approximately 600 apps in its SaaS stack. Most of those slip through conventional spend tool visibility.
App visibility requires more than spend visibility.
Financial tools won’t cut it if you want to uncover your SaaS sprawl. You need a method that discovers every app’s digital footprint.
Why Does Full Visibility Matter?
Spend visibility provides immediate financial impact, but app visibility is also essential for long-term financial health. Employees don’t adopt tools because they are bored; they do it because they need something. That has a few implications:
- The tools you pay for aren’t good enough.
No one will go to finance and say, “I don’t use that tool anymore.” Instead, they use sanctioned tools less and fill the gap with unsanctioned tools. And while the new tool might be better, the old one still impacts your financial health.
Early SaaS detection through a SaaS Management Platform, like Torii, allows you to get data faster, which could be critical with a contract renewal around the corner.
- You lack leverage in vendor negotiations.
Vendor negotiation leverage can come in a few forms:
- Benchmark data—how does the price compare to what other customers see
- Use data—how often does our company use the tool
- Alternative app adoption data—do we see a trend of employees self-selecting alternatives
Most spend management tools do the first. Some might help with the second. However, only SaaS Management Platforms can tell you the third form of insight. This data is the goldmine that vendors don’t want you to see.
Vendors want you to think that poor adoption is a failing of the employees, not their tool.
But, if employees drop one tool for another, it undermines that case.
- You pay for idle license seats.
Every organization pays for idle licenses. Yet, some pay far more than others. Our recent SaaS Benchmark Report found that some of the most expensive apps see license non-utilization rates of 30%, 40%, or even 50%+. That means that half of your expensive Salesforce licenses might go completely unused.
Spend visibility shows you what you pay for, and app visibility shows you what you use.
That’s why, within Torii, we have tools like the license reclaim workflows. These workflows automatically trigger after disusing and slacking the user, asking them to reclaim their seat. That type of action goes beyond spend management and improves resource allocation.
Conclusion
As the G2 report shows, SaaS Spend Management is a complex yet crucial ingredient for maintaining an organization’s fiscal health. But to accomplish spend management, you need spend and app visibility.
To accomplish that visibility, remember:
- Utilize the right tools
- Adopt a Platform Approach
- Prioritize App Visibility
By focusing on these trends and adopting a holistic approach to SaaS Spend Management, organizations can gain the insights needed to make informed decisions, optimize their SaaS investments, and confidently negotiate vendor contracts. For a more in-depth look at how to achieve these goals, consider exploring Torii’s comprehensive spend management and app visibility features.
