Optimizing SaaS Spend: Best Practices for 2024

In 2024, rising SaaS costs are becoming a major concern for businesses that depend on software to run their operations. With SaaS spending on the rise and budgets tightening, optimizing SaaS spend is more important than ever.

This blog provides practical strategies for SaaS spend optimization to help you cut costs and boost productivity. Let’s explore the best practices to get the most out of your SaaS investments.

Best Practices for SaaS Spend Management

Businesses need strong tracking systems, regular audits, and smart negotiation tactics to manage SaaS costs effectively. Here's how to implement these strategies to reduce expenses and improve efficiency.

1. Track and Monitor SaaS Usage

Tracking software usage helps identify which tools are essential and which are draining resources. This also reduces the risk of shadow IT—when departments independently subscribe to tools without the company's knowledge.

How to Get Started:

• Use analytics to track active licenses
• Remove tools that don’t support business goals
• Consolidate apps with similar functions

2. Conduct Regular SaaS Audits

A SaaS audit helps you see what tools are used, where redundancies exist, and how much you spend on each tool.

Steps for a Successful Audit:

• Create a centralized list of all SaaS subscriptions, capturing details like cost, renewal dates, and usage metrics.
• Identify underutilized or redundant tools and cancel or consolidate them.
• Adjust licenses to better fit actual usage—removing unused licenses and rightsizing subscriptions.

3. Negotiate with SaaS Vendors

Negotiating better terms with vendors is a simple but often underused tactic in SaaS cost management. Approaching vendors with a strategic mindset can secure significant discounts or better contract terms.

Negotiation Tactics:

• Leverage your company’s purchasing power by bundling multiple services from the same vendor.
• Lock in long-term contracts to secure lower rates if you’re confident you’ll continue using the service.
• Time negotiations around the vendor's fiscal year-end when they are more likely to offer discounts.

4. Leverage Automation for SaaS Management

Automation tools simplify SaaS budgeting by offering real-time insights into subscription usage and renewal timelines.

Why Automation Matters:

• Automated alerts ensure you’re aware of expiring contracts or unused licenses.
• Centralized platforms offer clear visibility of your entire SaaS stack, making managing renewals and tracking costs easier.
• Allocation tools allow for precise tracking of expenses by department, ensuring spending accountability.

Emerging Trends in SaaS Spend Optimization for 2024

Josys has found up to 30% of SaaS spend is wasted on unassigned licenses, underutilized licenses, or assigned to unknown shadow users. As 2024 unfolds, new trends in SaaS management will help businesses cut unnecessary costs and optimize their software usage. Here are the top trends shaping the landscape:

1. More Frequent and Detailed Usage Audits

Companies are adopting more frequent, granular audits in response to rising SaaS costs. These audits ensure that software spending is aligned with business needs and that redundancies or underutilized tools are identified early.

2. Smarter Subscription Management Tools

As automation evolves, subscription management tools become smarter. They provide deeper insights into usage patterns and offer predictive analytics that help companies anticipate their software needs.

3. Scalable Subscription Models

In 2024, more businesses are embracing scalable SaaS solutions, allowing them to pay for what they use and easily adjust their subscriptions as their needs grow or reduce.

4. Increased Focus on Compliance and Security

With decentralized SaaS purchasing becoming common, businesses prioritize security and compliance in their vendor contracts. This helps protect sensitive data while ensuring that tools meet regulatory standards.

How Josys Can Help Optimize Your SaaS Spend

Managing SaaS expenses doesn’t have to be overwhelming. Josys offers a comprehensive suite of tools that simplifies SaaS cost management and helps businesses streamline their software investments.

Key Features of Josys Cost Management:

• Centralized dashboard to track all app subscriptions with alerts for renewals
• Tracks license inventory, provides app usage insights,and surfaces license waste, such as unassigned or unused licenses
• Track SaaS costs by app and department for better budgeting, vendor negotiating, and forecasting

Conclusion

Optimizing your SaaS spend is an ongoing process, not a one-time task. Regularly audit your subscriptions, negotiate better contracts, and use automation tools to manage your SaaS stack efficiently.

With tools like Josys, you can control your SaaS costs and ensure your resources are allocated where they deliver the most value. Start optimizing your SaaS usage today to stay competitive in 2024 and beyond.