Software-as-a-service (SaaS) has become the bedrock of technological advancement and operational efficiency. However, the pace at which companies are adopting and scaling these solutions presents a multifaceted challenge.
We surveyed 130+ business and finance leaders from high-growth tech companies across verticals to gain a deeper understanding of how they are buying and managing their SaaS tools. Here are some of the key insights from the report.
#1 The SaaS Sprawl challenge
There's no denying that SaaS tools are essential for companies. With the average organization juggling over 100 SaaS tools, organizations find themselves navigating the labyrinth that is their SaaS stack, layered with a different tool promising to address a unique business need.
For organizations with over 250 employees, 41% utilize between 101 to 250 SaaS tools, while more than 12% employ over 250 tools.
However, due to decentralized buying processes and a lack of centralized visibility into their entire SaaS stack, companies often end up overspending on SaaS tools without accounting for duplicates, and distributed systems on employee devices and remote workers make it close to impossible for a company to gain visibility and control over their SaaS stack.
To control SaaS sprawl, regularly audit your SaaS stack to understand usage patterns and tool relevance. A SaaS Spend Management platform can help centralize the visibility of tools across your organization, eliminate duplicate tools and Shadow IT, and optimize your SaaS spend.
#2 The Opportunity Cost Challenge
The financial implications of SaaS sprawl go beyond direct subscription costs, affecting operational efficiency and resource allocation. The Total Cost of Ownership(TCO) of a SaaS tool exceeds what meets the eye.
An overwhelming 77% of leaders we surveyed mentioned that their SaaS spending increased year over year, demonstrating how SaaS pricing is an iceberg that goes deeper than what is visible on the surface.
To optimize subscription expenses, companies should regularly assess their subscription plans to ensure they match their actual needs, identifying and canceling underutilized or redundant subscriptions.
#3 The Data delta
There’s a lack of data. ranging from granular insights on tool usage to feature and use-case overlaps across tools. The lack of data often clouds decision-making for stakeholders - and considering the sheer number of stakeholders involved, the trial-and-error approach ends up costing companies a lot of time and money.
As mentioned earlier, deploying a usage analytics tool that can extract real-time data of a company’s SaaS usage and visualize it while intuitively highlighting gaps and overages could help streamline and optimize procurement and management processes, resulting in cost savings.
#4 Inefficient procurement journeys
Today, organizations' procurement journeys are almost like a twisted maze, with teams facing the challenges of opaque pricing, too many stakeholders opining on the broth that is their SaaS stack, and archaic methodologies from traditional software procurement practices that do more harm than good.
80% of organizations take over two weeks to buy SaaS tools and 15% take over 60 days. A shocking 10% require more than 60 days to procure a single tool.
To improve ROI, businesses should automate procurement workflows using AI, and invest in employee training and negotiation playbooks to enhance productivity.
What Leaders want
We asked leaders to highlight their biggest priorities as we step into the future, and a few key takeaways emerged:
With SaaS becoming a fundamental atom in companies’ operations and by extension, their success, the terrain gets steeper, presenting a new set of challenges. But where challenges arise, so do opportunities.
For deeper insights and data to navigate this terrain, learn how companies are procuring SaaS and managing their SaaS spend, peppered with information about how AI is entering the mix, how much organizations are investing in it, and some of the other key challenges, Download the Full Report Now..