20th May, 2021
TABLE OF CONTENTS
Every IT leader must have visibility into the money spent on software subscriptions.
In turn, like any other investment, have an idea of the potential returns. But it's tricky to have that visibility.
Introducing ROSS (Return on SaaS Stack), a framework that helps you evaluate and optimize the value you get from your SaaS stack.
SaaS stack is a critical component of operations in any company. Since companies are transitioning to SaaS, an efficient SaaS stack is more required than ever.
We all know that it's way too much effort. Keeping up with the ever-changing landscape of software services is a full-time role in itself but required nonetheless.
What if it needn't be the case? What if there was a way to critically measure your software
usage and the value gained from it?
It'd help in understanding which SaaS apps are essential to your business. It can help in understanding if you're paying more than what you need to for these applications.
More than that, what if it can do all this, keeping in mind the value each application has for your firm specifically? Not the marketed value that we're made to believe. But the value we genuinely get from these applications.
What if you can understand the following wastage that cost wasted business value on top of all this?
Unused software subscriptions,
The costs related to security breaches and non-compliance,
Hidden costs—like the cost for data migration, feature bloat—that overwhelm users and waste their time
ROSS is a scale we created at Zluri to solve these problems.
It essentially puts businesses in control of software license management. It provides a framework to realize the returns you get from your SaaS stack.
Right off the bat, it helps and probably is very important to understand that it's subjective to measure.
Though we've described ROSS for all the apps together (SaaS stack), let's understand this with just one app.
Now, if we venture out to calculate the returns these companies have in Dollar-terms, we'd be short-sighted. For the most part, the value that any business gets from Slack goes way beyond a monetary value.
It's community building, culture creation, automation, reporting, product delivery center-stage, and particularly in the current times, a virtual office.
Finding ROSS for the use of Slack will almost always fall short of the actual tangible value a team gets out of it.
But, it's not to say that we need to stop at that—quite the opposite.
The ROSS framework helps us realize how valuable our software stack is —even if we won't reach an actual value
Because we, as IT leaders (and CIOs), can make better decisions. Even though it provides you a relative value, you know when you improve or fall behind.
ROSS helps you while discussing with your C-level peers. Based on ROSS, you can make defensible arguments when arguing for a budget.
Finding out ROSS for SaaS apps is tough, maybe impossible. Yet, finding out a comparative number should work just fine, deciding in favor of one software license over another.
There are three major components to finding out ROSS for any subscription that you may have.
2. Latent Value
3. Future Roadmap
Before we delve deep into all the three factors here, it is again important to realize that it's a framework to figure out your ROSS of the SaaS stack of your company.
If we were to tell you the most critical element that'll affect your ROSS, it'd be the subscription wastage. This waste is a result of low application usage than what you paid for.
This amount ranges between $250-$2100 per user per year in a company—a source of potential cost savings if you're an organization with hundreds of people using apps.
It happens more often than we ought to imagine. Some of the most wasted subscriptions in the industry include apps like InDesign (55%), Dreamweaver (55%), Crystal Reports (63%), and Camtasia Studio (67%).
Not to mention the duplicate app subscriptions for the same purpose. How many times have we found ourselves with multiple apps that do the same thing with marginal differences between them?
It's a case of better housekeeping at times. While it could also be due to a policy that allows employees to have any app subscription that they feel comfortable with. Not a great policy for enterprises as it tends to consume time in data migration between apps and collaboration difficulties.
The best way to eliminate these is through clear visibility into department, team, and individual level app usages.
Talking about visibility, another area of wastage that we usually see is through wrong subscription plans and hidden costs.
Subscription plans for SaaS apps change all the time. Sometimes due to additional feature inclusions and other times because of the fierce competition in the marketplace that drives these changes.
Keeping on top of these changes and knowing the requirement of your team to optimize subscription plans is hard work and requires immense coordination within a team.
More often than not, business leaders and IT professionals are clueless about how to approach these wastages.
Latent value points to the presence of modern workflow capabilities of any app. It comes down to efficiency if you think about it.
Imagine having to pay for data movement from one app to another, which you were unaware of. Or, imagine having to pay for automation and integrations with the apps that you already use.
Can your CRM (Customer Relationship Management) integrate seamlessly with your HCM (Human Capital Management)? And in turn, can these apps cumulatively talk to your PMS (Performance Management System)?
And if that can be done, can automation take away the effort of data movement and consolidation, along with reporting from these seamlessly interacting apps?
And if that's possible too, can these seamlessly interacting and automated apps bring the best in AI and ML to your aid for incremental learning and optimization?
Well, it's highly likely that most SaaS stacks aren't set up with this level of sophistication. Yet, it's entirely possible to achieve.
If you think about it, answering these questions alone should provide you with an idea to reach your ROSS from a latent value perspective.
The movement to the SaaS model began with a deep dissatisfaction with the previous generation of solutions. These needed on-site implementation, greater initial investments, and an array of resources to keep them functioning properly.
The modern SaaS platforms solved these problems but created a whole other range of problems for the enterprise to deal with. Talk about cross-application data sync, security of data movement, and performance concerns.
