How To Optimize Your SaaS Application Portfolio?

Intro

Organizations rely heavily on SaaS applications to streamline operations, boost productivity, and improve customer experiences in today's competitive market. However, the management of these apps is frequently overlooked.

The proliferation of SaaS applications is apparent in companies now. As per the study by Productiv, the average number of SaaS applications used in a company is expected to reach 371 in 2023.

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But the question is, How well can these applications be managed?

The number of SaaS apps an organization uses doesn’t matter; what’s important is how these apps affect an organization’s security, revenue, and growth when not managed properly.

So, how do you effectively manage and optimize your SaaS application portfolio for greater business success? This blog will guide you through the steps to achieve this optimization, beginning with the adverse impacts of unmanaged SaaS apps on your business.

Unmanaged SaaS applications: What does it do to your business?

Unmanaged SaaS applications can create security and financial hassles, hurting your business's bottom line and growth. Unmanaged SaaS occurs when enterprises do not have a consistent approach or platform to manage their SaaS apps.

It occurs when applications are bought and utilized by an internal team or a single user without oversight from IT or financial teams.

Often, these unmanaged apps are tracked using error-prone spreadsheets. This manual approach to SaaS management is neither efficient nor productive. It leads to complexities like increased spending, non-compliance, and SaaS sprawl.

Manual SaaS app management was sufficient when dealing with less than 50 applications, but it's unsuitable for organizations with 200+ apps.

With manual management, you’re missing out on:

• A comprehensive view of the full SaaS portfolio
• Notifications of unapproved application purchases
• Departmental SaaS spending insights
• Usage pattern analysis
• Efficient user provisioning and de-provisioning

Understanding the Risks of Unmanaged SaaS

1. Increased Spending Due To Shadow IT

Unauthorized SaaS apps purchased using company credit cards cannot be tracked effectively. This will result in overspending and underutilized licenses, affecting a company’s bottom line. \

2. Rise of Duplicate and Underutilized Apps

Poor SaaS management and a lack of centralized visibility increase duplicate, free, and redundant apps, resulting in poor ROI and security issues. \

3. Data Security and Compliance Risks

Unmanaged apps will lead to security breaches and the loss of sensitive information. If an app is not compliant with regulations, it’ll impact your business operations too. \

4. Auto-Renewals

As unmanaged SaaS won’t be tracked by the finance or IT teams, the contracts might get auto-renewed, resulting in increased spending. \

5. Problems with Efficiency and Productivity

Unmanaged applications will create silos in communication, lead to poor collaboration, and hamper team productivity, ultimately affecting business operations.

Now that you know the implications and risks of unmanaged SaaS, let’s talk about simple ways to manage and make the most of your SaaS applications effectively.

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5 Ways to optimize your SaaS application portfolio

The swift adoption of SaaS has added management difficulties and constraints. To solve these issues, here are five ways to help firms optimize their SaaS application portfolios and get the most out of their SaaS apps:

Get complete application visibility

“MADX study reports that lack of application visibility in SaaS organizations leads to underutilized or unused SaaS app licenses. Nearly 1/3 of your SaaS can get wasted; this can mean hundreds, thousands, or even millions of dollars, according to the size of your company.”

Organizations must gain comprehensive visibility into their app stack to manage SaaS apps effectively. This visibility helps IT and finance teams determine which apps are being used, who's using them, and what they're being used for.

Enterprises with such visibility can avoid the negative implications of app redundancy, unsanctioned software usage, and poor resource allocation.

Decision-makers will be able to optimize their application stack, eliminating redundancies through consolidation and application rationalization. As a result, the SaaS stack will be optimized, increasing business productivity and operational efficiency.

Prevent shadow IT

As per the report by Gartner, 41% of employees acquired, modified, or created technology outside of IT’s visibility in 2022, and Gartner expects that number to climb to 75% by 2027.

The activity of purchasing and using SaaS apps without the IT department's knowledge is called shadow IT. Apps acquired through shadow IT can risk data security, impede compliance efforts, and result in fragmented workflows.

Getting 100% visibility is the easiest solution to combating shadow IT. Businesses can prevent unapproved or unsanctioned apps from entering their SaaS portfolio by proactively monitoring them and centralizing their procurement process.

Tools like CloudEagle can send immediate alerts when they spot unauthorized apps entering your system, offering a proactive approach to SaaS management.

Analyze application usage

Flexera stated that around 33% of SaaS software spend is underutilized by the team, leading to poor ROI.

Analyzing how SaaS apps are used within an organization gives significant optimization insights. By measuring user activity and engagement, decision-makers can determine which apps provide the most value and which are underutilized.

This data-driven method enables IT and finance teams to make informed license allocation decisions, allowing them to redistribute resources more effectively.

Analyzing app usage will help you identify if the app is really helping them complete the required task. If not, get rid of it and find a new app that your team will find useful.

Furthermore, it provides opportunities for employee training or enhanced processes to maximize the potential of already-existing apps.

Eliminate unused licenses or applications

License underutilization is a major hassle for companies, resulting in wasteful expenses. Businesses can negotiate with vendors using application visibility and usage research data.

With knowledge of actual usage patterns, businesses can negotiate license terms that ensure the number of licenses corresponds to actual demand. Only purchase licenses based on demand; surplus buying will lead to wasted investment and poor ROI.

Another clever way to optimize your stack is by consolidating two or more applications into one. For instance, if your marketing team uses OptinMonster for pop-ups and the sales team relies on Mailchimp for emails, you could consolidate these functions into HubSpot, which can handle both tasks.

Instead of two different applications for different use cases, you can use just one, making tracking and reducing software spending easier.

This procedure reduces waste and fosters a more cost-effective and strategic approach to software buying.

Use a SaaS management platform

You’ll need robust SaaS management software with relevant features to perform all the above-mentioned strategies. These platforms provide 100% visibility and centralized control over application management, making processes like contract management, license distribution, and renewal tracking easier.

SaaS management platforms can integrate with your internal SSO, HRIS, and Finance systems. These integrations enable the platform to see your complete SaaS stack and organize it along with your spending in one place.

Why rely on spreadsheets to track applications when you have advanced tools that can spot-shadow IT as it happens? These tools can also assist in optimizing your SaaS apps without requiring much manual work.

Not only will it provide visibility, but it’ll also provide cost optimization opportunities by revealing duplicate and redundant apps. You can analyze the usage, eliminate it, and optimize your portfolio.

This is also useful for processes like SCIM provisioning, as it’s not just necessary to know what applications are deployed, but also to track user identities across potentially disparate collections of cloud software. Being able to observe, monitor and manage all of this seamlessly and consistently is at the core of comprehensive portfolio optimization, regardless of the scale of this process.

Conclusion

Optimizing your SaaS application portfolio is essential for organizations that use a wide range of SaaS applications, as it can skyrocket your software spending.

Managing your SaaS application portfolio effectively is critical for increasing growth, reducing risks, and assuring operational excellence. Neglecting adequate management can result in wasted resources, security issues, spending escalation, and fragmented workflows.

This article discussed the five simple ways to optimize your app portfolio: from application visibility to preventing shadow IT, monitoring consumption, optimizing licensing, and selecting a SaaS management platform. These are tried-and-true approaches that organizations use to optimize their portfolio.

A well-optimized SaaS application portfolio serves as a driver of corporate growth, innovation, and long-term success.