How Different Industries Manage SaaS: A Data-Backed Study

Gartner predicts that the service-based cloud application industry will be worth $143.7 billion by 2022. This means businesses across the world are investing in plenty of SaaS tools to automate their workflows. 

But in this process, they get stuck in the trap of SaaS sprawl. 

SaaS sprawl results in app redundancies and shadow IT.

In a partnership with Pulse, we conducted a survey to understand how various industries tackle these issues and the methods they have implemented to prevent falling into the SaaS trap. 


We surveyed 157 tech leaders from North America, South America, Europe, and Asia Pacific regions to collect the benchmarking data for the white paper. They are predominantly Directors, C-Suite executives, VPs, and Managers. 

The majority of the professionals belong to the following industries: 

  • Health Care and Social Assistance

  • Professional Services

  • Finance, Banking, and Insurance

  • Software

  • Education Services

  • Telecommunication Services

  • Services (except Telecommunication  & Public Administration)

  • Manufacturing

Our survey asked questions about the state of their SaaS partnerships and budget allocation, whether they have invested in an SMP, and their top concerns with SaaS sprawl. 

Consumption of SaaS Applications

According to the survey, the top 3 industries that consume more than 50+ SaaS applications are Software (42%), Health Care and Social Assistance (37%), Finance, Banking and Insurance (34%), and Manufacturing (34%).  

Education Services (23%), Telecommunication Services (21%), Professional Services (23%) are the least three that consumed more than 50 apps.

Post Covid-19, businesses have shifted to remote work culture, which increased their adoption of SaaS. Especially industries like Software, Financial Services, and Telecommunications have to keep their employees on gear from home and manage and share their data with the respective departments. 

The education sector has to shift to online models for teaching students from home. They purchased apps like Zoom or Microsoft Teams for teaching, which could be a reason for an increase in SaaS adoption.

The top industries to spend 10% of their budget on SaaS are Art, Entertainment, and Recreation; Transportation and Warehousing; and Utilities. 

The Budget Allotted for SaaS

The top three industries to spend more than 10% of their budget on SaaS are Finance, Banking and Insurance(65%),  Software (57%), and Manufacturing.

Hospitals have the smallest budget for SaaS as they have other incurring expenses like infrastructure, medicines, and medical staff they need to pay attention to. They have turned to SaaS for maintaining EHRs (Electronic Health Records), EMRs (Electronic Medical Records), telehealth, billing, and supply chain.

On the other hand, Software and Finance rely on SaaS for their day-to-day functioning like communicating and sharing projects across departments, product development, storage, and much more. 

Only automating their processes would help them get productive on a day-to-day basis. 

Changes in SaaS Vendors

The top industries that have constantly shuffled more than 20% of their SaaS vendors in the last year are Health Care and Social Assistance (32%), Professional Services (31%), and Education Services (28%). Telecommunication Services (6%), Services (7%), and Manufacturing (13%) have least changed their SaaS vendors. 

The main type of application used by manufacturers is the ERP system (Enterprise Resource Planning) to plan the enterprise's resources. They tend to stay with the same vendor as constantly shifting would make the whole data transfer process tedious. 

Methods to Track SaaS Data

52% of these industries track the data manually through dashboards within the SaaS application itself.  The Software (57%), Professional Services (51%), and Finance (58%) industries equally collect employee feedback in the form of surveys and interviews to track their SaaS usage and performance. 

Many industries such as Education (40%), Professional Services (38%), Software (43%), and Health Care (36%) still rely on Expense reporting to track their SaaS data. 

Surprisingly 35% of the Education industry does not track their SaaS data usage. This could be due to their less consumption of SaaS applications. 

Services (80%), Finance (42%), Software (43%), Telecommunications (58%), and Manufacturing (63%) are the industries that mostly use SaaS management platforms to track their SaaS consumption. 

Satisfaction with Current SaaS Tracking Process

Unsurprisingly, the Services industry that relies maximum on SaaS management platforms is 100% satisfied, and the Telecom industry is 78% satisfied with their current SaaS tracking process. The Healthcare executives are just 46% satisfied with its current process. 

Other industries such as Education, Software, Professional Services, Manufacturing, and Finance are just less than 75% satisfied with the current SaaS tracking method they have implemented. 

This means the other industries need to shift to a SaaS Management Platform that offers better efficiency than traditional methods like Expense reporting, Spreadsheets, and Employee feedback. 

