SaaS waste is not an occupational hazard:
learn how to avoid it

Unnecessary. Inefficient. Not how you want your service described. But with the SaaS growing by 20% year-on-year, waste is becoming an urgent issue. 

Medium-sized businesses waste $1–$2 million annually on an overcrowded SaaS stack. 

Waste occurs when SaaS management is ineffective. A lack of management opens the door to unnecessary app spending and purchased software that is not used to its full potential.

Key problems caused by SaaS waste:

• Unnecessary expenditure
• Decreased productivity
• Shadow IT
• Reduced ROI on tech
• Less budget for innovation
• Falling behind the competition
• Misallocation of IT resources
• Compliance and security risks

You may be thinking—we have spreadsheets to track subscriptions and app usage. Is that enough to avoid SaaS waste? 

The answer is a resounding—no. 

Spreadsheets often negate cost-saving measures and are ineffective at highlighting the waste areas. On top of this, the manual monitoring of information takes time and could potentially lead to inputting errors. 

Instead, successful businesses benefit from automated management platforms for their SaaS stack. They help monitor and analyze data quickly and efficiently. 

SaaS in 2024 is blooming like a well-tended garden in the height of summer. But the economic climate of today calls for a thorough landscaping plan. Industries must prioritize capital preservation and long-term sustainability rather than ‘growth at all costs’. 

Now the threats of SaaS wastage are clear, it’s time to shine a light on where waste could occur in your business. And how SaaS management platforms can provide the visibility your company needs to weed out waste, make savings and grow.

A SaaS management platform can help to identify waste in four critical areas: underutilized subscription plans, unused licenses, redundant apps and ghost accounts. 

Underutilized plans

Think of a keen, hard-working employee within your organization. Now, imagine that they want to increase their productivity. Great! 

They research and sign up for a trial of three productivity platforms. After the trial, they buy a business plan, costing $25 monthly for their chosen app. Their productivity increases—but at what hidden cost?

High-tier subscription plans often include attractive features that meet the buyer’s needs. Yet, additional features that ‘come with the package’ and increase perceived value often prove excessive and remain unused.

People tend to overestimate their needs. Without clear visibility of budgets and the bigger picture, it’s easy to make a wrong decision and overpay.

Now, imagine that 1 in 6 of your employees make the same misplaced decision. And then, the underutilized subscriptions are renewed year after year, without reconsideration. 

What seemed like a good deal quickly turned into poor value due to SaaS wastage.

What is the best way to optimize your SaaS subscription costs?

Subscription waste can be hard to see within an organization’s packed SaaS stack. 

Unless you have a tool that adds visibility. 

To effectively monitor subscriptions, a centralized management platform must replace the time-consuming spreadsheets. 

You gain complete visibility of your SaaS subscriptions and can set up IT approval workflows for new subscription requests. 

You can avoid the waste sneaking back in by carrying out regular automated audits of your subscriptions.

Right-sizing comes next. 

With maximum visibility, cost optimization experts can help you analyze current app usage and point out where you can downgrade subscriptions without any productivity loss. 

For example, an audit of app usage may indicate that applications are better suited to a different department and can be reallocated. Or, perhaps contracts can be consolidated into organization-wide subscriptions for SaaS cost optimization. 

When drawing up contracts, vendor managers prioritize scalability, flexibility and favorable pricing to ensure that costs remain manageable and worthwhile as you grow. 

Discounts add the final touch. 

Most organizations overpay for SaaS, but with IT vendor management, you don’t have to. Vendor management services have long-term positive relationships with vendors and access to high savings on your SaaS spend.

Optimizing your subscription costs to avoid waste involves using a centralized management platform to see waste and right-size resources and getting discounts of up to 75% off. The money you save goes straight into innovation and growth for your company. 

With app subscriptions under control, let’s explore another blind spot prone to wastage. 

Unused licenses

According to stats collected by SaaS management services, companies are only using 49% of their provisioned licenses. Over half are wasted, resulting in significant financial implications. 

For context, consider a purchase of 700 licenses for Google Workspace at $13 a month per license. However, if you only have 500 employees who use the license that year, that’s a huge waste of $31,200.

Without complete visibility of your company’s software and licensing data, opportunities to recognize excess capacity are missed, and resources aren’t matched to the true needs of each department. What follows? A cycle of loss resulting from inaccurate budget forecasts. 

The solution? Gaining control with a centralized management platform. 

How can a management platform reduce license waste? 

Monitoring your entire SaaS stack on a single platform is a guaranteed cost optimization win.

Effective centralized management systems provide visibility over licenses. You can see how many licenses are assigned to employees and how many have yet to be assigned. 

It may also be that licenses are assigned but have yet to be used. Since 33% of software licenses within an organization’s stack are underutilized due to inadequate training, it is worth pairing an audit analysis with employee feedback to understand the cause of the wastage. 

