You’re like most IT leaders. (“Hang on a sec, BRB. I’m dealing with a mission critical issue…
…okay, I’m back.)
You want to leverage SaaS products to help end users work faster and smarter. You want to be a good steward of the corporate credit card and your ever-expanding budget. But, it’s inevitable. You know when dealing with SaaS that money will probably slip through the cracks.
Where are those cracks and how does the money slip through?
Here are the seven places many companies are wasting money with SaaS vendors. (On-premise products are another animal to tame.)
1. Under-Negotiated Price & Future Terms
A great way to throw some cash down the drain is to not ask for a discount, buy in a desperate and reactive fashion, and pay full price (or close to it). Also, remember to ignore terms about automatic price increases, cancellation fees, services fees, and such. If times are good later on, you can probably get away with approving the increased future cost.
2. Underutilized Log-ins & Unused Licenses (aka “Over-buying”)
In many cases, utilization data can be difficult to get from SaaS vendors. Many leaders have access to tools and log-ins but they rarely ever use. When users don’t log-in, it means you’re paying money for something you don’t need. Some have called it, Shelfware – maybe we should just call it what it is: #SaaSWaste or maybe even #WastedSpend
3. Off-Boarding Employees & Deprovisioning
When an employee leaves, after HR sheds a few tears of sadness (or joy), IT is usually responsible for de-provisioning employees off of all the products they had access to. But do you know every singe product they were on, even shadow products you’re paying for? Struggling to de-provision from all products not only creates security issues, but also creates continued wasted spend if their access isn’t re-purposed. SaaS vendors benefit from the fluff in user count and many customers just keep paying.
4. “Oops! We Just Renewed.”
We know this has never happened on your watch. Or, has it? Many companies accidently auto-renew for a service they didn’t want to continue with. While it’s not always a $100,000 renewal, even the small ones add up month over month, year over year. Do you keep a list of dates for every recurring subscription renewal? If you don’t, at least start with the most costly and the most critical, like SSL certs & DNS renewals that might crash your site if they don’t renew on time.
5. Little-to-No Renegotiation
When accounting asks the busy IT teams or software buyers if they should pay the invoice, many don’t have the tools (let alone the time) to analyze actual usage against scope or put effort towards re-negotiation. The result: Many leaders just give the nod to pay the invoice. Many miss the chance to look critically at their spend because it’s too difficult and too time-consuming to merit the effort. Money is lost due to a lack of data, details and time to research and re-negotiate.
6. Duplicate Purchasing & Expense Reports
As a company scales, certain groups prefer specific tools, even if they do the same thing as other ones the company already owns. Buying duplicate products means you lose out on the cost savings of buying in bulk. It’s not uncommon for a company to have two different accounts with the same vendor! Because these are submitted to finance in separate expense reports, many businesses leave money on the table because they can’t see the opportunities for consolidation and cost savings.
7. Shadow Proliferation & Shadow Renewals
Since SaaS tools are designed to be easy to use, people add users to them. Those incremental costs add up. Unless you’re a well-oiled enterprise, you’re likely unable to see the increase in users and higher, unplanned cost until it’s time for that monthly or annual payment to hit the credit card.
A report of companies in the US from 1E’s 2015 report The Real Cost of Unused Software says companies spend between 20-35% of their budget on wasted software costs. How much might you be wasting?