In simple terms, while the acquisition, deployment, and operation of the applications have dramatically improved, the interoperability of these applications is still lacking.
It's also important to be mindful of your company's immediate priorities as a company from any app. It's critical to know which elements you need first. Remember, there is a learning curve involved with these facets of modernization the apps bring.
It may also involve training your teammates or having a steep learning curve before you get to utilize it maximum.
The best apps are the ones that reduce your effort in the long run. Even if it means a complex integration requirement at the start of its use, these are the kind of apps that improve your ROSS and garner savings for you.
Increasingly every business decision, be it product-driven, or from a marketing front, or strictly operational, is data-informed.
Apps that can move data intelligently and use it to create automation scenarios will provide greater value for your business, even if it means that you need to sacrifice a few not-so-important features! As these applications have learning built-in.
Applications that can move data intelligently and use it to create automation scenarios will provide greater value for your business, even if it means that you need to sacrifice a few not-so-important features!
Your understanding of ROSS will strictly depend on the needs and capabilities of your team, for that matter. This includes the future roadmap that your firm has and the requirements you'll have in the future.
This helps you realize if your scale of growth will match the service provider's capabilities in the future or not. And if the policies that a SaaS provider has helps you in the long run or not. Additionally, it enables you to avoid SaaS vendor lock-ins.
Most companies usually have a roadmap of at least a year ahead, with all the marketing budgets in place, product timelines decided, market expansion or scale realized, and the team's growth plans in place.
With these, a business leader can have visibility of infrastructure and SaaS requirements. And if that's true, a company can have an estimate for the year's SaaS spend and, in turn, the ROSS.
However, this understanding is just one part of the puzzle. The other part that's required is the element of the future—both from a company's standpoint and an IT leader's standpoint.
What are the features that the growing team will require a year or more down the line?
How well equipped is your existing SaaS stack in dealing with these requirements?
And, in contrast, how another app from a category is poised to deliver these requirements in the year ahead?
These are important and tough questions to answer without proper research and understanding of each application being used. Something that in itself is a massive undertaking without appropriate tools.
To make this aspect of decision tougher, only a handful of SaaS providers will share future feature roadmap with the world. This is primarily because of fierce competition in the market.
The only available measure then is the historical performance of the apps you put your trust in. But, everyone in the industry knows that past performance isn't a guarantee of future excellence when it comes to services.
Case-in-point, Trello. When Airtable and Asana came along with identical Kanban boards. Trello fell from the pedestal it had built for itself as a leader. The copycat apps rendered Trello as a feature rather than a product.
Then there are things like losses due to downtime, and worse still, data loss or theft. No one needs to emphasize how important these aspects are. Yet, how many SaaS companies are upfront and proactive about their data protection policies and infrastructure limitations? Not a lot!
To understand all of these from a company's standpoint, ROSS can be a starting point.
In the SaaS universe, a year is a very long time. Newer competition with better offerings always comes along and disrupts the market.
And then, there are tectonic shifts in the whole SaaS ecosystem like the introduction of PaaS (Platform as a Service), where organizations can build their own apps to custom-satisfy their specific needs.
Also, let's not forget the micro-SaaS offerings that can catapult an existing SaaS app's capabilities to new heights.
If reading this article created more questions than those it has solved for you, you are on the right track because it means that you know how less equipped we all are in the face of rapid technology explosion.
ROSS is just the beginning of clarity we deserve for the money we spend on these applications. And precisely, the reason it isn't a yardstick but a tool—to clear a bit of fog that's always been around consuming these applications.
While we need all these apps for sure, we also need a starting point to build a SaaS stack—that we can measure, improve, and report.
We, at Zluri, genuinely believe that it will solve the perpetually complex problem of software license optimization that we're heading towards.
10% of company revenue is spent on SaaS. It’s a staggering metric, and a high percentage of income is wasted inefficiently on business tools. In comparison, companies spend, on average, 15% on employees annually.
With this explosion of SaaS at companies, there arise SaaS challenges caused by apps getting out of your control. These SaaS challenges varies in three dimension: spend management, security and complance risks, and various SaaS operations tasks like automating SaaS procurments, renewals, employees onboarding and offboarding.
‘Muda’ is used to describe any activity that uses resources but doesn't generate value. It is the Toyota system for identifying and eliminating waste in all forms. It is the same thing that helps Toyota sell more cars than Ford, General Motors, and Honda at a higher margin.
An obese SaaS stack leads to SaaS wastage. It's a disease! It not only causes financial issues but also gives you security and compliance problems. That's why you must keep tight control on your SaaS stack. And it begins with managing your SaaS vendors.
In this post, we've discussed 7 symptoms of an unoptimized SaaS stack and solutions to optimize the same.
Though the ITAM solution from SolarWinds is a useful tool for managing an organization's assets, it has a steep learning curve.
Software asset management (SAM) in the SaaS world is very different from traditional on-prem software asset management. Traditional SAM was focused on tracking and optimizing the software licenses.
David speaks about his passion for ITAM and SAM and his interest in the industry. He also talks about the changes ITAM has undergone in the last 12 years of his career. He also highlights how the SaaS landscape has made our lives easier and gives valuable insights into managing SaaS applications.