Forbes magazine reports that companies spending on SaaS applications is at it’s highest ever level with the average company spending over £274,000 per year ($343,000) on SaaS. With an annual growth rate of over 70% the costs are becoming significant. However over 70% of companies report that nobody is managing this important area of IT. Often the original procurement was done by someone who has now left the company or changed roles, effectively leaving the SaaS subscription as “orphans” with nobody to look after the service and associated costs. Typical midsized companies use over 120 apps so how can organizations make sure they manage SaaS effectively. Here are six steps to follow:
1. Ensure someone is taking responsibility for ownership. This does not mean restricting the use or choice of apps but instead providing a framework and effective procurement support.
2. Adopt an inventory management approach. SaaS apps are different to traditional software licenses in that the terms are more flexible so you can increase and decrease according to requirements.
3. Use what you pay for. Usage tracking is key for efficient management. Compare your usage to what you are paying for and take appropriate actions to increase overall usage.
4. Get rid of legacy and unused apps. Organizations are deploying new apps and don’t need legacy apps, yet they continue to pay for them. Identify the unused apps and cancel them to save money and reduce complexity.
5. Adopt a “Kaizen” approach. Managing SaaS is not a one off project but a process of continuous improvement (Kaizen). Review at least once every quarter and take appropriate actions.
6. Set targets and have an action plan. Many organizations are using less than 60% of what they are paying for however the benchmark is 85–90%. Set your own targets and work out an action plan based on realising the largest cost savings first.
SaaS usage will continue to grow because it makes business sense and the tools produce efficiency benefits. However like all things in business they need to be managed. TBSC provides tools and services that ensure organizations have the right quantity and type of SaaS subscriptions along with automating the management tasks to maximise R.O.I.
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