A Brief Guide To Cost Management For Saas

Optimal use of SaaS (software-as-a-service) solutions relies on effective management of the costs involved in leveraging the various cloud-powered platforms used by your business.

Here is a look at why this matters and how it can be achieved in a way that should help your organization to make savings going forward.

The rise of SaaS

Although SaaS is pitched as being a cost-saving measure, compared with running software on-site using in-house hardware, it can become a burden on already growing IT budgets if it is not kept in check.

In particular, SaaS spending can grow if employees are allowed to acquire cloud-based apps and charge their use to the company, without any centralized system being in place to monitor and control this practice.

The metrics that matter

Not every business will be overpaying for SaaS resources, although unless you keep tabs on key metrics and establish a baseline for your ideal inventory, you will have a tougher time determining where you sit on this spectrum.

Understanding and scrutinizing SaaS COGS (cost of goods sold), while also discovering and identifying apps used through the assessment of spending on company accounts, should be a priority.

In terms of the kind of period you should be studying to get a reliable overview of the current state of play, 12 months should be enough to help unlock the most important metrics and give you actionable insights.

The user habits to consider

Another factor which needs to be used when managing the cost of SaaS is the extent to which employees are actually using the various resources at their disposal.

Some solutions may have a high cost of licensing or a large, fixed fee to cover the subscription, but if they are only being harnessed by a handful of users, this could be seen as either an unnecessary expense or a wasted opportunity.

The issue of overlapping functionality

Another area in which SaaS spending can become inefficient is that of app functionality. If more than one piece of software you are paying for shares effectively identical functions with another established platform on your books, this is clearly far from cost-effective.

This can happen most commonly with team collaboration tools, where communication and file sharing may be offered by disparate solutions that are also used inconsistently from team to team.

Drilling down into this can help you to pinpoint SaaS apps that might be better to move away from, rather than allowing them to remain intact in spite of being demonstrably redundant.

The impact of policy changes

What may become apparent is that your current SaaS acquisition and usage policies are not adequate to encompass the kinds of spending you are aiming to achieve for this type of service within your broader IT budget.

If this is the case, then you not only need to pinpoint the services which are worth culling, but also ensure that employees are appropriately instructed on the best practices you would like to see put in place for SaaS cost management.

This is not just a good idea from a financial perspective, but also from the point of view of ensuring cohesion across entire teams and departments, as well as ensuring that everyone is on the same page in terms of platform experience, understanding and access to collaborative tools.

Ultimately, establishing a process by which employees can suggest prospective apps to be adopted, which can then be reviewed centrally and either approved or denied according to merit and cost, rather than allowing this to occur without any oversight, will stand you in good stead and achieve those sought-after savings you crave and make your funding stretch further.

Interesting Related Article: “Why Is Design Important for SaaS?