Adoption of SaaS (Software as a service) rose dramatically after the Covid-19 outbreak, as businesses explored new tools to help them stay afloat in a rapidly changing environment. Now, businesses are looking to update and optimize their SaaS management and investments. Karen Hodson, global procurement and real estate officer at email marketing platform CM Group, and global enterprise procurement manager Brittney Linville at sales enablement platform Highspot shared their ideas on how to unlock SaaS cost savings at SaaS management and optimization platform Zylo‘s second annual conference, 2022 SaaS Management Event (SaaSME).
Hodson said that improving SaaS management and driving cost savings starts with leveraging data and “getting full visibility into your SaaS footprint” by reviewing your company’s expenses, licenses, and utilization of software tools, particularly during a company’s M & A (mergers and acquisitions) activity, with new information coming in, tools overlapping and challenges with tracking down contracts.
Using a SaaS management platform like Zylo also gives businesses a holistic perspective of narrow concerns or requests coming from specific departments, Hodson added. For instance, if one department wants to renew a software license, companies can have organizational visibility on whether other departments are already using a similar tool, whether they got rid of the program to be renewed in the past, and why, how much they spent and so forth, Hodson explained.
“I think that it’s really important for any organization, in my opinion, to have procurement, and have that procurement be a centralized department. Meaning that we don’t belong to any single department. I don’t sit under the marketing team and we don’t sit under any particular department. And our goal really is to break down the silos between all of those departments, because when you’re buying for the organization, you really need to have the overarching view of expenses for the company,” said Hodson.
Linville recommends leveraging the power of data to ensure SaaS investments are money well spent. She says businesses should look at all their data sources, including their contract management system, AP system, corporate card system, and expense reports to manage cost savings and tackle redundant applications.
“Really looking at these expenses is a way to better connect with those business teams that you serve and helping set a strategy with those stakeholders, figure out what’s working and what’s not working for them, and come up with what apps you might need to migrate to those official channels, and then what can just be straight canceled because it’s not necessary anymore,” said Linville.
Linville detailed five strategies to drive SaaS cost savings:
- Prevent multi-channel spend – Ensure expenses are coming from the official channels in the company, and fold the usage of the software into your company plan to solidify the negotiation you put in place with SaaS vendors
- Review zombie apps and low dollar recurring spend
- Look for overlap and utilization data – Deprovision inactive users, review whether all licenses purchased are being utilized, and reassign unused licenses to people in other departments who might need them.
- Know the pricing models of SaaS -evaluate the downsides and advantages of choosing a per user pricing model, a platform fee pricing model, or a consumption pricing model.
- Negotiate with SaaS vendors – Have data to back up why you need a discount, understand the margins in the industry, leverage the growth of your own company, use benchmarks on pricing if they are available, and outline what the vendor is getting in exchange for the discount you are receiving.