Has your SaaS spending spiraled out of control?
You’re not alone. Managing SaaS spend has become a daunting challenge, with 61% of IT professionals considering it the second-highest threat to their organization’s long-term success. Despite efforts to control costs, many organizations face surprise SaaS renewals, wasted budgets, and the constant anxiety of explaining overspending to the CFO.
Why does SaaS spend management feel so impossible?
In this article, we’ll explore the three primary reasons behind this struggle and how understanding them can help you regain control over your SaaS expenses:
- SaaS is Everywhere
- No Application Ownership
- Poor Communication Between Finance, Procurement, and IT
Fortunately, these challenges are not insurmountable. By delving into each of these issues, we can uncover strategies to overcome them and bring your SaaS spend back under control. Let’s begin by understanding how we arrived at this point.
Three Reasons Why SaaS Spend Management Feels Impossible
SaaS is… Everywhere
One of the main reasons why SaaS spend management feels impossible is the rise of self-selection in the modern workplace—shadow IT. Employees—including leadership—feel empowered to pick and adopt their own applications. With just a company email and a web browser, anyone can sign up for new tools without going through traditional procurement channels or IT oversight.
While this empowerment fosters innovation and agility, it places IT teams in perpetual reaction mode, scrambling to address issues they had no opportunity to prevent. The lack of centralized control leads to several costly problems:
- Duplicate Applications and Overlapping Functionality: New apps often replicate the capabilities of existing tools you’re already paying for. This redundancy means you’re incurring additional expenses for tools that offer no new value, inflating your SaaS spend unnecessarily.
- Idle Licenses and Wasted Resources: Studies show that most companies have about 30% of their software licenses left unused. These idle seats represent wasted capital that could be better allocated elsewhere, directly impacting your bottom line.
- Knowledge Silos and Reduced Collaboration: When departments use different or incompatible applications, it creates silos that hinder cross-functional teamwork and data sharing. This fragmentation not only affects productivity but also leads to inefficiencies that cost time and money.
- Increased Security Risks: Unapproved applications may not comply with your organization’s security protocols, exposing sensitive data to potential breaches. IT teams are often unaware of these vulnerabilities until it’s too late to mitigate them.
The resulting effect of uncontrolled app adoption is a huge drain on your organization’s budget and a massive weight on IT’s shoulders. Without basic visibility and oversight, SaaS spending spirals out of control as redundant and unused tools pile up, making effective management seem impossible. One of the main reasons why Saas Spend Management feels so impossible is because IT can’t see the apps that need to be managed.
Related: Learn about Torii’s AI-Powered SaaS Discovery
No Application Ownership
Another major reason SaaS spend management feels impossible is the lack of clear application ownership. When no one is assigned to manage a specific app, critical responsibilities fall through the cracks. Including, but not limited to, making sure people actually use the app!
The social-psychology fans will recognize the “bystander effect”. Essentially, everyone assumes someone else is handling the situation, so no one does. Assigning clear ownership for each application ensures accountability, optimizes usage, and reduces unnecessary spending, making SaaS management more manageable.
What does an app owner do?
It differs by organization, but app owners can help to:
- Monitor usage and perform occasional license “clean up” to ensure seats are assigned to active users.
- Assist with renewals and contracts so finance and procurement have a trusted source of knowledge when the renewal rolls around.
- Aid with security and compliance
By establishing clear ownership, you create accountability and empower individuals or teams to manage applications proactively. This not only helps in controlling costs but also enhances operational efficiency and security posture.
Related: Learn about Torii’s SaaS Spend Management
Poor Communication Between Finance, Procurement, and IT
The third reason SaaS spend management feels impossible is poor communication between finance, procurement, and IT departments. When these teams operate in silos, several problems emerge:
- Disconnected Processes: Decisions by one department may not align with others, leading to misaligned purchases and implementations.
- No Single Source of Truth: Inconsistent data tracking makes it difficult to monitor SaaS subscriptions and costs, resulting in overlooked renewals and unexpected expenses.
- Inefficient Spending: Without collaboration, procurement might approve tools that don’t meet technical needs, and finance may not fully understand the scope of SaaS expenditures, leading to overspending.
This lack of coordination results in unmanaged SaaS sprawl and uncontrolled costs, making effective spend management nearly impossible.
Bridging the Communication Gap
To overcome this challenge:
- Establish Cross-Functional Collaboration: Encourage regular meetings between finance, procurement, and IT to align on SaaS strategies and budgets.
- Create a Centralized SaaS Inventory: Develop a shared repository accessible to all departments, ensuring up-to-date information on applications, licenses, and costs.
- Develop a Plan for Renewals: Renewals are the single most important moment for managing spend. Ensure that each team is part of the planning process.
By improving communication and collaboration among these key departments, organizations can gain control over SaaS spending, eliminate redundancies, and ensure everyone works toward efficient and effective SaaS management.
Related: Learn how Torii improves Vendor and Contract Management
How To Make Progress on SaaS Spend Management
Managing SaaS spending may feel like an impossible task, but with the right strategies and tools, you can regain control and turn this challenge into an opportunity to finally address the SaaS sprawl in your organization.
It starts with discovery.
The first step toward SaaS Spend Management is unveiling which apps employees actually use. A SaaS Management Platform like Torii is designed to discover all your shadow IT so you can:
- Identify redundant tools
- Compare usage data with spending data
- Prepare for renewals
- Improve app adoption
- reduce license non-utilization
- Gain peace of mind
Ready to Transform Your SaaS Management?
Discover how Torii can help you regain control over your SaaS ecosystem. Request a demo today and take the first step toward efficient, effective, and hassle-free SaaS spend management.
