Gain control over growing SaaS usage and spend

 

 

Steps to Gain Control Over SaaS Usage and Spend:

1. Identify and Inventory SaaS Applications:

  • Data Collection: Use finops.heeddata.com or other cloud cost management tools to gather data on all SaaS subscriptions, licenses, and applications used across the organization.
    • This should include both corporate-approved and shadow IT (applications that teams have subscribed to without formal IT approval).
  • Tagging and Categorization: Ensure all SaaS applications are tagged properly for each department, project, or team, enabling you to track and allocate costs accurately.

2. Monitor SaaS Usage and Consumption:

  • Tracking SaaS Usage: Analyze the actual usage of each SaaS tool. Many applications provide usage reports (e.g., Microsoft 365, Salesforce, Slack). Tools like finops.heeddata.com can help consolidate this data to understand:
    • License utilization: Are all licenses being used? Are there idle or underutilized accounts?
    • Feature usage: Are teams using the advanced features that justify premium pricing, or would a lower-tier plan suffice?
  • Rightsizing SaaS Licenses: Regularly review and optimize licenses based on actual usage. This ensures you’re not overpaying for unused or unnecessary features.

3. Centralize SaaS Procurement and Budgeting:

  • Consolidated View of SaaS Spend: Centralize the procurement of SaaS applications through a single team (e.g., IT or finance) to avoid redundant purchases and negotiate bulk discounts.
    • Vendor Management: Track which vendors are providing SaaS services and review contracts regularly. Use this data to negotiate better terms based on usage or combine subscriptions into a single enterprise agreement where possible.
  • Budget Allocation: Use FinOps tools to allocate SaaS spending to the appropriate business units or projects. Set budgets for each department and track actual SaaS spending against these budgets in real-time.

4. Implement Governance for SaaS Adoption:

  • Policy Enforcement: Establish policies that require teams to seek approval from IT or procurement before adopting new SaaS tools. This helps maintain visibility over what tools are being introduced.
  • Subscription Approval Workflow: Use automation (possibly integrated within FinOps or cloud cost management platforms) to create a subscription approval process. This ensures that all SaaS subscriptions align with corporate policies and that costs are known upfront.

5. Optimize SaaS Costs and Eliminate Waste:

  • License Optimization:
    • Identify unused or redundant subscriptions: Deactivate accounts that are not in use.
    • Reassign underutilized licenses: Instead of purchasing new licenses, reassign unused licenses within the organization.
  • Renegotiate Contracts: Review usage data regularly to negotiate lower prices or switch to more cost-effective plans. For instance, if teams are only using basic features, consider downgrading to a lower-tier subscription.
  • Subscription Lifecycle Management: Implement automatic renewal reminders to prevent auto-renewal of unused or unnecessary subscriptions.

6. Gain Real-time SaaS Spend Visibility:

  • Dashboards and Reporting: Set up real-time dashboards in finops.heeddata.com that provide visibility into:
    • Total SaaS spend across the organization.
    • SaaS spend broken down by department or team.
    • License utilization and wasted spend (e.g., unused licenses, multiple subscriptions for the same tool).
  • Alerts and Notifications: Set up alerts to notify teams or stakeholders when SaaS spend exceeds allocated budgets or when a contract is about to renew. This helps in controlling costs and avoiding unnecessary renewals.

7. Ongoing Monitoring and Improvement:

  • Continuous Audit of SaaS Tools: Schedule regular audits to review whether the SaaS tools in use are still relevant and whether better or more cost-efficient alternatives are available.
  • User Feedback: Gather feedback from teams about the tools they’re using to ensure they still provide value. Discontinue subscriptions that no longer meet business needs.
  • FinOps Culture: Foster a FinOps culture where every department understands the importance of tracking and optimizing SaaS usage and spend.

Example Case Study for Controlling SaaS Usage:

Company: Mid-size retail company with growing SaaS subscriptions for various business operations.

Problem: Unchecked growth in SaaS spend and underutilized licenses across multiple departments. Lack of visibility over what tools were being used and by whom, leading to waste and overspending.

Solution:

  • Implemented a centralized SaaS procurement policy and started tracking all SaaS applications through FinOps tools.
  • Regularly audited SaaS usage data, leading to the identification of unused licenses and redundant subscriptions.
  • Renegotiated contracts and consolidated multiple tools into a single enterprise agreement with bulk discounts.