SAM: Shifting Focus to SaaS Cost Optimization

Ekaterina Mizrobova

Software Asset Management (SAM) has been in the service of IT teams since the beginning of 1990s. In the age of on-premises software SAM tools served mainly to achieve software license compliance. However, the situation has changed and so has SAM. Today we live in the age of the cloud. And according to Gartner, in the future the share of the cloud will be only greater. In the cloud environment resources and services can be provided on demand in accordance with operational needs, which accelerates processes, improves efficiency and attracts increasingly more users. However, there are some pitfalls.

Some believe that SAM is outdated as with SaaS the risk of non-compliance is lower. But first of all, SAM is not only about compliance; and secondly, as Gartner puts it in its report, “SAM Reaches a Tipping Point: SaaS Cost Management Eclipses License Compliance”, “SaaS subscriptions are not a turnkey fix to licensing complexity…” There are not only the threats we talked about in one of our previous posts – information security issues arising from the ToS provisions – but also cost risks arising from the nature of cloud applications.

SaaS licenses are usually temporary, i.e. users pay for subscriptions or usage. That encouraged the myth that SaaS apps cannot expose a company to non-compliance. While a compliance risk is really lower with SaaS as vendors now can track user logins, there are still other issues. For instance, payments for some application components are not always charged immediately and an invoice can be issued later upon completion of the licenses audit by the vendor. Another issue is unauthorized usage related to ToS restrictions in terms of shared logins or geography, etc.

The SaaS subscription process is so easy, that an increasing number of employees subscribe to cloud-based applications bypassing their IT department, which leads to decentralization of the procurement process and consequently to increased costs, as it becomes harder for companies to sign volume contracts with discounts. Another issue arises when there is no need in a SaaS app any longer and employees forget to terminate their subscriptions, so their companies continue paying for unused services. There is also a risk related to Freemiums. Freemiums are applications provided free of charge but an invoice still can be issued for some features, unexpectedly for the company.

To gain more transparency and control over SaaS applications and to optimize costs, companies can turn to the good old SAM. Taking into account the above mentioned peculiarities of SaaS applications, Software Asset Managers should now shift focus from software license compliance to cost management. To optimise costs, first of all, it is necessary to identify what applications are subscribed to, by whom and how much does it cost the company. The next step is to find whether those applications are used by employees and whether employees use all the paid functions. Based on such analysis the IT team can make decisions on cost optimization – revoke licenses or reallocate subscriptions.

How to save IT budget on SaaS subscriptions and software compliance