Understanding SaaS Sprawl: The Hidden Costs of Uncontrolled Software Adoption!

SaaS applications have grown in popularity, offering businesses across industries a convenient and adaptable way to solve problems. From marketing automation to project management, SaaS tools have transformed the way businesses operate. However, there's a less-discussed downside to this convenience: SaaS sprawl.?

Uncontrolled SaaS adoption can lead to chaos, including redundancies and forgotten subscriptions. This "sprawl" can silently eat away your finances, turning the dream of increased productivity into a budgeting nightmare.

At the end of this blog, you'll find key strategies to overcome this problem. But before that, let's cover the basics.

The SaaS 'Sprawl' and 'Chaos'

SaaS sprawl refers to the uncontrolled proliferation of SaaS applications within an organization. This often occurs when departments or individual employees independently subscribe to various SaaS tools without proper oversight or central management. While each app might address a specific need, the lack of coordination can create a complex and chaotic IT environment.

Here's a glimpse into the current SaaS landscape:

• By 2025, SaaS is expected to grow by 85% of software used by the average companies, up from 70% at present. (Radix)
• The SaaS market reached a staggering $623 billion in the year 2023, with a compound annual growth rate of 18%. (Ardas)
• SaaS has become the fastest-growing cost center for many businesses, surpassing traditional on-premise software expenses.

These statistics highlight the increasing demand and financial significance of SaaS in today's business world.?

However, despite its benefits, unchecked SaaS sprawl can lead to many challenges, including unused apps, uncontrolled procurement, and wasted IT hours.?

Here are some “SaaS sprawl” stats which paint the picture better:

• 56% of SaaS apps in your company aren’t managed, meaning no one pays close attention to things like renewal dates, licenses, app usage, security, and compliance.
• ?On average, every company now has 4.3 orphaned apps and 7.6 duplicate apps.?

Common SaaS Management Pitfalls

Here are some common SaaS management pitfalls that you should be aware of:

1. Uncontrolled Procurement

In the age of self-service SaaS, employees can easily purchase applications with just a few clicks without keeping IT and finance departments in loop.?

This can lead to redundant subscriptions, with multiple teams or departments unknowingly subscribing to similar SaaS solutions. Studies reveal that 1 out of every 3 employees at Fortune 1000 companies uses cloud-based SaaS apps without the approval of the IT department.?

Uncontrolled SaaS procurement results in resource wastage, making it difficult to budget effectively and identify cost-saving opportunities.

2. Lack of Utilization Tracking

Without proper SaaS management, it's difficult to identify underutilized or abandoned apps. While businesses use an average of over 300 SaaS products, 53% of SaaS licenses remain unused, leading to wasted expenditure. Paying for unused licenses is like throwing money away!

For example, if your company pays $10 per user per month for an unused SaaS app with 100 licenses, that's $12,000 annually wasted. Shocking, right? ???

3. Automatic Renewals and Lack of Optimization

54% of businesses today lack optimization in their software spend. Automatic renewals can result in wasted spending if subscriptions are not regularly reviewed and optimized. Without proper oversight, surprise renewal costs and missed opportunities for cost savings can occur.?

Strategies for Optimizing SaaS Costs

We know that the above information might have left you stressed. However, with the strategies listed below, you can optimize your SaaS costs effectively.

1. Streamline Procurement

The key approach would be to control your spending with a centralized procurement process. Utilize software to find competitive pricing and negotiate better deals. You can further consolidate payments and establish spending limits with dedicated expense cards. This approach streamlines buying, reduces costs, and ensures you get the most value from your SaaS investments.

2. Track Utilization and Manage Access

The next strategy should be to identify areas for improvement. You can use SaaS management tools to find underused or orphaned applications draining your budget. These tools also help you automate access management to guarantee only active users have assigned licenses. Most importantly, schedule regular reviews to optimize license assignments and ensure you’re not paying for unused features or inactive users.

3. Plan ahead for Renewals

Surprise renewals are a hidden cost culprit. Use subscription management tools to gain visibility into upcoming renewals. Analyze usage data to identify underutilized licenses and redundant applications. We advise exploring alternative options before auto-renewing because you might find a better fit. If not, use data insights to negotiate better.

LivLyt - Your One Stop Solution to Optimize SaaS Costs

You know 94% of IT executives think managing SaaS manually leads to poor decision-making about SaaS spending. That's why you should consider investing in a SaaS management platform like LivLyt, offering you robust features to optimize SaaS costs.

LivLyt provides a clear view of all your SaaS expenses with a unified dashboard. You can easily track where your money is going, identify underutilized apps, and pinpoint your top spenders. LivLyt even tracks upcoming software renewals, ensuring you never miss a deadline.

And you know what you get easy access to unbeatable discounts, on your favorite SaaS apps directly from the dashboard.

These powerful features enable you to make data-driven decisions. You can eliminate unused subscriptions, optimize licenses, and negotiate better rates with vendors.

LivLyt users have slashed their SaaS costs by up to 30%, and with over 250 organizations already on board, it's the trusted choice for taking control of your SaaS expenses.

Conclusion

Unmanaged subscriptions lead to wasted spend on unused licenses and hidden costs. Take control by implementing SaaS cost optimization strategies and maximize the value of your software investment.

LivLyt empowers you to take action. Our comprehensive SaaS management platform provides the features and insights you need to reduce and optimize your SaaS spending.

Ready to learn more and see how LivLyt can help your business regain control over SaaS expenses?

Visit our website!