Stop SaaS Sprawl: Control your software spends

In the digital age, as more businesses migrate to the cloud, Software as a Service (SaaS) has become a cornerstone for businesses looking to leverage the best tools for operational efficiency. Tools like Slack and Microsoft Teams have revolutionized internal communication, enabling seamless collaboration and information sharing across global teams. In customer relationship management, platforms such as Salesforce and HubSpot offer businesses powerful tools to understand and engage their customers better, driving sales, and improving customer satisfaction through data-driven insights and automation.

However, as the saying goes, “too much of a good thing can be harmful,” and this rings particularly true in the context of SaaS sprawl. SaaS sprawl occurs when an organization accumulates an excessive number of software as a service subscriptions, leading to wasted resources, increased costs, and heightened security vulnerabilities. This article delves into strategies for managing SaaS sprawl, featuring insights from seasoned IT and finance executives on maximizing SaaS investments while keeping the portfolio lean and effective.

What is SaaS sprawl?

SaaS sprawl refers to the unchecked growth of SaaS or software subscriptions across an organization, resulting in redundant, underutilized, or unmanaged applications. This is further complicated by the decentralized nature of the modern software purchase dynamic where, hypothetically, an employee could buy a subscription to a tool they’d like to try or use with simply a credit card. While this brings about greater flexibility for teams without having to wait for IT to buy them licenses, it impacts a company’s software spends. With CTOs and CFOs unable to keep track of exactly how many tools are there in a company’s tech stack, who is purchasing them, who is accounting for them, these expenses can become a silent drain on a company’s budgeting and accounting processes.

The implications affect not just the financial bottom line, but also introduce security risks and operational inefficiencies.

Views from the frontline: SaaS sprawl affects the whole organization

We spoke to customers across various industries such as renewables and environment, IT services and consulting, software development, and design services, to name a few. The common thread emerging across industries, functions, and businesses centers around the challenges of complexity, cost management, operational efficiency, and the need for greater visibility and control in managing SaaS subscriptions.

1. Complexity and overhead: Businesses are grappling with the complexity of managing multiple software subscriptions. The administrative overhead associated with keeping track of numerous SaaS tools, each with its own billing cycles, user access management, and integration points, is a significant challenge.
   As noted by Anne Lene Holstad, earlier COO at Modulize and now at Medlytic, “Imagine being a Lean geek stuck watching founders and engineers go on wild goose chases for subscription receipts every month. It’s enough to make you want to scream!”
2. Cost management and optimization: The financial aspect of managing a SaaS portfolio is another common concern. With budgets under increasing scrutiny, companies seek to optimize their SaaS spend.
   Simen Fure Jørgensen, co-founder and CPO at Otovo, says “With more than 50 different subscriptions to software, it was a big and demanding job to keep control of expenses and receipts.”
3. Operational efficiency: The need to enhance operational efficiency by reducing the time spent on managing subscriptions and focusing on core business functions is a recurring theme.
   Patrick Skjennum, co-founder and CTO at Strise, spoke about how managing third party services, such as GitHub, Google Ads, Adobe, was an absolute chore that got in the way of their main focus — building Strise.
4. Visibility and control: Across the customers, there’s a clear emphasis on the importance of gaining visibility into and control over the SaaS landscape. Companies are looking for ways to better understand which subscriptions they are paying for, who owns them, and how they can be optimized to remove unused tools. This need for insight and oversight is crucial for making informed decisions about which tools are essential and which can be retired.

Businesses are seeking solutions that can address these issues head-on, helping them to streamline their SaaS portfolio, reduce unnecessary expenditures, and focus their resources on strategic priorities.

What can organizations do to stop SaaS from becoming a financial and operational drain?

The very first thing to understand is the trade-off between centralization vs. decentralization when it comes to software services.

Organizations would benefit from centralizing overview and control of SaaS subscriptions while maintaining the benefits of decentralized decision-making on which tools to use. Thus empowering teams to improve productivity and still maintaining control of software spends and accounting.

Step 1: Centralized SaaS management

Implementing a centralized platform to manage all SaaS subscriptions is crucial. Such a platform provides visibility into every subscription, ensuring efficient use and compliance across the organization. Spreadsheets aren’t going to cut it anymore. They are a good start to get an overview, but not enough to manage the complexity of managing cards, approvals, and accounting processes related to software spends; plus they inevitably get outdated.

