Editor's note: The following is a guest article from Jason Patterson, head of the business value advisory group at Flexera.
IT asset managers face a whole host of factors that deliver budgetary pressure.
The pandemic, its impact on the economy, competitors, employees, suppliers, shareholders, government regulations and more contribute to the need for comprehensive IT asset management (ITAM) initiatives.
Yet, while the need to keep costs from skyrocketing is a top priority, a significant problem remains: waste. Gartner estimates that more than 30% of the $102 billion spent on software-as-a-service (SaaS) in 2020 was unused.
The good news is that for teams ready to embrace SaaS asset management initiatives, the payoff can be significant. SaaS management is a crucial element of technology value optimization (TVO), which provides visibility into an organization's full IT asset estate. TVO eliminates silos often present across the cloud environment, physical devices, on-prem data centers and virtual machines.
SaaS management, as part of TVO, can provide clear data about assets, helping rightsize for software license and spend, while also managing risk and compliance. SaaS management can:
Provide cost control, by governing and planning software spend, identifying waste from unused software and flagging unused or underutilized SaaS applications that are candidates for cost reclamation.
Deliver visibility into the enterprisewide catalog of sanctioned and unsanctioned SaaS usage; and
Improve security, by identifying and remediating unauthorized access to SaaS applications.
The top areas of opportunity for optimizing SaaS spend come from identifying the low-hanging fruit. The following guidelines can help the organization take attainable steps to reduce SaaS overspend.
1. Set corporate objectives for utilization of SaaS subscriptions
Establish clear objectives about the rate of SaaS utilization. A 90% utilization rate of SaaS licenses is achievable, but many organizations function at around 70%. That gap, between actual and targeted license utilization, can lead to millions in wasted spend.
The gap is also the attack surface that the organization should address. Regardless of the length of the license agreement (most license terms are 12 months, while some are monthly or quarterly), look at renewals as opportunities to optimize license position with SaaS providers to find immediate ROI.
Begin by identifying the publishers with which you have compelling events coming up soon. If a renewal agreement with a vendor is coming up in 30/60/90 days, use that as a starting place. Also identify where the organization has the largest spend; generally, the contracts with the largest spend also provide the most opportunity for optimization.
2. Dive into unauthorized spend and citizen's IT
If you start to dive deep into your connections into your financial management or purchasing systems, you can identify unauthorized applications, who owns them, the associated expense and the total costs. A robust SaaS onboarding governance program, which establishes processes around the technologies that the organization uses, can also strengthen the efforts.
By providing guardrails around SaaS usage, the organization can prevent wasted spend on applications that duplicate functions. For example, you may have a corporate-wide initiative to use Dropbox for file hosting, but an individual on staff may have purchased and be expensing a subscription from another provider, like Box.com. This presents an opportunity to transition the Box user away from that expense and onto the enterprise agreement for Dropbox, eliminating unsanctioned spend and perhaps lowering overall spend.
Because unauthorized access can also be disruptive to an organization's security and intellectual property (IP), taking swift action to eliminate it can also bolster security initiatives and the environment.
Make sure all SaaS purchases are compliant with company policy. For example, when a SaaS application is set up by a user outside of IT, employees sometimes use a personal (rather than corporate) email address as the recovery account. This and other settings may need to be reviewed by IT to ensure not just license compliance, but that security protocol is followed.
3. Look at granular activity to free up expensive licenses
Optimize investments so that each user gets the most functionality for their specific needs at the best cost, based on what's available in each supplier's catalog. Begin by identifying entitlements, then identify active and inactive users. This process allows the organization to reclaim and reuse underutilized accounts.
Digging deeper, know who is using what products. Does that individual truly require entitlements to the full Adobe Creative Cloud suite or might a subscription to just Photoshop be sufficient? Reviewing assets this way allows downsizing of entitlements or harvesting of underused licenses for reassignment to another user.
If a staffer isn't using everything offered in a particular subscription, such as Microsoft Office 365, that person can be downgraded to a lower-level — and less expensive — plan.
4. Know who shouldn't have access, but does
Nearly nine out of 10 ex-employees continue to have access to sensitive applications, including SaaS such as Salesforce, even after their term of employment has ended, according to a survey by Osterman Research. While this clearly presents a significant security issue, it also presents an opportunity to rein in SaaS spend. Identify — and terminate — all suspicious or unauthorized activity.
Managing SaaS spend is just one piece of the overall process of technology value optimization. A thorough approach to ITAM must evaluate the entire hybrid IT estate. But getting the full financial value of your technology investments can begin with identifying and eliminating your SaaS overspend. The steps are small; the potential payoff is significant.