If modern enterprises are to achieve the promises of a cloud-first future, business and IT teams must improve collaboration. For IT leaders, delivering data-driven insights from SaaS management (SM) is an ideal starting point.
Reason being, teams and individuals throughout enterprises procure and use the software in faster and more independent ways. During this process, IT is often removed from the central decision-making (or influencer) role but must nonetheless ensure that people use the right, decentralized tools.
Indeed, as seen below, the current trends of enterprises show that employees and departmental levels have a much bigger role in software purchases:
Employees are responsible for 50% of cloud app purchases, equivalent to 1% of total cloud spend.
Department level is responsible for 35% of cloud app purchases, equivalent to 70% of total cloud spend.
IT is responsible for 15% of cloud app purchases, equivalent to 29% of total cloud spend.
Centralized IT teams must now extend responsible levels of autonomy to business and engineering teams so they can efficiently deploy the tools and applications they need — especially for more technical use cases like data science, analytics, or engineering.
Automating the discovery and improvement of SaaS estates is one way for IT management to perform such nimble governance efforts without delaying productivity/innovation.
SaaS management: A driver for IT-business collaboration
Above all else, SaaS management (SM) is a perfect opportunity for IT leaders who want to lead continuous transformation efforts to use their technical knowledge to facilitate more open conversations with teams in finance, procurement, and security.
As Alm Brand's EVP Hjort-Madsen stated: "Being hidden is not as much fun as being able to show the value of your investments. Because if you can show the value, you get more money to innovate." For forward-thinking cloud companies, this process is contingent on efficiently documenting all decentralized applications in companies (i.e., shadow IT). Superior SM has thus become central to decision making, savings and investment, security management, and productivity.
SM activities have proven to produce a sort of "hive effect" where critical departments can connect, leverage one another’s insights, and, together, deliver business value. This is particularly important given the overlapping, functional IT-business responsibilities surrounding SM processes and cloud landscapes in general:
- IT drives productivity and cloud usage. It provisions and onboards new tools and administers existing ones.
- Finance controls spend and prioritizes financial responsibility. Finance guides budgeting, cost optimization, and planning.
- Procurement sources recommended tools at competitive prices and look for license consolidation opportunities.
- Security teams monitor vendors’ data access and ensure conformance to company policies.
The collaborative benefits of SaaS management
Insights into the following can easily be collected via dedicated SM platforms:
- Why are we over IT budget
- How do we get ahead of renewals
- What are the business reasons to use a particular tool
- What is our cost to onboard new market hires
- Have users adopted our recently purchased tools
Improving technology on-boarding
When IT leaders find transformative technology to deploy within the company, a challenge is realizing those benefits through full user adoption. To support this, IT must move from broad, company-wide outreach and institute targeted touchpoints to ensure users follow a prescribed usage plan. This outreach requires adoption rate and usage insights at departmental and user levels.
But granularity is difficult to assess without SM platform with integrations to the full suite of cloud tools you own. Though insights like “spend by the department” are useful for budgeting and cost-containment, many find other usage stats more illuminating, such as knowing the departments that don’t log in or who under-utilize enterprise tools (and can potentially be coached into increasing adoption) accordingly.
Proactive SaaS renewal optimization
Many vendors require notifications of non-renewals in the event that a customer chooses not to renew a contract. These are often overlooked or forgotten. The consequences for this oversight may be severe; SaaS auto-renewals often include price hikes and, in the case of reduced licensing, may revert to the price book’s highest level regardless of the previous term per-unit pricing.
Basic miscommunication and organizational details can derail cancellations. Does the legal, finance, IT, or departmental owner send the cancellation notice? Who actually is responsible for the contract? A vendor email may end up in a spam folder or be sent to a contact that has left the company. Now multiply the likelihood of each of these issues by the hundreds or thousands of contracts managed between procurement, finance, and IT every month.
These problems are specifically addressed by SM and SM tools. Robust SM platforms connect to contract management systems and assist with renewal management using automated renewal alerts and a highly visual, renewal timeline.
LeanIX finds this to be the quickest way to move from reactive to proactive contract optimization.
SaaS budget allocation and future planning
Headcount growth or shrinkage requires agile software cost optimization processes. Few FP&A departments can handle this dynamic employee movement with a basic budget spreadsheet approach.
Accurate planning and budgeting are even harder with decentralized buying and an ever-changing SaaS environment. IT leaders need to be able to support financial planning by knowing software spend by the department, as well as the standard software spend by the role. Imagine being able to answer: "how much software does someone in sales need to start?" in less than 30 seconds.
SM platforms help IT leaders collaborate on budget planning, define cash flow impacts, and guide accurate departmental software spend allocation when needed.