SaaS Spend Management
Learn about the world of SaaS spend management and how cutting-edge tools like Lumos can help you be a SaaS superhero.
Picture this: a world where SaaS management isn’t a mundane task, but an exciting adventure, one that calls for a hero with exceptional abilities. Enter our superhero: YOU! With Lumos as your sidekick, you’ll navigate the maze of SaaS subscriptions and renewals with the agility of Spider-Man and the strategic brilliance of Batman.
In our story, the villains are twofold: SaaS Sprawl, the many-legged sea monster made up of subscription after subscription, and Lord Shadow IT, a dark and devious figure who hides all the SaaS tools he’s squirreled away under his cloak. The impact of these nefarious bad guys? About $3,500 per employee per year for the average company. That’s right: most companies are spending way too much money on SaaS tools—and they probably don’t even know what they’re paying for!
It’s time to tackle these formidable foes. Armed with Lumos, you can cut costs and strategically invest in tools that propel your business forward (faster than a speeding bullet!). Let’s suit up, embrace our inner superheros, and get started on our journey of SaaS spend management.
What Is SaaS Spend Management?
At its core, SaaS spend management is a simple concept: optimize and/or reduce expenses associated with SaaS subscriptions. Optimizing SaaS spending is critical practice for modern organizations, particularly when reliance on cloud-based applications is rapidly increasing. However, while the idea is straightforward, the execution is often anything but. SaaS spend management strategies includes a wide range of activities, like:
- Tracking and analyzing usage data
- Evaluating licenses and contracts
- Negotiating new license agreements
- Creating new procedures for SaaS access
SaaS spend management must take a comprehensive approach in order to be effective. By implementing a robust strategy, your organization can achieve significant cost savings, enhance operational efficiency, and better align your tech stack with your business objectives.
What Are the Goals of Spend Management for SaaS?
While the overall goal of SaaS spend management is to reduce expenses, other goals include gaining visibility, data collection and analysis, and leveraging automation. Let’s take a closer look at each of these goals to help understand the deep importance of spend management for your business.
- Cost Savings. Do we need to say more? This goal is pretty self-explanatory and ultimately, all the other goals lead back to this one—imagine Cost Savings as the superhero leader of a group of other superheroes. They’re all powerful, but Cost Savings is the one in front with the shiniest cape.
- Increased Visibility. You need to know what’s going on in order to make effective decisions. Eliminating shadow IT—the issue of employees using SaaS tools that your IT team doesn’t know about—is vital.
- Collecting and Consolidating Spend Data. It’s vital to have a single source of truth in order to effectively carry out your SaaS spend management strategies.
- Spend Data Analysis and Reporting. This goal is a bit of a sidekick with the previous one. They’d have matching uniforms for sure—after all, data is no good if you’re not actively digging into it. Additionally, reporting is the key to demonstrating to your leadership the impact of SaaS spend management, ultimately justifying the investment in SaaS management tools and strategies.
- Leveraging Automation. AI this, AI that…you can’t turn around these days without someone talking about our new robot overlords. But automation is a powerful tool that you can and should be taking advantage of. Automation can help you reduce SaaS costs and eliminate repetitive, boring tasks (like downloading a new app or giving access permissions) that bog down your IT team. Plus every superhero team needs a cool robot!
- Enhanced Efficiency. All of the strategies should keep efficiency in mind—end users should have a streamlined experience to access the tools and permissions they need, IT teams should be able to quickly carry out requests, and your tech stack should end up lean and nimble.
Once your SaaS spend management team of superheroes is assembled, it’s time to start fighting the dreaded bad guys: the SaaS Sprawl sea monster and Lord Shadow IT!
What Is the Spend Management Process?
The SaaS spend management process includes several steps and strategies, like gaining visibility, assessing needs, procuring tools, managing your tech stack, and demonstrating success on an ongoing basis. (Hint: these steps are all made easier if you leverage spend management software like Lumos!)
- Gain Visibility. The first step is to know what you’re working with before you do anything else. You need to centralize your vendor data, software spend, and contract information. This database of all license, permission, and usage data will help you make informed decisions about software needs and usage in the later steps of this process.
- Assess Your Needs. What tools are actually being used? Which ones aren’t? Are there expensive SaaS tools that could be replaced with an alternative? Look for the fit and value of each SaaS tool in your tech stack carefully. It’s also important to consider who really needs access to which tools. Debra in accounting probably doesn’t need access to the marketing team’s graphic design software!
