2023 Guide to SaaS Management
The average organization now uses over 300 SaaS apps. With so many apps spread across the business — and more being added every month — organizations are turning to SaaS Management to effectively identify, manage, and renew SaaS apps to ensure they’re delivering value.
In this guide, we’ll cover what SaaS Management is, what terms you should know, how SaaS Management benefits organizations, and why it’s essential that IT, finance, and procurement teams invest in a data-driven SaaS Management Platform.
What is SaaS Management?
SaaS Management is a process that enables businesses to regain control over all aspects of SaaS (software as a service) across the organization — from maintaining full visibility into what apps are in use and how they’re used to proactively managing spend, renewals, compliance, and more.
Download the “What is SaaS Management?” eBook for additional perspectives on SaaS Management.
Key SaaS Management terms
Before we dive deeper into SaaS Management and SaaS Management Platforms, here are some key terms that are helpful to understand.
A SaaS contract is an agreement between a service provider and a customer for the use of SaaS apps. In a SaaS model, customers do not own the software. Instead, organizations access it on a subscription basis, paying for ongoing use of the software. SaaS contracts typically outline the terms and conditions of the service, including the scope of the software provided, payment terms, security and privacy policies, uptime guarantees, and support services. SaaS contracts may include provisions for data ownership, intellectual property rights, and termination or cancellation of the service.
A SaaS license allows the customer to access and use the provider's software on a subscription basis. In a SaaS license, the provider grants the customer the right to use the software for a specific period, typically on a pay-as-you-go, monthly, or yearly subscription basis. The license outlines the terms and conditions of use, including the scope of the software, the payment terms, service level agreements, intellectual property rights, and termination or cancellation policies.
The SaaS license also typically includes provisions for data ownership, privacy, and security. As the SaaS model has become increasingly popular, the terms of the license have become more standardized, and customers are generally able to access and use the software with minimal upfront costs or technical infrastructure requirements.
SaaS usage refers to the extent to which employees are utilizing the SaaS apps they have access to. Measuring SaaS usage is critical for organizations to ensure that they are getting the most value from the service. Most organizations rely on login data and reports from vendors to measure SaaS usage. However, these methods don’t provide insight into if and how employees are using the features within an app. Employees may sign into an app but not actually use it.
SaaS discovery is a crucial step towards gaining visibility into an organization's SaaS environment. This process involves discovering and cataloging all of the SaaS apps in use, including those that are not officially approved or managed by the organization's IT department.
By using SaaS discovery tools, IT teams can scan the organization's network to identify SaaS apps, and then assess the risks associated with their use. This information can be used to develop strategies for managing and securing the SaaS environment, including consolidating redundant apps or negotiating better terms for the apps that are being used.
Shadow IT refers to the use of technology systems, devices, and apps by employees within an organization without explicit approval or knowledge from the IT department. This phenomenon is driven by various factors, including the ease of access to cloud-based services and the need for employees to be more agile and efficient in their work. However, it can pose significant risks to the organization, such as security breaches, data loss, and compliance issues. Therefore, it is crucial for organizations to have policies and procedures in place to monitor and manage shadow IT to ensure the security and integrity of their IT infrastructure.
SaaS procurement is the process of acquiring and implementing SaaS apps. This involves evaluating different vendors, negotiating contracts and pricing, and managing the deployment and adoption of selected SaaS apps. Key considerations include features, pricing models, security, support, and training. Effective SaaS procurement can help organizations optimize their use of SaaS apps, increase productivity, and reduce costs.
The process of renewing a subscription to a SaaS app already used by an organization is referred to as a SaaS renewal. When a business signs up for a SaaS subscription, it is typically for a defined period, such as one year. When the subscription period is coming to an end, the business must decide whether to renew the subscription or switch to a different provider.
SaaS renewals involve negotiating contracts, reviewing service-level agreements (SLAs), assessing the value of the software, and evaluating user feedback. It is important to ensure that the renewal terms align with the organization's needs and goals, and that the provider is delivering the expected level of service. Proper management of SaaS renewals can help businesses maintain continuity of operations, reduce costs, and ensure they have access to the latest features and updates.
SaaS retirement is the process of discontinuing the use of a SaaS app. When a business decides not to renew a SaaS subscription, they may need to retire the software from their operations entirely. SaaS retirement involves assessing the impact on the organization, such as identifying any data that needs to be migrated or replaced, as well as determining the steps needed to transition to a new software solution.
It is important to properly retire a SaaS app to avoid any disruption to business operations, as well as ensure compliance with any legal or regulatory requirements. The retirement process may involve working with the SaaS provider to ensure that all data is properly removed and that there are no lingering security concerns.
