The growing market and adoption of SaaS tools has significantly impacted the way businesses purchase, renew and manage their cloud software assets. While years ago business leaders submitted requests to IT or procurement for purchasing a specific software, nowadays SaaS tools can be purchased by employees with a single click. But, the common practice of automated SaaS renewals that are expensed by employees are bringing up the need for a complete strategy for managing SaaS subscriptions.
The organizations’ shift to using SaaS is a trend that is expected to continue, due to several reasons: the low cost of SaaS solutions, the ability to use and evaluate the solution prior to purchasing, the ease of deployment and the ease of scaling the solution upwards, if extra license seats or features are needed.
However, this SaaS usage trend presents a challenge for business leaders to prove the value and ROI of the tool, and prevent risks associated with the SaaS investment. Among the key challenges is also handling automated renewals, so they don’t incur wasted costs for unused or underused licenses. Hence, a sound renewal management strategy should be created and followed that would:
A sound SaaS renewal strategy should cover the following topics:
Here the key task is to find out all SaaS software purchased and used throughout the organization. This includes enterprise-wide solutions like Office 365, Salesforce, etc or apps purchased by business units, departments, employees, etc
The ultimate goal here is to figure out the scope of the corporate SaaS investment and the opportunities to eliminate redundant, functionally overlapping or unneeded subscriptions. It is estimated that the SaaS used in companies are 2 or 3 times more than what the ITs presume!
This app discovery process, however, requires collaboration between the different departments in the organization, as well as the involvement of the employees. The record collected is often put into a spreadsheet format and may take a lot of time to build. Only to understand that this record is out of date a week later.
Due to this time-intensive effort, many organizations are turning to platforms for managing SaaS subscriptions like Oveo, which help to automate their SaaS discovery, get visibility and optimize their SaaS spend. Oveo would also help in maintaining this SaaS inventory overview completely current at any given time, by directly integrating with accounting systems.
After visibility on the full SaaS inventory has been achieved, an owner should be assigned to each app and data collected about the level of its usage. This information may be collected from the expense records and from the tool’s admin dashboard, if there is such.
Getting visibility on the app consumption metrics might be more difficult, though. Even if some vendors provide a usage dashboard, the data is often not reliable and non-standardized.
By using a platform for managing subscriptions, companies can get detailed and standardized insight on the usage of each tool they are paying for. On average, about 40% of the tools get underutilized! A follow-up action should then take place, by rightsizing the underused subscriptions and eliminating or re-assigning the ones that are abandoned.
The above process requires active collaboration with business leaders, to find out who owns the SaaS investment decisions in their unit, whether the utilization of the apps owned by them justify the cost, what applications have duplicate features and can be consolidated, etc.
After getting visibility on the SaaS toolset and collaborating to identify the ownership and usage for each app, it is time to set up a reliable process for ongoing management of the renewals. With a renewals management plan, ITs can proactively review the software usage and license details and decide whether to renew, downgrade or terminate the license about to be renewed. A decision can also be taken to start negotiations for better terms with the vendor.
It is essential to hold regular meetings with the SaaS ownership stakeholders and plan what actions are needed prior to any renewal due in the following 6 months.
After gaining visibility on the SaaS stack, identifying usage and ownership and setting up a renewal schedule, the last step is formally documenting the entire process and then executing it on an ongoing basis.
The process documentation should cover:
Having the entire process documented would allow technology leaders to efficiently collaborate with other stakeholders in the process, proactively manage the SaaS stack and significantly optimize the software spend.
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