- Procure SaaS Tools. Using the information that you’ve gathered, you can then select the SaaS tools that your employees can use. With usage information, you can also make sure to only select the number of licenses your team will actually need.
- Manage Your Tech Stack Proactively. Now it’s time to enable your team—setting up an app store so that users can request access to the apps they need (and pre-setting permissioning based on their roles) makes it simple for you to be in control of your SaaS tools. Don’t forget to keep going back to the data to make sure the apps you’ve selected are actually being used! Tools like automatic license management can optimize the number of active licenses and reduce costs without burdening your IT team.
- Demonstrate Success. Be sure to pull reports on your software spend! Leadership loves to see how effective your SaaS spend management is—consider showing how the average cost per employee or department has decreased due to these efforts.
All of these steps can be carried out effectively with a SaaS spend management platform like Lumos. Let’s explore how our tech can help you control your SaaS expenditures and make the most of your technology investments.
What Is SaaS Spend Management Software?
SaaS spend management software is a specialized tool designed to help you effectively track, analyze, and optimize your spending on SaaS solutions. With Lumos, you’ll have comprehensive visibility into all your SaaS subscriptions and expenses, enabling you to make data-informed decisions about your SaaS spend.
What Does Spend Management Software Do?
According to the Gartner Market Guide for SaaS Management Platforms, this technology should include seven core capabilities:
- Discover both authorized and unauthorized SaaS use and cost.
- Manage your tech stack configuration and policies through a single dashboard.
- Optimize SaaS licensing through analytics, insights, alerts, and automation.
- Automate management taste with AI and machine learning.
- Protect your sensitive data within your SaaS tools by ensuring compliance with corporate, security, and regulatory standards.
- Govern your tech stack with reporting, alerting, and measuring.
- Enable employees to request easy SaaS access through an employee-facing app store or catalog.
Gartner also notes that the demand for these platforms has increased significantly. In fact, this report predicts that by 2027, 40% of organizations with multiple SaaS tools will move to using a SaaS management platform. This is an increase from less than 25% in 2022.
What Is an Example of Spend Management?
Let’s take a look at a real life example of SaaS management and how we helped one company save money and empower their IT team. Checkr, a company with over 1,000 employees, faced the challenge of managing a growing number of software tools and access requests—which were leading to skyrocketing software costs and significant inefficiencies. Their main goal was to achieve profitability while handling the overwhelming number of IT tickets.
Checkr focused on three SaaS spend management goals: cost savings, automation, and fast implementation. Leveraging Lumos, Checkr was able to:
- Create a self-service app store with only the essential apps and exact licenses people needed. This saved money by cutting out unnecessary apps/licenses, as well as eliminating tickets for the IT team through the automated processes set in place.
- Analyze app usage, reclaiming licenses from unused apps and allowing time-based access for others. This approach created a dynamic license pool that adjusted to actual needs, leading to cost savings.
- Implement Lumos in just 90 days, integrating seamlessly with Checkr’s existing systems and gaining all the benefits of SaaS spend management quickly and efficiently.
The impact of using Lumos for SaaS spend management was significant. Checkr ultimately accomplished:
- Automating 20% of IT tickets, freeing the IT team to focus on strategic tasks.
- Trimming $230,000 in software costs which more than covered the cost of Lumos.
Curious to learn more? Click here to read a first-person account of Checkr’s experience with Lumos and SaaS spend management.
How Can I Reduce My SaaS Spend? With Lumos.
Remember that staggering statistic about how much companies spend on SaaS? Ready for another one? Spending on SaaS tools may reach around $197 billion in 2023, an increase of almost 18% compared to 2022. It’s time for your SaaS spend optimization montage—like any great superhero story, the journey with Lumos is all about transformation: turning what was once a chaotic, costly SaaS environment into a streamlined, cost-effective powerhouse.
We know there’s a lot of spend management software companies out there, all promising the best SaaS management tools—that’s why we’ve put together our IT vault with resources, the Lumos Impact Calculator, and compiled stories of IT heroes to help you make your own decision. Or, if you’re ready to take on the role of a SaaS spend management superhero, we’re here to help. Schedule a demo today—together, we’re unstoppable!
