Despite efforts to trim budgets and cut the bloat, Australian companies are losing millions of dollars each year on underutilised software as a service (SaaS). With Gartner forecasting local SaaS spend will grow by 18.3 per cent this year, if left unchecked, the problem is likely to get worse.
Globally, research has found 33 per cent of SaaS spend is wasted, with a whopping 60 per cent of SaaS buyers regretting renewal.
It’s little wonder, given companies are leaving more than half of licensed SaaS applications untouched, with wastage attributable to factors like forgotten platforms and purchases by employees no longer with the company.
Speaking to Digital Balance clients, Fullstory’s Kim Hann quantified the problem: “Different departments might go and buy a particular solution without procurement or the IT department knowing about it. And, over time, you’ve got a range of technologies that are similar. It’s one thing to buy a license and look at the number of logins with the assumption that your employees or team members are using that solution. But do you really know how effectively they’re using it? Or how deep they’re going?”
If that sounds like something that could be happening within your business, there are untold cost efficiencies to be made by streamlining your tech stack. But where to start?
Assess the needs of your business
Begin by conducting a comprehensive needs analysis. What do you need SaaS for? What functions within your business are essential versus nice to have?
Identify the critical needs. This means distinguishing between the tools essential for daily operations and those that are like the icing on the cake. Essential tools directly contribute to your core business functions, whereas nice-to-have tools may add convenience or minor improvements.
Speak to each department within your organisation to determine what they need, what they have, and what they could do without. Different departments will have different requirements, and understanding these needs can help you tailor your tech stack more effectively.
Audit your SaaS
To recover budget spent on underutilised licences or features, you need to start by identifying the problem. An audit of your current SaaS tools is an ideal first step.
E-commerce advisor and chief experience officer at Adore Beauty, Nicola Clement, points out that more and more tech providers are taking a slice of the profit from e-commerce brands. She advises businesses to do a full audit. She says: “List everything you can find, get finance to help.”
You can also get a SaaS management tool like Wayfinder from Fullstory to do the work for you. These tools can automatically discover and track SaaS applications in use. This comprehensive tracking ensures no application goes unnoticed, providing a clear picture of your SaaS landscape.
Once you know what you have, identify the original intent in buying that solution. Does it still stand up?
Hann says: “Are you using the maximum features of that particular tech stack or, out of the 10 different modules that you’ve purchased, are only 30 per cent of your team members using it effectively because they don’t know how to use it or how to get value from it?”
Calculate the ROI of your SaaS investment
Measuring the return on investment (ROI) for your SaaS tools is crucial in understanding their value.
Hann says: “How often have we heard that procurement or the IT team wants to cancel a particular contract? People pipe up and say, ‘No, we need that!’ But do you truly understand how efficiently they are using that tool?”
To calculate ROI, you need to assess how much value each tool brings compared to its cost. This involves looking at the usage data, the impact on productivity, and any financial benefits derived from the tool.
Hann says: “What are they using the most? What is driving the value? Is it worth renewing that particular licence?”
Consolidate your tech stack
Now that you have a clear understanding of your SaaS usage and ROI, the next step is to consolidate your tech stack.
Objective data on how employees are using each tool can help surface applications that are underutilised or redundant, enabling more informed decisions about which tools to keep and which to cut.
Start with the low-hanging fruit – software no one is using. Then move on to the products with duplicated functions.
Fullstory’s Hann also recommends revisiting licence agreements. She says: “Eliminating unutilised licences can help you to better negotiate.”
By consolidating your tech stack, you not only reduce costs but also simplify your IT infrastructure, making it easier to manage and maintain moving forward.
Embed an ongoing training program
With your ideal tech stack in place, you need to ensure your teams know how to get the most out of it. Design and implement a training program that will ensure current and future employees know and utilise the full value of your SaaS investment.
Understanding employee workflows within and across applications is essential for optimising processes. By analysing how employees interact with different tools, you can identify opportunities for integrations and other workflow optimisations that enhance efficiency and productivity.
Regular training sessions can help employees stay updated on new features and best practices, ensuring they make the most of the tools available to them.
Reevaluating and optimising your SaaS spend can save significant resources, allowing your organisation to invest in more innovative and critical areas, such as responding to the onslaught of generative AI technologies.
Start today by assessing your current SaaS usage and implementing these strategies to maximise the value of your investments.
