In this guest article, Uri Haramati, co-founder and CEO of Torii, examines the four types of company cultures when it comes to optimizing SaaS spend. Are you living in the Wild West, the Economical East, Secure South? Or have you found your True North?
How do you optimize SaaS spend? Answer quick—the pressure is on!
A recession is rolling in and organizations must prepare now. Leaders from IT, Procurement, and Finance need to examine their tech spend and look for ways to cut costs and build efficiency. It’s not easy, but it’s long overdue—and SaaS applications are a great place to start.
The relationship organizations have with applications is more complex than ever before. That’s because cloud applications are easier than ever for anyone to acquire and implement.
That easy adoption creates decentralized ownership and management. And for IT, that should be a cause for concern.
The typical organization has three to six times more apps than IT and finance teams realize, thanks to Shadow IT. That means budget and security are being altered outside their purview—and yet when push comes to shove, they’re still responsible.
If you’re going to cut costs without cutting the business value of your applications, your strategy needs to have a sustainable end goal—a “true north” to guide you.
So, what’s the best way to embark on this journey? No different than a road trip, it’s all about the route you take.
But before you can plot the road ahead, you must begin by understanding where you’re starting.
Understand Your Starting Point
How does your organization interact with SaaS? We have examined the most common company cultures around SaaS spend management. In doing so, we recognized four “types” that seemed to reflect their habits and trends.
Those trends can be difficult to spot from the inside, and their weaknesses may not immediately present themselves.
See if you can place your organization in one of the geographies below.
Do you value innovation above all else? Does your company allow employees to explore applications at will? Do you have a permissive IT policy for app adoption? If so, your organization may exist within the Wild West.
Organizations here excel at finding creative ways to leverage technology and spur innovation, but they also excel at creating SaaS waste. Redundant applications and orphaned or underutilized licenses bloat costs.
Equally important, the wild west is fertile ground for Shadow IT. Those hidden apps contribute to bloated spend and also create security risks. After all, IT can’t manage what it can’t see.
Maybe you’re on the other side of the map. Are you unimpressed by shiny, new applications? Do you obsess over contract costs to ensure your tech spend remains low? Do you rip and replace when cost saving opportunities arise? You’re probably a resident of the Economical East.
Organizations here are less a victim of SaaS waste. Instead, they miss out on impactful opportunities to add value to their business. They may also find themselves in an exhausting rip-and-replace cycle, disrupting employees by replacing valuable applications in favor of less expensive alternatives. Apprehension to spend could also lead to longer life cycles for existing applications that are underperforming—just to preserve a stark budget.
Still doesn’t sound like you? Then maybe you’re an occupant of the Secure South. You likely exist in a highly-regulated industry, so as the title suggests, security is paramount. Allowing the decentralization of application adoption is too risky. IT frequently says “no” to avoid possible consequences.
Unsurprisingly, this leads to stifled innovation. Existing in the Secure South could mean missing out on top-tier applications. It’s a friction-filled land that is often devoid of the optimizations technology enables.
Uninhabitable Lands Longing For Something New
If you’re growing frustrated with one of the above geographies, it’s likely because you’re unbalanced in your strategy. The common marker in these lands is a lack of visibility. A fog surrounds IT teams and SaaS applications due to Shadow IT and decentralization.
Shadow IT is a consequence of sub-par visibility and can create wasted costs and endless risk, and a recent study found Shadow IT rose by 59% during the pandemic. That means conditions are only worsening.
But Shadow IT exists because these applications provide value to employees looking to improve their productivity and efficiency. Squashing it completely can cut value in the process (plus, good luck trying).
Now as a recession arrives, it’s time to formulate a strategy for SaaS spend optimization that’s sustainable.
True North: Optimized SaaS spend
Finding your “True North” involves finding the balance between cost and value. It means facilitating innovation without letting Shadow IT run wild or shutting it down.
The easiest way to do that is to improve your IT team’s visibility. When you have detailed, always-available information on the usage and cost of all the applications in your company’s ecosystem, you can see exactly where you’re starting from and better navigate where you want to go.
That requires a shift in perspective. IT departments need to transition to a connector role. Move from being the border between lands to being the customs agent asking for information and helping enable efficient entry and exit.
Look to SaaS management platforms that automatically discover Shadow IT. Invest in tools that make smart cost-cutting easier. Ensure your team has accurate data on usage and licenses in one central place. Leverage automation to reduce the burden on IT while accelerating operations.
In altering your perspective, you’ll clear the fog, discover your True North—and illuminate the ways you can cut SaaS spend while adding value to your business.