SaaS security is the process of ensuring the security and compliance posture of SaaS apps. As more businesses rely on SaaS apps to manage their operations, ensuring the security of those apps has become increasingly important. SaaS security involves evaluating the security features and controls of individual apps, as well as assessing the overall security and compliance posture of an organization's entire SaaS portfolio.
This includes identifying any security gaps or vulnerabilities in the apps, implementing appropriate security measures to protect sensitive data, and ensuring compliance with regulatory requirements. Proper management of SaaS security can help businesses mitigate security risks, reduce the likelihood of data breaches, and maintain customer trust.
Why do I need SaaS Management?
In this era of SaaS sprawl, businesses are using more SaaS apps than ever before. In fact, as of 2022, approximately 70% of total company software use is SaaS, and 38% of companies run almost entirely on SaaS.
As a result, a huge chunk of a business’s tech budget is spent on SaaS. And while that spend brings a lot of value to the business, a lot of it is also being wasted. This happens because organizations lack the visibility and insights needed to effectively allocate SaaS licenses, consolidate redundant apps, and manage SaaS renewals.
Businesses also need to be aware of the security risks that come with large tech stacks that have limited SaaS oversight. If IT and procurement don’t have full insight into what apps are being purchased, they are unable to verify certifications and ensure SaaS compliance. As a result, employees could be loading sensitive information into unsecure apps.
Get five security and compliance tips for your SaaS portfolio.
What are the top challenges of managing a SaaS application portfolio?
Without effective SaaS Management, it is incredibly difficult for organizations to confidently track, analyze, and manage many important SaaS metrics, including usage, spend, ROI, and compliance. Here are some of the top challenges and why organizations struggle to adequately address them.
Gaining visibility into all SaaS apps
The sheer number of apps within a portfolio, with apps constantly being added and removed, makes it extremely difficult to effectively track in spreadsheets. Employees using apps without the knowledge or approval of the IT department, teams purchasing and managing their own apps, and employees who own apps leaving the organization all add complexity to this problem.
Identifying which SaaS apps are being used and how
Employees purchase and access apps in a variety of ways, meaning teams need to constantly monitor a variety of systems, including SSO, finance, and expense systems to identify what apps are being used. Even then, many will slip through the cracks. And when it comes to understanding usage, companies often rely on SSO logins and vendor reports. Unfortunately, this data is often not granular or timely enough to truly understand usage and take meaningful action.
Ensuring SaaS apps are delivering value
The lack of measurable usage metrics makes it challenging to understand the value of SaaS apps, especially when different stakeholders have varying expectations. Another challenge is the difficulty in identifying user needs, which can make it challenging to assess whether a SaaS app is delivering them value. The cost of a SaaS app and its return on investment may also be difficult to calculate, especially if it is used by different departments or teams with varying levels of adoption.
Managing SaaS renewals
With SaaS contracts constantly coming up for renewal, it is hard to stay on top of when renewals are due. Lack of usage data can also make it challenging to determine whether an app is still necessary or whether renewal is justified. Procurement teams also encounter a lot of friction when it comes to aligning stakeholders and orchestrating reviews and approvals across siloed systems.
Automating SaaS license provisioning
Organizations struggle to automate SaaS license provisioning for several reasons. One challenge is the complexity of licensing models, as SaaS vendors may offer a range of licensing options with varying pricing structures, user limits, and feature sets. These licensing models can be difficult to navigate and automate, especially for organizations that use multiple SaaS apps with different licensing models.
Another challenge is the lack of visibility into license usage, which can make it difficult to determine when additional licenses are needed or when unused licenses can be reclaimed. This can result in unnecessary costs or underutilization of licenses.
Integrating SaaS license provisioning with existing IT systems and processes can be challenging as well, especially when SaaS apps are hosted in the cloud and require API integration to automate license provisioning. Finally, the lack of standardization across SaaS vendors can make it difficult to implement a uniform approach to license provisioning and management.
Maintaining security and compliance
Since SaaS apps are typically hosted and managed by third-party vendors, it can be difficult to enforce security policies or ensure that SaaS apps comply with industry-specific regulations or standards. Another challenge is the complexity of managing multiple SaaS apps with different security requirements or compliance standards, which can lead to confusion or oversight.
Additionally, the use of shadow IT can create security risks and compliance issues. The lack of visibility into SaaS app usage can also make it difficult to identify potential security vulnerabilities or compliance gaps. The rapid pace of innovation and updates to SaaS apps makes it challenging to keep up with security and compliance requirements.
Providing employees visibility into available SaaS apps
Without a centralized system or process for managing SaaS apps, it’s hard for employees to discover what SaaS apps are available and how they can access them. This can lead to frustration, reduced productivity, and potentially the use of unsanctioned SaaS apps without IT approval.
Another challenge is the rapid pace of SaaS app innovation, which can make it difficult to keep up with new or updated apps that may be relevant to employees. The use of multiple SaaS vendors with different user interfaces and access methods can also make it challenging to provide a consistent and streamlined experience for employees.
