SaaS Waste: The Hidden Drain and How to Fix It

The increasing adoption of Software as a Service (SaaS) solutions by businesses has led to a surge in the SaaS Management Platforms market. This rapid growth, however, has also brought about a significant challenge: SaaS wastage.

What is SaaS Wastage?

SaaS wastage refers to unnecessary or inefficient spending on software applications. This often happens when organizations subscribe to applications that are underutilized, overprovisioned, or purchased without proper authorization (shadow IT).

The Impact of SaaS Wastage

SaaS wastage can have a significant financial impact on organizations. The average company wastes around $135,000 annually on SaaS tools that aren't needed or used. This wastage accumulates over time, straining IT budgets and limiting investments in critical areas.

AlphaSaaS's data reveals alarming statistics:

• Companies with 200-399 employees waste $500,000 per year.
• Companies with 400-749 employees waste $1.3 million per year.
• Organizations with 750-2,000 employees waste $2.3-$2.8 million per year.
• Enterprises with over 2,000 employees waste as much as $4.5 million per year.

The Root Causes of SaaS Wastage

Several factors contribute to SaaS wastage, including:

• Maverick buying: Individuals or departments purchasing software outside of established procurement channels, often leading to tools with little business value, fragmented buying processes, and missed opportunities for negotiation.
• Lack of employee training: Employees not fully utilizing software features due to insufficient training, leading to idle subscriptions and untapped potential for productivity and revenue growth.
• Redundant and duplicate tools: Different departments or individuals procuring tools with overlapping functionalities, resulting in unnecessary licensing costs and missed opportunities for volume-based discounts.
• Employee offboarding: Failure to deactivate accounts and revoke licenses of departing employees, leading to continued resource consumption and unnecessary spending.

Addressing SaaS Wastage

Organizations can implement several strategies to effectively address SaaS wastage:

• Centralized procurement process: Implementing a centralized process with an automated solution like AlphaSaaS ensures oversight of software acquisition, prevents maverick spending, aligns tools with business goals, streamlines approvals, and maximizes SaaS value.
• Application rationalization: Conducting a thorough assessment of existing software to identify redundancies, underutilized subscriptions, and instances of shadow IT, allowing for informed decisions on canceling or consolidating tools.
• App ownership: Assigning an App Owner to each new software purchase ensures in-depth research, team training, active tool utilization, and appropriate license management, preventing abandoned apps and optimizing usage.
• Structured employee offboarding: Implementing a workflow using SaaS management software to deactivate accounts and revoke licenses of departing employees, preventing unnecessary spending on inactive subscriptions.
• SaaS inventory management: Utilizing dedicated SaaS management solutions like AlphaSaaS to automatically track software usage, identify optimization opportunities (duplicate apps, downgrading plans), and maintain an updated inventory with minimal manual effort.

The AlphaSaaS Solution

AlphaSaaS, a SaaS ROI Optimization Suite, offers a comprehensive solution to combat SaaS wastage and maximize returns on software investments. The founders, Mohd Azam and Mohd Amir, identified this critical need during finance audits, noticing the prevalence of dormant SaaS tools and manual reporting burdens.

AlphaSaaS's Key Features Include:

• App Discovery: Tracking all tools used within an organization, monitoring usage patterns, and identifying redundancies.
• Usage Analytics: Providing comprehensive Health Scores for all applications, using a HEART score inspired by Google's framework.
• User Feedback: Implementing in-app surveys to gather insights on user preferences and areas for improvement.
• Software Adoption: Boosting adoption through on-screen guidance for employees.
• License Optimization: Removing redundant and underutilized licenses to control costs.

AlphaSaaS stands out by bridging the gap between SaaS Management Platforms (SMPs) and Digital Adoption Platforms (DAPs), offering a unique advantage in the market. While SMPs focus on cost optimization and DAPs on user adoption, AlphaSaaS combines both aspects for ultimate SaaS ROI.

Conclusion

SaaS wastage is a growing concern for organizations of all sizes. By implementing proactive strategies, utilizing dedicated management solutions like AlphaSaaS, and fostering a culture of optimization, businesses can effectively address this challenge, maximize their software investments, and achieve significant cost savings.