SaaS Optimization Explained
June 21, 2022
5 minutes read
We have to admit that we use far too many applications on a daily basis and can not imagine our lives without them. Our bills and shop orders are paid in two clicks in online bank applications. We no longer carry our paper notebook to get an access to to-do lists or actually meet with anyone to share the latest news.
We can get any service/product we need for our personal satisfaction via applications. Installed in a few clicks, registered in one – then you are charged monthly or for having access to extra features. It is so easy to miss the moment when expenses start growing.
Now let’s imagine how many applications are used within one organization to make all the work done? Add here cases when workers find new ways and new applications to complete their work in a short time and with less effort…The companies’ SaaS portfolio turns into chaos. No need to speak what happens to the companies’ budget.
That’s why the SaaS optimization strategies are so actively discussed by mangers. It allows making the most out of money investment in services provisioned for business.
So, in this article we are going to explain the process of SaaS resource optimization, make arguments why it is crucial for the bottom line of the business. Additionally, we’re going to discuss the best practices for getting the maximum benefit from your SaaS services and apps.
Why SaaS optimization is important
Broadly speaking, there are 2 main reasons why the SaaS optimization become a question of the great importance to many companies using the SaaS model:
1. Significant SaaS spend
The CIODive report states that most departments use between 40 and 60 different applications, companywide – 200 applications. No wonder each application generates a particular cost. As a result, organizations end up spending a great deal of money on covering SaaS-related expenses.
According to Insivia research, companies spend on average $2,623 per employee within a year to provide access to required SaaS. Considering the fact that some of the purchased applications are renewed automatically (vendor sticks to recurring billing), there are good chances that a company might continue paying for solutions no longer utilized.
* CIODive - publication operated by Industry Dive. CIO Dive provides in-depth journalism and insight into the most impactful news and trends shaping IT.
* Insivia - a global consultancy and marketing agency focused on working with SaaS & technology companies.
2. Underutilized resources
Rising costs in SaaS bills do not necessarily mean rising workloads that push utilization rates. Some team members keep adding new solutions to the toolbox but as a rule of thumb, those solutions are only used once to quickly resolve ongoing tasks and then forever forgotten.
Taking into account the chaos appearing due to lack of control – not only some services are abandoned, but also some of them serve to execute the same functions. In this case, organizations pay for the resources that don’t bring any additional value or profit.
When reporting period comes – the financial department discovers that SaaS expenses exceed their expectations and, what is more, exceed the allocated budget. Once the issue becomes visible, management concludes that SaaS optimization tools are a must to have in order to avoid money waste. A penny a day keeps poverty away.
SaaS optimization best practices
When speaking about SaaS optimization, the course of corrective actions may differ according to the company’s goals but most of the CEOs vote for optimizing SaaS costs in the first place.
In this article we have outlined 5 cost-saving recommendations for companies whose SaaS portfolios are plunged into chaos:
1. Remove duplicate applications
It is impossible to optimize SaaS applications that are not: a) discovered, b) categorized in a logical manner, c) justified by teams.
Initially, companies should start by identifying all applications involved in task execution together with their utilization rates and costs. Binadox users can do that by checking the SaaS Utilization Dashboard.
As the next step, companies need to look at the purchased applications from the functional perspective and then prioritize them based on the effectiveness and convenience parameters.
Functional categorization can dramatically simplify the task of finding “twin-applications” that do not create additional value. There are some of the categories SaaS applications fall into:
- Online training classes or learning platforms;
- Team collaboration and communication;
- Project and team management;
- Recruiting (as well as onboarding, and offboarding);
- Customer support and customer relationship management;
- Accounting and budgeting;
- Document and asset management.
We also suggest documenting everything for future use – the company’s goals and, respectively, the SaaS portfolio can change over time.
2. Improve renewal experience
Taking into account the vast number of applications used by an average organization, the renewals happen on a nearly daily basis. So, they play an essential role in your SaaS optimization journey. In order to optimize the renewal process and facilitate it, companies should learn the 3 integral part of the renewal process:
- The pre-renewal stage;
- At-renewal stage;
- The post-renewal one.
At the pre-renewal stage, companies arrange app inventory, then identify the ownership and allocate the subscriptions to the users to see whether the service is used to the fullest extent and was agreed upon by the IT department in the first place. This step is finished by prioritizing apps. The factors like convenience, profitability and rate of utilization are significant here.
At-renewal stage implies eliminating the wasteful resources and optimizing the underutilized ones. It’s a common practice to resize the existing licenses and payment plans. It is done based on the number of users actively deploying the app and the business value of the application.
Especially for that purpose, Binadox provides a Renewals calendar that allows monitoring the above-described parameters and setting alerts for upcoming payments.
The last stage is post-renewal. Companies should keep in mind that asset optimization is a continuous process. It’s crucial to keep a system of record of all changes done during the first two stages.
Read our previous article called “Best Practices for Effective SaaS Renewal” to dive deeper into the renewals world.
3. Rightsize licenses
Rightsizing is all about reducing the number of licenses (underutilized, unused, unassigned, or overprovisioned ones), or downgrading the expensive plans (if there is no need to have advanced functionality to have the work done).
There are applications like Zoom and Office 365 that have basic plans and users can upgrade them by purchasing extra features. It’s similar to a electric razor: it has a basic tool – the razor itself, and various nozzles and accessories. When you upgrade your Office or Zoom plan, you just add the required “nozzles”.
That’s why it can be more difficult to optimize this type of liceses: you need to view the utilization rate of each feature to make the right decision. Binadox helps to deal with rightsizing both Zoom and Office 365. It suggests the plan that is better for you and your employees from the cost and usage perspective.
Moreover, Zoom has a free plan that can be enough for most users. An employee can easily move to the free plan, especially if assigned work doesn’t require many additional features available with the paid plan. The same applies to Office 365.
It offers multiple plans including various features, however, the most staffed and expensive plans might be not required at all. Binadox will tell you about it as well.
4. Reduce or eliminate shadow IT
Maybe it’s rather unexpected but shadow IT isn’t always a bad thing. You can read about shadow IT risks and benefits in our previous article. However, it makes the work of the finance and security departments much harder. The lack of visibility can lead to overspending and increase security risk, as well as lead to compliance issues.
It’s recommended to select the most beneficial apps from the legal and safe offerings in the market and provide a catalog of various options to employees. This way you give them a choice and offer only the trustworthy services avoiding the increase of shadow IT.
5. Plan ahead for future
SaaS optimization is a continuous and infinite process. So, knowing how to optimize your SaaS resources can help to make sure that you won’t waste any time or money down the road.
Visibility into what you’re currently spending gives business owners the opportunity to make smarter decisions when it’s time for new purchases, updating contract terms, and adding new licenses. From here, companies can decide what to keep, what to get rid of, and what to invest in more.
In this article we’ve highlighted the best practices that can help you deal with a challenging task of optimizing your SaaS assets. Also, we’ve discovered the main reasons why the elaborate work of SaaS optimization worth the effort and time.
You can significantly facilitate the monitoring of all your SaaS licenses, subscriptions, and applications with the help of Binadox. It offers the solutions that can be applied immediately, as well as helps business owners to anylize the situation, draw valuable conclusions and create a SaaS management strategy for the future.
With Binadox, you have full control of your SaaS portfolio. Start optimizing your SaaS assets today.