Managing all the software applications a company uses can feel like juggling several balls simultaneously. From collaboration tools to customer management software, businesses rely on various SaaS applications to get things done. But what happens when no one keeps track of all these subscriptions?
Without a clear system for managing SaaS tools, it’s easy for expenses to pile up. Unused licenses, forgotten subscriptions, and duplicated tools can drain your IT budget fast. For finance and IT teams, poor SaaS management doesn’t just mean wasted resources—it also translates to a bigger budget hit, reduced efficiency, and lost opportunities to save. In fact, research shows that nearly 30% of SaaS subscriptions go unused or are underutilized, meaning that if a company spends $1 million on SaaS annually, roughly $300,000 could be wasted—funds that could be allocated toward strategic growth initiatives.
Let’s examine how inadequate SaaS management leads to unnecessary costs and explore some practical ways to control those expenses.
The Financial Impact of Poor SaaS Management
When SaaS management isn’t prioritized, companies often face higher-than-expected costs in several ways. Here’s where budgets take the biggest hits:
Duplicate Subscriptions
Without proper oversight, different teams might buy subscriptions for similar tools or accidentally pay for the same application twice. Over time, these redundant purchases add up, leaving money on the table.
Unused Licenses
It’s common for companies to purchase more licenses than they need. But if no one is regularly monitoring usage, these extra licenses sit idle, silently draining funds each month.
Shadow IT
Employees sometimes sign up for tools on their own when they feel that existing solutions don’t meet their needs. These “shadow IT” applications bypass IT protocols, creating additional security risks and unnecessary expenses.
Strategies for Cost Optimization
Keeping SaaS costs in check requires a proactive approach. Here are some strategies to help you manage and optimize SaaS expenses effectively:
1. Centralize Your SaaS Management
Centralizing SaaS management gives finance and IT teams a single point of visibility into all software subscriptions, helping them identify unnecessary costs quickly. Platforms like Josys provide a centralized system to track, monitor, and manage SaaS subscriptions, making optimizing and avoiding duplicate purchases easier.
2. Conduct Regular SaaS Audits
Set up routine audits to evaluate current SaaS usage and identify redundant, underused, or no longer necessary tools. During each audit, assess whether each tool meets the organization’s needs and adjust licensing as needed. Audits can highlight areas where departments are overspending or using multiple solutions with similar features.
3. Monitor Usage and Align Costs with Actual Needs
Tracking usage across departments ensures that each license is used effectively. Monitor app usage regularly to avoid paying more than required, and reassign unused licenses when possible. By aligning spending with actual needs, you can ensure that your SaaS investments genuinely support productivity rather than waste resources.
4. Align SaaS Investments with Business Goals
When you understand the role of each tool within the organization, you’re better equipped to make strategic decisions. Align your SaaS spending with broader business objectives by involving key stakeholders from finance, IT, and department leads in decision-making.
5. Automate Renewal Management
Keeping track of renewal dates manually can lead to missed deadlines, resulting in service interruptions or unwanted auto-renewals at unfavorable rates. Automate renewal management with reminders or through a SaaS management platform to stay on top of renewal cycles, giving you time to renegotiate contracts or cancel unnecessary subscriptions.
Conclusion
If managing your SaaS applications has become a challenge, consider using a dedicated SaaS management platform like Josys. By providing visibility, tracking usage, and helping you manage renewals, Josys can help you streamline SaaS spending, reduce costs, and make smarter software investments. Start by assessing your current SaaS landscape to identify opportunities for cost optimization—your IT budget will thank you.
