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SaaS applications have become the lifeblood of nearly all businesses to drive innovation, efficiency, and growth. Shiny new software has become very easy to acquire, and increasingly harder to get out of once you’re locked in. As the SaaS landscape continues to expand, businesses face the challenge of managing a sprawling ecosystem.
Organizations have an average of over 400 different SaaS applications, totaling $1,040 annual spend per employee, but IT typically is aware of only a third of those. Left unchecked, this can lead to a tangled web of redundant applications, spiraling costs, and potential security vulnerabilities.
Identify redundancies in your SaaS portfolio
Redundancies in a SaaS portfolio often develop when companies accumulate multiple applications with overlapping functionalities. This can lead to wasted resources, increased complexity, and heightened security risks. Here are a few common events that trigger redundancies:
- Mergers and acquisitions (M&A): When companies merge, they often inherit multiple copies of similar or identical applications, leading to duplication. Without careful evaluation, these redundant applications can persist, draining resources and creating inefficiencies.
- Contract consolidation and tier changes: Moving between different tiers or consolidating contracts can result in redundancies, especially when legacy applications are not retired. These legacy apps may continue to operate alongside newer solutions, compounding the problem.
Regular audits of your SaaS portfolio help identify and eliminate redundancies, ensuring that your organization is only paying for what it truly needs. A SaaS management platform gives you a comprehensive view of the sanctioned, unsanctioned, licensed and free SaaS applications within your organization.
How to prioritize SaaS applications for rationalization
SaaS sprawl can seem daunting, but you have to start somewhere. First, focus on the behemoths: the high-cost, high-impact applications. In particular, applications that are heavily integrated with other systems or have a high user adoption rate should be evaluated carefully. Removing or replacing these apps may have a broader impact on your organization, so a thorough analysis is essential.
Aside from cost, prioritization should consider factors like the level of support required, the potential for reducing IT overhead, and the security implications of each app. Free applications are deserving of your attention, as many of these can expose your organization to security vulnerabilities. For example, WeTransfer is a favorite amongst marketing teams. The free site allows users to share documents that are typically too large to be sent easily via email, messaging apps, or other services like Dropbox. If IT is paying for licenses to Dropbox, but the marketing team is not using them, it’s time to drill down into whether the paid service, like Dropbox, is suitable for their end-user needs.
Use analytics to drive your decision-making
Analytics can provide crucial insights into usage patterns, helping you determine which apps are underutilized or redundant. By integrating SaaS data with your IT asset management (ITAM) systems, you can achieve a more comprehensive view of your software landscape. SaaS management is more complex today due to the variety of options and functionality offered. Sometimes, it’s not what you have, but how it’s being used.
For example, Zoom and Cisco Webex are both video conferencing solutions that offer features like virtual meetings, webinars, screen sharing, and integration with calendar systems. In some organizations, both Zoom and Cisco Webex might be in use due to different departments or teams adopting their preferred solution. It could be more cost-effective to use Cisco Webex for webinars, while using Zoom for daily internal meetings. What is important is understanding, documenting, and detailing the core reasons around why applications in the business are critical. You want to avoid removing an application without context to prevent upsetting stakeholders. Some vendors offer great deals if you can take advantage of “one-stop shopping,” but not every vendor is cost-effective or offers the best solution, so you need to mix your applications. This is where you can leverage usage data from your SaaS management platform to determine how to go forward with your application rationalization.
You can also implement real-time monitoring features to continuously track SaaS usage, costs, and performance. Regular reporting helps ensure that your SaaS portfolio remains optimized over time. These reports can serve as a foundation for strategic decision-making, helping you to justify rationalization efforts to stakeholders and secure buy-in for necessary changes.
Prevent software proliferation
Stopping software proliferation is essential for maintaining control over your SaaS environment. However, resist the urge to block and ban apps as your first step. Instead, start by gaining a deep understanding of the needs and use cases of each department. Have your stakeholders walk you through their workflows and application dependencies.
In many cases, software proliferation happens because users are unaware of which applications are approved or prohibited, they just know they need to do their jobs, and the application they need is tantalizingly in reach with a few clicks of a button. To combat this, establish clear governance policies that outline the approved software for various tasks and ensure that these policies are well-communicated across your organization.
And just when you think you’ve got a good handle on everything in front of you, new challenges are just around the corner. According to the 2024 IT Priorities Report, 62% of IT leaders say they are seeing increased investments in emerging SaaS applications, such as ChatGPT and Google Bard. To future-proof your SaaS portfolio against rapid changes in technology, maintain clear channels of communication with your stakeholders and engage with them regularly. This will help you stay ahead of emerging needs and prevent the unchecked adoption of new solutions.
Best practices for migrating data and users from decommissioned SaaS apps
When retiring redundant applications, it’s crucial to ensure a smooth transition for users. This involves understanding ownership, retaining necessary data, and managing the cost of migration. During migration, ensure that all necessary data is transferred securely and that users are fully trained on the new systems. This not only minimizes disruption but also helps build trust and confidence in the new solutions. Additionally, having a clear decommissioning process in place can help prevent the resurgence of old, retired applications.
Reporting adoption of the new application is also critical – how well is the new app working for your stakeholders, how is adoption going, are they still using the old app and if so, why? With usage statistics, you can see into the nitty gritty of how the apps are being used (or if the old apps are still being utilized), so you can ask the right questions to your stakeholders.
A few final thoughts
Rationalizing your SaaS portfolio is not just about cutting costs – it’s about optimizing your software environment to drive better business outcomes. By identifying redundancies, prioritizing the right applications for evaluation, using analytics to inform your decisions, and preventing software proliferation, you can create a more efficient, secure, and scalable SaaS landscape.
This is the first post in our series on SaaS management. We have more advice coming on how to manage stakeholders during procurement, how to make the most of your SaaS budget, and how to measure your application rationalization efforts. Subscribe to the Flexera blog, and stay in the loop.