Once you have a clear picture of your licenses’ efficiency and necessity, they can be redirected to departments requiring the resource or eliminated when it’s time to renew. 

Just like vendor managers can help with discounts, they can also assist with negotiations during renewals.

These negotiations consider your exact license needs, getting you the best value to maximize your ROI. Vendor managers make sure that there is no waste present from the get-go. 

Now you’ve reallocated or deleted unused licenses and are matching license purchases to your precise needs, you must employ a strategic approach to app management itself. 

Redundant apps

No one is questioning just how game-changing a fully-charged SaaS stack can be. 

Deloitte recently revealed that 50% of companies report that shifts to cloud-based applications impact company development most. 

However, the exciting options for workflow enhancement can lead to unwelcome cost surprises within a business. 

For instance, if your company has an enterprise contract for a collaboration app, but new employees are unaware of this tool, they may find their own solution. Then, there are duplicate apps on the system—double the expense for the same outcome. 

The average company has 15 duplicative online training apps, 11 project management tools, and 10 team collaboration apps. Whether these were purchased in ignorance of current company resources or by maverick employees with strong preferences, this Shadow IT siphons essential funds that could be used to stay ahead of market developments. 

To make matters worse, you may receive surprise renewal costs of unnecessary apps (especially if they are unauthorized purchases) with subscription autorenewals. 

Waste might sound minimal on a monthly basis, but it adds up. For example, an unnecessary autorenewal of Adobe Photoshop for 20 employees equals $8,800 of waste. 

For cost-effective asset management, an automation tool is a necessity. 

How can automated platforms optimize spend management?

Businesses are already making slow and steady progress in this area. The average organization used 269 apps in 2023, compared with 291 in 2022 and 323 in 2021, suggesting a slimming down of unnecessary apps. 

Like many of the waste threats mentioned above, automated centralization provides the visibility needed to optimize app spending and reduce waste. 

Management platforms like Spendbase allow you to view all sanctioned and unsanctioned app purchases. Cost optimization experts can analyze your app portfolio and highlight where subscriptions can be downgraded or apps can be eliminated without sacrificing productivity or value. 

Regularly carrying out tool rationalization with management platform audits can provide you with data on usage, efficiency, and integration capabilities. With these detailed insights, you can make financially informed decisions before subscriptions are up for renewal.

In addition, you can bring over-enthusiastic employees in line with financial priorities using a structured workflow for SaaS purchasing. 

Workflows can be set up using a centralized management system and involve submitting purchasing requests to the approvers—usually heads of departments, IT and finance. 

A critical element of this workflow is assigning an app owner upon purchase. This person will take responsibility for the correct usage of the app, monitor license needs and keep up to date with new features to ensure it is being used to its full potential. 

Two more things to consider are high workloads and the fast-paced working environments, which often cause the preparation stage before SaaS renewals to be overlooked—no one is alerted in time to assess opportunities for optimization.

Centralized management platforms remove the moments of heart-stopping dread when you realize unneeded subscriptions have autorenewed. 

The platform provides timely alerts and countdowns to renewals. It’s organized, prepared and puts you in the best position to capitalize on savings in renewal negotiations. 

Undoubtedly, weeding out cost waste with a SaaS management platform should be at the top of your agenda. But what if you could save even more budget and expel a few ghosts from your attic?

Ghost accounts

Over the years with your company, each employee will likely have accrued access to multiple applications. 

Projects end, priorities change, and people leave the company. But, access to your company’s SaaS may still be open. 

Accounts with access to business licenses and subscriptions that are no longer being used are termed ‘ghost accounts’. They expose your business to one of the most significant financial risks.

So, why do they pose such a considerable cost threat? 

Firstly, each account could hide hundreds of wasted license payments that have been mass-distributed across the company. 

But worse still, every ghost user on your network increases the odds of a network security breach. 

1. The surplus access privileges held by the ghost account can expand the attack surface for malicious actors, allowing the theft of sensitive data or network incidents. 
2. Employees departing the company under contentious circumstances could exploit their access by damaging your systems or stealing important data. 
3. If individuals have access to sensitive data, this can even result in non-compliance. 

Unsubscribing users from licenses and subscriptions can involve human error, and ghost accounts could be unnoticed and accessible for long periods. 

The global average cost of a data breach in 2024 for a business is $4.88 million. However, you can avoid the nasty side effects of ghost accounts.

What are the best practices for dealing with ghost accounts?

It’s no secret by now that a centralized management platform is your answer. 

A management platform like Spendbase allows you to see every employee’s activity. The system highlights accounts that don’t use any apps, indicating they might not work for the company anymore. 

You can then take action, such as reassigning the unused licenses or canceling them entirely. The account can then be closed, safe in the knowledge that waste has been identified and eliminated. 

It is good practice to create a structured employee offboarding workflow, which includes checking their account activity in your SaaS management platform.