Vendor Management

  • 6 min read

How CFOs can Leverage SMPs to Optimize SaaS Spending?

Rohit Rao

16th January, 2023

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A CFOs' primary focus is to allocate budget and gain a return on technology investments. But an increase in SaaS spending has led CFOs to lose control over the annual organizational budget. With efficient SaaS spending management, you can make informed cost-saving decisions to optimize the SaaS spending.

With the rapid adoption of SaaS applications in organizations, IT spending has increased and impacted the company's IT cost structure. Therefore, managing SaaS spend and expanding the remuneration generated from technology investment is essential.  

As per Gartner's report, cloud services spiked by 20.4% in 2022 compared to 2021. In 2021 the end-users spent $410.9 billion, and in 2022 the numbers reached $494.7 billion. The users are expected to spend nearly $600 billion by 2023.

So, it becomes crucial for CFOs to manage SaaS spending to attain the organizational goal efficiently. CFO needs to monitor and regulate the expenditure on SaaS applications to do better cost management and get the ROI of apps.  

A CFO has a vital role to play in the business landscape. It is not limited to annual budget planning. CFO keeps a close eye on spending, budgets, cash flow trends, etc., to help businesses make strategic decisions at the right time. These decisions can save on costs and reduce SaaS spend. 

CFOs need to be aware of the organization's various SaaS apps. If anyone asks a CFO about the number of SaaS apps or licenses deployed in the organization, they will need help to get a real-time update.

To optimize SaaS spending, a collaboration between CIOs and CFOs is crucial to the business. The CIOs can give insights to CFOs on SaaS apps which will help in making effective decisions on reducing the SaaS expenses and maximizing the ROI. On the other hand, CFOs can help CIOs get a clear view of organization priorities, challenges, and understanding of IT costs. This will enable CIOs to choose suitable applications to meet the business needs and employees' requirements.

Moreover, in a decentralized organization, employees can use different SaaS applications, but IT teams need to keep track of them, leading to SaaS wastage and a rise in business expenses. 

For example, the employees of an organization use the IT-approved app once in a while and instead choose an app that simplifies their work better. This leads to an increase in the organization's SaaS expenses. Therefore, the collaboration between CIOs and CFOs can help analyze SaaS usage and make appropriate decisions on optimizing the SaaS cost. The ideal solution will be reducing the subscriptions based on the use of applications to save the SaaS cost.

For proper SaaS spend management, an efficient SaaS management platform can help CFOs make strategic decisions. For example, with an SMP, CFO can discover and identify all the SaaS-related cost-spending, insights on unused licenses and duplicate apps, and more. This will help CFO to prevent a build-up of spending on redundant or under-utilized applications for cost optimization. 

This article will briefly explain how leveraging an SMP can optimize SaaS spending.

CFO Leveraging an SMP can optimize the SaaS Spending

A SaaS management platform (SMP) can help an organization's CFO manage and optimize the SaaS spending. Let us now discuss how an SMP will help you manage SaaS spend.

1. Rightsize unused SaaS licenses

The major part of managing SaaS spend is to understand licensed users vs active accounts for all the subscriptions the organization is paying for. 

CFOs having proper insight into the licenses used in an organization will have control of the SaaS cost. In addition, you can use the SaaS platform to monitor an organization's employees' licenses. This will help the CFOs track the number of unused licenses they are paying for and rightsize the unused ones to save costs. 

For example, a business has bought 200 licenses, out of which only 70 are used. In this situation, you can observe that 130 licenses are not active, and the organization is paying extra for them. So, the CFOs need to rightsize the used licenses to make better cost-saving decisions.

CFOs can use the Zluri SaaS platform for efficient SaaS spend management and rightsize unused licenses. Zluri will help CFOs view the number of users using the licenses, their usage, and the actual number of licenses purchased in the organization. This will help you better understand and can rightsize the licenses accordingly.

2. Remove the duplicate apps

CFOs can save the debilitating Saas budget of the organization by eliminating redundant or duplicate apps. First, you must go through the business inventory and find the SaaS apps with overlapping functionality. 

These SaaS applications create unnecessary expenses and are usually subscribed by employees who use them for once and go for other similar applications that simplify their work without informing the IT team.