Only accurate SaaS tracking like SMPs can help reduce costs, discard redundancies, and secure your SaaS stack from security threats. 

SaaS Application Metrics that Concerns Tech Leaders

The first metric that all the industries except Education give importance to is Usage/Consumption. 

It makes sense. If you aren't concerned about whether an application is being used or not, then you will end up paying every month without knowing about its consumption.

Let's say you have purchased Slack Enterprise Grid Version for the entire organization. However, most of the departments are already using other applications like Microsoft Teams for communication. This means that the premium license you are paying for Slack is money down the drain.

87% from Services, 69% from Manufacturing, 68% from Telecom, 65% from Education, 65% from Professional Services, 59% from Software, 55% from Health Care, and 46% from Finance looked at usage costs as the second most important SaaS application metric. 

This makes a lot of sense. No one wants to pay higher than what they use. Tracking the usage cost is a must to gain maximum potential from SaaS. 

Adoption and Support & Operation costs are the other two metrics given nearly equal importance by all the industries. 

Except for Services and Telecommunications, compliance is a key metric given more than 40 percent importance by the other industries. The need to monitor security is seen as a common trait among them as you deal with critical data in your SaaS applications. 

Usage of SaaS Management Platform and When Will They Purchase

80% of the surveyors have said they don't use any tool to track their SaaS usage. 72% of the Software industry that uses various SaaS applications daily do not use any SaaS management tool.  

33% from the Finance and 30% from the Education industry use the SMPs most. 

30-40% of the Telecommunication, Manufacturing, Education, and Services industry leaders said they would purchase in the next 12 months. 

Concern Related to SaaS Sprawl

Security is the most concerned SaaS sprawl by all the industries with 100% from Services, 84% from Telecommunications, 76% from Health Care, 74% from Finance and Banking, 78% from Professional Services, 72% from Software, and 65% from Education.

All the industries showed equal concern for Compliance issues and Shadow IT. 

Those industries which said that SMPs are not on their roadmap should start considering the option. 

A Gartner Study points out that 30 to 40% of enterprise spending goes to Shadow IT. With SaaS taking over your business, security and compliance of your data might also be at stake. To eliminate such vulnerabilities, you need to secure your business with a SaaS management tool. 

Security Related Concerns

Increased chances for attack surface and non-transparency among vendors in security-related events are seen as the main concern among industries. 

The increased attack surface is seen as the primary concern by Services (87%), Software (65%), Manufacturing (44%), Educational Services (55%), Professional Services (51%), Telecommunications (58%), Educational Services( 55%), Health Care (52%), Professional Services (51%), and Manufacturing(44%). 

It is followed by non-transparency among vendors in terms of security by Services (87%), Telecommunications (74%), Manufacturing (69%), Health Care (62%), Professional Services (59%), Software(53%), Educational Services (50%), and Finance(43%). 

Except for Telecommunications (47%) and Software (47%), Employees sharing sensitive information and data with people outside the organization are seen as a serious security threat by other industries by at least 60% and above. 

Most Desirable Features in An SMP

On average, the least privilege access (49%) is seen as the most desirable feature. Other features like visibility (48%), identifying unused subscriptions (48%), measuring ROI (46%), integration (40%), process automation (40%), and automated reporting (41%) are also seen as equally necessary and desirable feature in a SaaS Management tool by all the industries.

The Educational Services industry (50%) saw the enhanced integration feature as the most desirable feature. 

Manufacturing (63%) and Software (47%)  saw identifying unused subscriptions as the most desirable feature. 

Finance (54%) and Health Care (55%) see the least privileged access as the most wanted feature. 

Telecommunications (68%) and Services (93%) have their eye on the ROI Reporting feature, whereas Professional Services (53%) saw the Visibility feature in an SMP as the most desirable feature.

Conclusion

It is no doubt that SaaS adoption will see rapid growth in the coming years. Along with growth, it will also bring SaaS sprawl concerns for businesses that cannot be monitored or avoided with a spreadsheet or internal audits. An organization should be equipped with a SaaS Management Platform that alerts during renewals, monitors usage, securely does onboarding and offboarding, and most of all offers visibility. 

Any industry that desires to get the most out of its tech stack must have an SMP to monitor their 3rd party tools. Maybe today, having an SMP isn't present in the roadmap of some companies, but when these companies grow and expand, they will automatically understand its need.