The tech industry has been at the center of an unfortunate downsizing trend over the past year. With rising pressure to deliver on favorable outcomes in an uncertain economy, many organizations are left with difficult decisions to meet their expense reduction goals. Although it’s not the first option anyone wants to entertain, reorganization is the new reality and each organizational change introduces opportunities and risk as it relates to managing your SaaS portfolio. Gartner’s 2022 Market Guide for SaaS Management Platforms estimates that as many as 25 percent of provisioned licenses aren’t regularly used. Flexera’s 2022 State of ITAM report found wasted SaaS spend trending even higher at 33 percent.
In 2022, the Great Resignation increased the industry’s turnover by 649 percent. And so far in 2023, more than 130,000 workers at U.S.-based tech companies have been impacted by cuts. Even the strongest performing tech companies are making changes, with Amazon, Airbnb and Samsung among those on the list.
These changes are challenging to even the most sophisticated organizations as they create “licenseable events” and, when not managed well, can expose businesses to significant cost and risk. Enterprises with a significant SaaS footprint need to take action now before upcoming contractual events with their publishers.
Overlooking SaaS could cost you even more
While this disruption and reorganization have a clear impact on a company’s ability to turn a profit, there’s another factor that may be overlooked: unauthorized SaaS access.
In recent years, there has been a massive shift in organizations using SaaS applications for their business. On-premises solutions are decreasing as companies start to enjoy the benefits of SaaS-based applications that can be accessed anytime, from anywhere. There was a significant push for SaaS applications during the COVID-19 pandemic, with companies seemingly overnight moving to a remote operating structure. This enabled employees to remain productive while working from home, but it was also a significant change to the way companies bought, managed and secured the software that they use to run their business. According to Gartner’s 2022 Market Guide for SaaS Management Platforms, “SaaS spend continues to grow by 15–20 percent annually, as organizations maintain an average of over 125 different SaaS applications totaling $1,040 per employee annually.”
Even though SaaS applications provide a flexible and reliable way for employees to get work done, they can also pose a significant risk, especially during a period of economic downturn when organizations reprioritize and reorganize headcount.
When organizations experience turnover, layoffs or restructuring, they must make sure the SaaS apps that an impacted employee was subscribed to are managed and governed correctly. You certainly don’t want a former employee to have access to sensitive company information within a SaaS app. Ensuring access is revoked is imperative to ensuring former employees no longer have access to the critical data that runs your business. According to the IBM Cost of a Data Breach report, the global average total cost of a data breach is now $4.35M, with stolen or compromised credentials being the most common and costly.
And what about all the expensive SaaS subscriptions an enterprise are still paying for after employees leave? Paying for licenses that are no longer needed is a significant expense. Flexera’s 2022 State of ITAM report shows roughly half of organizations have ITAM teams that are responsible for tracking usage of SaaS.
Your most relevant SaaS providers are often the most difficult to effectively manage and optimize
According to Flexera’s 2022 State of ITAM Report, Microsoft, Salesforce and ServiceNow are some of the most relevant SaaS providers that organizations rely on today. But only 52 percent are negotiating contract terms with these vendors, and less than half have teams and processes in place to track usage, rightsize and promptly offboard employees, resulting in significant optimization challenges and exposure to risk. Just imagine how it would impact your cost-cutting measures if you could reduce spend with these top publishers by 20-30 percent—you may even meet your annual cost-cutting goals by optimizing just one.
These business-critical apps have complex licensing terms, and related risk to unauthorized access is challenging to manage for even the most sophisticated companies. Furthermore, these applications are often extensible into or have marketplaces of their own (i.e., Salesforce AppExchange), causing your exposure to be even greater.
Effectively managing Microsoft, Salesforce and ServiceNow requires not only deep expertise in SaaS licensing terms and conditions but also the right product capabilities to automate usage optimization, govern spend, remediate unauthorized use, discover shadow spend and reporting to achieve business outcomes.
Leading the renewal negotiations with these vendors, procurement officers have the added challenges of gaining full visibility of who is using these platforms and why, how the technology fits in with broader ELAs and ensuring you have the data you need to effectively negotiate the best deal for your organization.
Get a free, no-obligation analysis to optimize spend
Whether your organization downsized due to the economy, is preparing for a contract renewal or just looking to better optimize your SaaS spend and mitigate risk, Flexera can help. In fact, we’re offering a no-obligation analysis of your Microsoft 365, Salesforce and ServiceNow subscriptions for a limited time. This will help you optimize spend and usage, secure user accounts from unauthorized use, discover shadow spend, establish best practice compliance reporting and prepare you for your next renewal negotiation. Using our industry-leading Flexera One solutions and team of experts, you can expect results in just a few weeks.
Click below if you’re interested in receiving a free analysis today.