Unused Apps, A Common Enigma

SaaS (Software-as-a-Service) tools are the backbone of modern businesses, empowering teams and driving growth. But with a vast array of options available, controlling costs and maximizing the return on investment (ROI) becomes crucial.

This newsletter delves into the intriguing world of SaaS spending, exploring how much companies invest and the factors influencing those decisions. We'll uncover a surprising trend: departments with the highest spending may not always yield the best ROI.

Typical SaaS Spend by Employee Size

Interestingly, the data reveals a crucial point: Marketing, Sales, and Customer Support departments often see the highest rate of unused apps within a year of purchase. The reason is that these departments have to adapt quickly to evolving market conditions and customer needs.?

They may adopt new tools to address specific challenges, but as needs change, the Marketing, Sales, and Customer Support departments might abandon those tools for newer solutions.

Our analysis revealed that the Engineering team had the best cost-to-ROI ratio despite being the highest-spending department. Meanwhile, the Marketing, Sales, and Customer Support departments had poor ROI. This shows where you must initiate your cost optimization efforts and effectively allocate your budget.?

How Much Are Companies Spending on SaaS? Benchmarks by Employee Size

SaaS tools are becoming essential for businesses of all sizes. But how much are companies really spending on these tools, and how many are they using?

SaaS Spend by Company Size

The data shows a clear trend: as companies grow, their SaaS spend increases. Here's a breakdown.

Small Businesses (10-100 employees): Spend between $250,000 and $1 million annually on SaaS, using 50-70 applications.

Medium Businesses (100-500 employees): Spend between $1 million to $15 million, with 100-300 apps in use.

Large Businesses (500-2500 employees): Spend between $5 million to $50 million, utilizing 300-400 applications.

Enterprise Businesses (2500+ employees): Spend between $40 million to $100 million, managing 300-400 apps.

Optimizing Your SaaS Spend:

Understanding these trends can help you make informed decisions and optimize your SaaS budget. Here are a few tactics for cost optimization:

• Consolidate features: Identify overlapping functionalities within applications and consider "full-stack" solutions to eliminate duplicate subscriptions.
• Analyze usage patterns: Collaborate with department heads to understand their tool usage patterns and identify opportunities for cost optimization.
• Start with "low-hanging fruit": Focus on departments with the most underutilized applications, like marketing and sales, and prioritize cost optimization efforts there.

By understanding your SaaS spend trends and implementing these recommendations, you can realize significant cost savings and maximize the value you get from your SaaS investments. For further insights and actionable recommendations, download the full CloudEagle report: [link to report ].

Let me know in the comments below what strategies your organization uses to optimize your SaaS spending!

Optimize Your SaaS Stack and Save on Spend - Book a demo