How to Control Runaway SaaS Costs
Have you ever been paying your bills, only to ask yourself, “What are all these monthly charges?” $9.99 here. $14.99 there. Netflix, Prime, Hulu, Adobe Creative Cloud. Everything has gone subscription-based. This everyday, 21st century personal problem is also a major professional problem, as well.
A seemingly endless number of SaaS products are available to today’s businesses; both Statista and Gartner studies show that the SaaS market will climb at an annual rate of 17%-23% over the next five years. These services can easily take on a costly life of their own.
How much? Well, enterprise organizations are spending a yearly average of $10,000 per employee on software. For comparison, the average annual cost for a company to provide healthcare to an employee is $14,000, according to the National Business Group on Health. Yes, providing software is on par with providing healthcare, proving that it’s equally important (and costly) to businesses. This trend is moving beyond the enterprise since most SaaS options offer pricing plans that serve the small and mid-sized markets. The issue isn’t the pricing or even the software: it’s that most businesses aren’t efficiently monitoring SaaS costs as closely as other traditional software buys, making SaaS easily susceptible to overspending.
Case in point: in most organizations, a SaaS software license can be purchased by anyone within the company and the cost added to an expense report. IT has no visibility into this expense, no knowledge of it’s usage, and therefore no way to control the cost. This is the dreaded “shadow IT” you hear about.
Fortunately, all it takes is a little direction and the proper toolset to avoid overspending scenarios. Here are a few ways to identify, keep track, and rein in out of control SaaS costs to make sure you’re using what you pay for:
Compare, Contrast, & Benchmark
At this point, most of the functions you desire from a SaaS platform are offered by multiple providers–which means you get to choose. Lucky you! Unfortunately, this choice can often be time wasting and, at worst, paralyzing.
Sometimes you’ll find yourself testing out platforms that do almost everything you need except for that one essential task. More often you’ll find platforms are well beyond your budget, or they’re affordable but well below meeting your needs in an efficient, streamlined way. For instance, many SaaS providers only offer their service with a minimum number of licenses. If you’ve got a department of two but need to by a minimum of five licenses, that’s not going to work is it?
Before you know it you’re exhausted from searching for the perfect platform and settle–but because you weren’t satisfied with the service to begin with, you’re slow to take to the platform and it quickly becomes expensively underutilized or an afterthought that acts like a slow leak in your budget.
Avoiding this is all about setting expectations. Before beginning your SaaS search, establish a criteria that a desired platform needs to meet–and don’t settle! As you search, shop, and demo different solutions, stress test them with your biggest needs. Holding firm to those can’t-do-without features improves the odds that you’ll enthusiastically integrate your new SaaS platform into your workflow.
Once you’ve found the perfect SaaS platform–put it to use!
Let’s be honest, when money is approved to spend, nothing makes the budget stakeholders happier than seeing their dollars at work. Don’t hesitate! Immediately start an on-boarding plan, develop education and training, and run with the momentum. The more excitement you can build around a new product within your organization, the better adoption rate you’ll see. Taking this action will help you introduce a new tool into your organization that has high-potential for return, rather than becoming an OpEx line item that goes unused and unnoticed.
This might seem obvious, but as usage of SaaS options increase within your business, it’s easy for accounts to not only quickly multiply but remain hidden. Keeping track of your SaaS licenses can help you avoid costly shadow IT, forgotten cloud services, and subscriptions that go unused and whose invoices sneak their way through accounts payable.
If your organization is small enough, sure, a spreadsheet might suffice. Far too often, though, we’ve seen single IT stakeholders that hold all of the keys move on in their career and leave the business scrambling to recover login credentials, billing information, and other pertinent access details. Even worse in this scenario is the lack of transparency into SaaS usage. Understanding usage across multiple business units helps an organization determine if that service is beneficial or detrimental to their bottom line.
Don’t Do It Alone
Could you imagine coordinating healthcare benefits for your employees without the help of a healthcare provider? Of course not. Expert guidance is invaluable when you’re spending that much for such a vital service–and since software costs rival that of healthcare, shouldn’t you be pursuing expert guidance in managing that, too?