In a complex organization, it's hard to monitor each SaaS application, due to which the business spends on similar applications that serve the same purpose. For instance, Trello, Asana, and Monday manage various organizational projects. 

But the organization is paying for three similar application subscriptions and is adding extra costs. As a result, it can set back the business by a hundred dollars every year. 

An SMP like Zluri will help CFO to have visibility to all the redundant or duplicate applications in the business processes. In this platform, CFOs can gain insights into SaaS apps and analyze all the applications the employees are actively using. Accordingly, CFOs can eliminate these applications and make effective cost-saving decisions.

3. Assist you in being proactive with SaaS auto-renewals

Auto-renewals are associated with purchasing SaaS applications. It helps the business save time without worrying much about renewals of SaaS apps from time to time. But when the organization buys many SaaS applications at a time and needs to keep track of renewals, it affects the business's budget, leading to unnecessary SaaS spend. 

Sometimes, the employees sign up for the apps and must remember to cancel their subscriptions. This leads to paying for the apps that have yet to be used.  

For example, an IT department procured a Zoom app for a new project for the Marketing team. The team finished the project in six months, and they stopped using the app without canceling the subscription. This led to auto-renewal every month for an unused application.

CFOs need to have insights into the auto-renewal of SaaS applications. This will help you to communicate to the concerned team about unnecessary spending and reduce the expenditure. CFOs can leverage SaaS platforms such as Zluri to get the renewal insights of applications in the business processes. 

With Zluri, CFOs can view all the contracts and payments month-wise in the renewal calendar. In addition, you can analyze and evaluate the SaaS application in this platform which will help you to understand which apps are required by most users in the organizations. Accordingly, renew the apps for future use, making cost-effective decisions.

4. Terminate the abandoned apps

Sometimes in an organization, there is no procuring process for the SaaS apps and employees are independent in signing up for the apps they choose. But when these employees leave the organization, they need to remember to terminate the apps, and the IT teams need to be aware of these apps. 

Therefore, the apps further need to be revised, leaving the organization with compliance and security threats like cyberattacks, data breaches, etc. Also, the apps continue to renew, which makes the organization pay for the abandoned apps leading to SaaS expenses.

For example, employees signed up for Trello (a project management tool) to simplify their work. But the employee leaves the organization 7 months after signing up for Trello and forgets to terminate the app before leaving. As a result, this app can make the organization vulnerable to security threats and increase SaaS expenses due to auto-renewal.

You can use a centralized solution to gain visibility into all the apps used in the organization. Then, as a CFO, you can view the apps and get real-time insights. These insights will help you to reduce SaaS spending by terminating abandoned apps. 

With Zluri, you can track software usage and identify the licenses that have been abandoned or unused. Additionally, we can help the IT teams de-provision the application for offboarding employees from Zluri's dashboard. Apps with no owner are always at risk of app abandonment.

5. Downgrade the licenses to suitable tiers

SaaS apps allow you to choose the subscription plans per your needs. SaaS providers offer various pricing tiers and features that you can avail of based on your selected pricing tiers. Sometimes the employees or teams can overestimate their requirements and purchase the highest pricing tier plans. 

The employees or teams can realize that the chosen plan is optional only once when they start using it.

For example, you purchase the Business plan ($24.99/month) of Asana that offers advanced integrations with Salesforce, Adobe Creative Cloud, etc. Later, you realize that these integrations are optional and the features provided in the Premium plan ($10.99/month) is sufficient for the team.

Asana's premium plan allows you to integrate with Gmail, Zoom, Slack, and many more, which meet the requirements of the employees or teams. Hence, the business plan can be downgraded to the suitable tiers (premium plan) and save money for your business. This change will optimize your SaaS spending and help you reduce it.

Zluri gives CFOs insights and usage monitoring data that will help them analyze app usage patterns in the various departments, teams, business units, etc. The app insights will help you choose the appropriate pricing plan for the business and make strategic decisions to optimize your SaaS spending.

About the author

Rohit Rao

Rohit works in the Community and Marketing Team of Zluri and is a strong advocate of community led growth.