Unlocking the full potential of your SaaS investments through SAM maturity
Unlocking the full potential of your SaaS investments through SAM maturity
With 32% of SaaS spend estimated to be underutilised or wasted, discover how a mature SAM program can help avoid any unnecessary overspend.
Published on 29th April 2024
No matter where you are in your SAM program maturity, you’re likely focusing on optimizing your software vendor relationship. According to the latest Flexera 2023 State of ITAM Report, negotiating contract terms with software vendors is a key practice for half of organizations in managing their SaaS. As asset managers prepare for renewals and major contracts, it’s crucial they highlight user adoption and identify optimization opportunities, while also developing strategies focused on reporting and governance to maximize their investments.
A whopping 32% of SaaS spend is estimated to be underutilized or wasted (Flexera 2023 State of ITAM Report). With SaaS solutions from Microsoft, Salesforce, ServiceNow and Adobe ranking among the top ten vendors by spend, SaaS contracts are focus points attention for SAM teams.
Myth buster: SaaS contracts are un-optimizable?
One misconception among SAM professionals is that SaaS contracts are inflexible. However, by closely managing these contracts you can gain significant value, creating cost savings or cost avoidance. Sometimes, there’s a lack of support from management or executive sponsorship where SAM teams identify optimization potential or see there can be something improved—in order to gain executive buy-in and build your SaaS optimization muscles, it’s important to show the value your program can deliver.
Main challenges SaaS management addresses
Two key issues in SaaS management are wasted or underutilized spend and shadow IT. On average, a third of your SaaS licenses are underutilized or unused. Instead of aiming to save 30% on SaaS, a more realistic starting point is saving five or ten percent, as these savings will compound over time.
Shadow IT is a term that refers to the proliferation of SaaS applications, where the IT asset management teams haven’t identified all used applications within their environments. Enterprise organizations can average eight to ten new SaaS apps monthly. With that influx, how do you see all the apps that users are actually using?
Shadow IT creates additional issues, such as connecting to some of the security cloud app brokers to show all the SaaS apps that users are logging into. Shadow IT also creates complications into seeing SaaS applications that may have been expensed on a credit card or freemium applications (that IT asset managers don’t have visibility into). Lastly, many employees can still log into their SaaS applications after they’ve left the organization, presenting a huge security risk to organizations.
Navigating the complexity of SaaS ecosystems
SaaS platforms have evolved into a complex ecosystems, with licensing and contracting differing for each and every version and vendor. This complexity requires asset managers in various platforms like Salesforce, ServiceNow, Microsoft, and Adobe, while also interpreting complicated commercial terms. Manual analysis of contractual and legal facets, coupled with data extracted from SaaS platforms, is nearly impossible. Additionally, there’s no standard for the data SaaS vendors report in their API, complicating subscription allocations and usage tracking.
SaaS maturity evolution
Organizations struggle with SaaS management not due to a lack of understanding, but because each organization is at a different point in its management and ITAM journey.
Some are just getting started with ITAM, with a heavy focus on on-premises software and hardware and haven’t yet thought about managing their SaaS applications. Others have been doing it for years and they have a more advanced understanding of their capabilities. Below is a SaaS maturity model that can be used as a simple view into where your organization is and the steps to achieve the next level of growth.
Incremental steps (aiming for 5-10 percent savings) toward delivering business outcomes, rather than aiming for significant cost recoupment (aiming upwards of 30 or more percent), are crucial for realizing early value realization.
Companies new to SaaS management typically operate at the ad hoc level, employing inconsistent approaches across major SaaS vendors. However, with potential value becoming evident, organizations can save money through manual processes. As executive sponsorship increases and processes streamline, you can start to see real value in managing SaaS effectively.
As your organization matures their SaaS management, you can easily identify licenses that are on the shelf, and licenses that are seldom used or never used. Automation enables constant optimization, by having licenses in the available pool when new hires or other team members require a license. Your SAM program can go to an even deeper level of determining licenses in use that can qualify to be downgraded to a lower cost license, recouping investment. Additionally, organizations can start identifying overlapping SaaS functionality used throughout the various business units, and either eliminate redundant applications or realize improved license economics through volume-based pricing and consolidation of contracts.
At the highest level of this value-driven model, ITAM is delivering investment and value back to the business units by making commitments to confidently lower the costs year-over-year by a certain percentage. This is possible by having policy-driven activities that are measured through quantifiable business outcomes you can demonstrate and repeat over time.
Accelerating SaaS management maturity
Let’s recap: optimizing the software vendor relationship is essential to any ITAM organization. SaaS platforms have evolved into a complex ecosystems, with licensing and contracting differing for each and every version and vendor; by closely managing these contracts you can gain significant value, creating cost savings or cost avoidance. Organizations often struggle with SaaS management not due to a lack of understanding, but because each organization is at a different point in its management and ITAM journey; as your organization matures their SaaS management, you will more easily identify licenses that are on the shelf, and licenses that are seldom used or never used.
