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Top 3 Challenges of Managing Enterprise SaaS Spend

Updated January 19, 2022

Large businesses are increasingly realizing they have a major problem around SaaS spend management. The use of cloud subscription services is going up but, unlike with traditional on-prem technologies, few companies had controls in place before the pace of SaaS and UCaaS adoption accelerated. And while SaaS applications were a lifeline for companies and workers when COVID-19 hit, the scope of expenses associated with so much cloud service sprawl is just now becoming clear.

Challenges of Enterprise SaaS Expense Management

For businesses trying to get their arms around ballooning cloud costs, three primary challenges stand in the way of managing their enterprise SaaS usage and spend.

1: Lack of Visibility into SaaS and UCaaS Services

One top challenge is that many large enterprises simply don’t know what’s happening within their business when it comes to SaaS and UCaaS services.

· What services do we have out there?

· Which SaaS applications are being used?

· Who’s using them?

· What type of subscriptions do they have?

The number of SaaS applications is likely to surprise you once you start digging. You may think you have a good handle on your productivity environment, where Microsoft Office and Google Workspace dominate. However, within those services there are a variety of subscription tiers that include different individual applications. So even if you’ve accounted for your core platform, it’s really just the beginning.

What about APIs? A subscription with Microsoft may also include APIs to support Teams, SharePoint and others. Salesforce and Adobe have their own fleet of APIs, often numbering in the dozens or more. Then there’s Zoom, standalone task management applications, one-off data storage solutions and any number of disparate platforms hanging around that aren’t widely used but support niche workflows.

Now multiply all those SaaS applications by the number of APIs that make each of them work. You could easily have hundreds within your organization without anyone knowing it.

2: Optimization of SaaS and UCaaS Costs

Even when you begin to gain visibility into your organization’s SaaS and UCaaS usage and spend, managing the related costs effectively is still a tremendous challenge.

API integrations can offer some insight into usage and subscription details. However, gathering and ingesting those data streams is a complex undertaking and few enterprises have the tools to do it effectively. Applying analytics to the information is even more difficult, but it’s critical to managing your SaaS environment. Without the ability to scrutinize the data, it’s nearly impossible to gain any actionable insights from it.

Enterprises may also combine information from other sources, such as an SSO solution and intelligence through their GL. Unfortunately, this strategy is time consuming to set up and maintain, and it delivers only rudimentary visibility in the end. You're still likely to gain only a glimpse into your organization’s full SaaS usage and actual costs.

You might also try to control SaaS & UCaaS spending by identifying data to conduct chargebacks for the applications you’ve discovered. By mapping costs back to a cost center or attributing expenditures to lines of business, it’s possible to let those units manage their spend themselves. This may result in minimal cost savings, but when compared to overall SaaS costs, it still falls far short of true spend management.

3: Governance of Subscriptions

Another piece of a holistic SaaS spend management strategy is governance, and it continues to be a big challenge for many enterprises. It’s important that you know not only what’s in use within your business, but also how it’s being used.

Free subscriptions: While not a direct cost, you can’t overlook free tier subscriptions. Some may be candidates for deactivation. If users are sharing data without proper oversight and controls, then their free subscription might need to be transitioned to a paid tier with the necessary security features. Free licenses can be difficult to discover since they aren’t hitting anyone’s radar through traditional channels.

Redundant subscriptions: Some individual users may have several active licenses each, resulting in expenditures for subscriptions that sit idle or are vastly underutilized. If the assignment of multiple licenses doesn’t align with your organization’s policies around primary and backup subscriptions, then one or more of those accounts should be eliminated.

Incorrect subscriptions: Different license tiers often provide different features and functionalities. You should know who can set up meetings and/or act as a meeting host, who’s attending meetings and how many participants organizers typically have. A free version may be a more cost-effective option, or the capabilities in the current SaaS subscription might not be appropriate for the user’s role.

Integrations: Another area within governance is developing insight into the integrations each SaaS service has with other tools. Do sharing permissions in one platform enable unintended features in another? If integrations are a paid feature but are unused by a subset of subscribers, can you migrate them to a different tier to save money? 

Governance focuses on ensuring users have correct access and the necessary security tools across every SaaS subscription, but it ties back to driving automation, reclaiming unused or unneeded licenses and consistently offboarding users from SaaS platforms to better manage spend. If configurations and permissions aren’t applied correctly during the onboarding process, a strong governance strategy can help you catch some of those errors and ensure they don’t contribute to your SaaS spend management challenges.

Ready to Take the Next Step in SaaS Management for Your Enterprise?

These challenges can be solved a number of ways, but trusting in a reputable TEM provider that specializes in SaaS expense and subscription management makes it easy. See how Calero can help you automate, validate and allocate all subscription usage and cost across the enterprise.