Step 2: Collaborative decision-making

The procurement of new SaaS tools should be a collaborative effort between IT, finance, treasury (where applicable) and the other departments. This synergy ensures that technological needs are balanced with budgetary constraints and business needs, preventing unnecessary sprawl.

Step 3: Regular audits and reviews

Conducting periodic evaluations of SaaS tools to assess their utility, cost-effectiveness, and alignment with business goals is essential. This process helps identify and eliminate redundancies, optimizing the SaaS portfolio.

Expert insights from the field

Maximizing value with a lean portfolio

Seasoned executives highlight the importance of maintaining a lean yet effective SaaS portfolio. Key strategies include rigorous vetting, centralized governance, and regular audits to ensure that each tool serves a strategic purpose.

How can you achieve more with less?

• Streamline: Opting for multifunctional platforms could reduce costs and streamline workflows.
• Consolidate: Leverage consolidated demand to negotiate better terms with providers.
• Maintain overview: Utilize a SaaS management platform offers real-time insights into an organization’s SaaS environment, enabling proactive management and cost optimization.

For example, before consolidation: Imagine a marketing team using separate tools for each function: one for email marketing, another for social media scheduling, a third for customer relationship management (CRM), and yet another for analytics. Managing multiple subscriptions and switching between different systems is not only time-consuming but also prone to errors due to lack of integration.

After consolidation: The same marketing team could switch to a multifunctional platform like HubSpot or another marketing automation software, which offers email marketing, social media management, CRM, and analytics all in one integrated suite. This shift means the team now has one subscription instead of four, one unified data source, and a streamlined workflow that allows them to craft campaigns, follow customer interactions, and analyze results in a cohesive environment.

In this example, the marketing team achieves more with less by reducing the number of tools they use, which lowers costs and simplifies their daily tasks, allowing them to work more efficiently and effectively.

Tangible benefits

Reducing the number of SaaS applications yields significant advantages, including cost efficiency, enhanced security posture, and improved operational efficiency. Organizations that successfully manage their SaaS sprawl not only save money but also enhance their agility and security.

How Cardboard helps you tackle SaaS sprawl

To manage and effectively tackle SaaS sprawl, organizations need a comprehensive solution that not only provides an overview of their SaaS portfolio but also streamlines payment and accounting processes. That’s why we built Cardboard to offer a trio of core functionalities: Organize, Pay, and Automate, aimed at saving organizations time, money, and frustration in managing their SaaS subscriptions.

Organize your SaaS portfolio

Cardboard delivers a clear, unified view of an organization’s SaaS subscriptions, enabling IT and finance teams to easily monitor and manage their software subscriptions. This visibility is crucial for identifying redundant applications, underused subscriptions, and opportunities for consolidation. With Cardboard, decision-makers gain the insights needed to optimize their SaaS landscape, ensuring each tool delivers value and aligns with business objectives.

Streamline payments with virtual cards

One of Cardboard’s standout features is our use of virtual cards for subscription payments. This approach offers enhanced security, as each subscription can be associated with a unique virtual card number, reducing the risk of fraud and adding the flexibility to cancel a subscription by canceling it’s associated card without affecting other subscriptions in the tech stack. Additionally, virtual cards simplify the management of SaaS expenses, as they can be easily monitored and controlled through the platform. This not only makes subscription renewals hassle-free but also provides granular control over SaaS expenditure.

Automate receipt collection and accounting

Cardboard automates the tedious task of receipt collection and matching, a boon for accounting departments. By automatically gathering payment receipts and matching them to the corresponding subscriptions, Cardboard significantly reduces the manual effort involved in expense reporting and reconciliation for software expenses. This automation streamlines the accounting process, ensuring accuracy and compliance while freeing up valuable time for finance teams to focus on strategic activities.

By following Organize, Pay, and Automate, Cardboard offers a comprehensive solution to the challenges of SaaS sprawl. Organizations that adopt Cardboard can expect not only to regain control over their SaaS portfolios but also to realize significant cost savings, enhanced security, and improved operational efficiency. In a world where SaaS tools are indispensable yet challenging to manage, Cardboard provides the clarity and control needed to harness the full potential of Software as a Service.

Infographic: Understand and tackle SaaS Sprawl