Why your SaaS stack is more expensive than anticipated

SaaS is not the cool kid on the block anymore. It has become more mature – perhaps, even a tad grey-haired – considering the adoption rate in recent years. As 2020 has indicated - the surge has only just begun. A recent study by Gartner revealed that IT spend on cloud technology will increase in the post-COVID-19 climate, with “cloud projected to make up 14.2% of the total global enterprise IT spending market in 2024, up from 9.1% in 2020.” And it has also put SaaS as the market leader, ahead of PaaS, IaaS, and the others.

Now, this may sound hunky-dory for SaaS providers – but what about you, as a SaaS customer?

How can you be sure that multiple software is being effectively utilized? From your business user’s POV - are they seeing value in the subscription? From your organization’s perspective - are your third-party SaaS investments paying off?

Now, fret not if you’re stuck for answers because you’re not alone. For companies, from small and mid-sized businesses to larger players, the ability to optimize cross-team software usage is as scarce as hen’s teeth. And this isn’t a knock on their IT or finance teams. Besides having their hands full on more business-critical tasks, manually assessing or calculating the ROI of third party software is too much work for either team.

Then again, assessing the utilization of software assets is just half the battle. With that information, they must also collaborate to optimize the user counts while ensuring audit compliance. It will put them in a position to effortlessly manage all their software contracts and create a data-rich approval process to reduce the software spend.

Doing so without an AI-driven automated and centralized software license management system is impractical and unscalable. To begin with, though, it is essential to plan ahead! It’s why there are a bunch of questions you must ask before signing up for any new software to help business users in your organization.

5 questions to ask yourself before buying new software

1.       How flexible is the subscription model?

2.       What is the software uptime SLA?

3.       What is the most cost-efficient migration option (if required)?

4.       What is the cost of implementation/post-implementation support?

5.       What is the software development roadmap for future upgrades?

3 questions to ask about existing software

1.       What is the current and historical software usage?

2.       Has employee productivity increased after accessing the software?

3.       What is the timeframe for canceling the software subscription?

One of the barriers to maximizing the subscription ROI is the complexity involved in getting out of rigid software contracts. And it’s not just because of the fine-print in confusing SLAs, given the growing number of contracts of which finance teams must keep track. To make matters more complicated, they won’t have a single source of truth to evaluate all the software contracts in the organization – much less a way to extract this data since each software comes with its specific SLA.

Increase software ROI with dynamic re-contracting

You can leverage dynamic re-contracting, based on adoption (number of users) and usage (number of interactions or actions), to ensure positive ROI on every software investment. This methodology allows for dynamic switching of tiers - depending on the consolidated consumption of licenses across the teams in your organization. In the process, you may also unearth and eliminate shadow IT spends. 

Of course, all this is easier said than done.

You need a solution that can quickly gather, organize, and store a considerable volume of contract data. That way, your finance team can use clean data insights from SaaS contracts like renewal dates and renegotiation terms to help you better handle contract disputes or negotiations.

Remember, relying on first impressions of attractive pricing plans is low-hanging fruit. It not only decays at alarming speeds but also negatively impacts IT budgeting in the long term. So, unless your subscription plans are continuously aligned to company-wide usage or a particular business unit-wide usage, they turn into investment guzzlers.

There’s no denying that the future of business will be more digitally-fluid than ever before. SaaS is about to become a bigger deal too. It also means that the cost of managing software is about to become a more significant threat - if left unattended.