Finally, security and compliance concerns may limit the ability of IT to provide employees with unfettered access to SaaS apps, particularly those that require sensitive data or access to internal systems.
How does a SaaS Management Platform work?
SaaS Management Platforms (SMPs) make it possible for businesses to proactively manage SaaS app licenses, workflows, usage, and costs. SMPs come in different flavors. Some are primarily focused on controlling spend, others on license management.
The Productiv SaaS Intelligence™ platform connects with SSO, CASB, contract, expense, finance, and HR systems to combine organizational context with billions of employee app usage data-points, providing organizations with visibility into app usage, spend, contracts, and more. This data and insight enables organizations to effectively govern and rationalize their SaaS portfolios and streamline SaaS procurement to optimize costs and operational efficiency.
SaaS management software vs. SaaS Management Platform
SaaS management software, SaaS Management Platform, and SaaS management solution all refer to systems that help you manage your SaaS portfolio. Though you may come across a mix of naming conventions when researching ways to manage SaaS, they all refer to a similar set of tools. Gartner uses SaaS Management Platform to refer to these solutions.
What are the benefits of a SaaS Management Platform?
Organizations start evaluating SMPs for a variety of reasons. Oftentimes, IT teams are looking for a way to get visibility into all the apps used across the organization and improve workflows. Procurement teams want to be able to better manage renewals and gain the upperhand in negotiations. And in today’s economic environment, finance teams need to ensure the business is getting the most value from its investments.
The ideal SaaS Management Platform provides your organization with the data and insights to effectively:
- Govern your SaaS portfolio
- Rationalize your SaaS portfolio
- Streamline SaaS procurement
Govern your SaaS portfolio
Our data shows that 53% of the average SaaS portfolio is shadow IT. These are apps purchased by teams and departments that are not owned or managed by IT. As of late 2020, 49% of cyberattacks were due to shadow IT. SMPs can provide up to 100% visibility into the SaaS apps used across your organization along with compliance certification tracking for discovered apps. This helps IT teams better understand the organization’s risk surface and take action on non-compliant apps.
This visibility not only helps you understand what apps are in your SaaS portfolio, but also the usage, engagement, and spend associated with each. This can be segmented at the team and user level to understand the app costs associated with each department and understand where to focus efforts to improve app adoption.
Another important aspect of governing your SaaS portfolio is centralizing your contract visibility and management. In order for procurement teams to do their best work and proactively manage renewals, they need easy access to detailed contract information. An SMP can provide teams with one location for software contract information.
Rationalize your SaaS portfolio
We found that only 45% of app licenses purchased by organizations are being regularly used by employees. That’s a lot of wasted SaaS spend. SMPs help combat this SaaS spend problem by enabling IT to compare and consolidate redundant apps and rightsize app licenses so the organization only pays for what employees use. Learn more about IT cost optimization strategies.
Managing licenses is a big part of rationalizing your SaaS portfolio. It’s easy for SaaS license management to become a full-time job, which isn’t sustainable for many organizations. SMPs can reduce IT time spent on manual tasks up to 90% with automated license provisioning, reclamation, and more. This can be done by providing employees with automated approval workflows for IT-sanctioned apps and setting custom thresholds to remove access or downgrade employee licenses based on app and feature usage.
Streamline SaaS procurement
With many businesses managing multiple SaaS renewals a week, it’s critical for procurement teams to stay on top of upcoming renewals. SMPs help procurement teams proactively manage renewals with contracts, calendars, alerts, and usage data all in one place.
The software procurement process at most organizations today is spread across a variety of disparate systems with siloed data. And bringing together the people, processes, and data needed to buy and renew software is a friction-filled experience for procurement teams. By using an SMP that provides automated procurement workflows for software intakes and renewals, along with license rightsizing recommendations and pricing benchmarks, teams can effectively streamline the procurement process, reduce risk, and drive stronger negotiations.
What’s the best platform for managing SaaS?
Productiv is the only SaaS Intelligence™ platform for the modern enterprise. More than a SaaS management solution, Productiv aligns IT, procurement, finance, and business leaders with trusted data to unlock the most value from SaaS portfolios at scale.
- Proactively govern all of your SaaS apps with a trusted system of record for SaaS engagement to reduce risk exposure.
- Confidently optimize costs and manage renewals using feature-level app usage analytics, spend recommendations, and alerts.
- Improve the quality and velocity of cross-team decisions through better alignment based on reliable data and automation.
The Productiv SaaS Intelligence™ platform has been named a Leader in SaaS Management by GigaOm and has been listed in four Gartner Hype Cycle™ reports. Additionally, a commissioned study by Forrester Consulting concluded that organizations could achieve 234% ROI on Productiv with a payback period of less than six months.