Picture this: You’ve spent the last few days generating reports on your organization’s SaaS spending. You have calculated how much money you’ve saved by reducing excess licenses. Winning! Your meeting with the CFO is in mere minutes. You’re ready.
You confidently present your findings to the CFO and then are hit with, “But how can we further reduce SaaS costs”?
Yep. It’s time to get creative with finding optimisations.
The average company is inching their way to leveraging 1,000 apps for their organization.
The average company is inching their way to leveraging 1,000 apps for their organization. **Record scratches**. Wait, what? We’re really using hundreds and hundreds of apps? The answer to this question is actually a clue to a more subtle way of reducing SaaS spend: identifying redundancies between the apps employees use to do their work.
There are a few categories of redundancy between applications:
• Like-for-like: This is when your organization has apps from different vendors that serve the same purpose. For example, Marketing might use Mural for ideation and Product Design uses Miro. When departments are empowered to purchase SaaS apps, they may not consult other departments to see if there’s already something similar in use.
• Overlap with bundle: Most companies will have a bundle of applications from one of their SaaS vendors, normally associated with their corporate email provider. Gmail comes with Google Workspace. Outlook comes with Office 365. Once you set up email, you get a whole bundle of applications, which your users may not know exist, nor know what those apps do.
• Feature overlap: Many SaaS apps, especially as they mature, will do more than just their headline function. Eventually as the feature sets of two applications grow, you could find overlap between them. For example, Zoom has an instant messaging feature for 1:1 text chatting that might be able to replace Teams or Slack, depending on how that feature is used.
It’s important to source feedback regarding app usage and the impact of change from every team involved.
Where does this redundancy come from? Often the infamous Shadow IT is at the heart of these duplicates. Different teams identify a need for a piece of software and instead of discussing it with IT, they use the department credit card to pay for a subscription.
That’s not the only root cause though. Employees may just not know what applications the organization already uses or whether those apps support the functionality they are looking for. Sometimes the feature sets of applications evolve over time or new apps get added to the bundles you are already paying for; an overlap may have emerged that was not there when you initially picked software tools.
These redundancies and overlaps represent opportunities for savings. If any of your users can get the functionality they need from another application you support, that increases the chance for shared licenses on one app and licenses to be reduced on another. Bam! You’ve just shown further reductions in your SaaS spend.
Of course, it may not be as easy as just picking one app to standardize. Users have preferences or unique use cases that require using one app over another. It’s important to source feedback regarding app usage and the impact of change from every team involved. A change will require training in the new tool and potentially transferring of data over (or at least archiving of data from the old app).
Stop the Madness
What can you do to get savings from redundancy in your appocalypse?
1. Provide an easy way for users to discover apps. Given the choice of all applications that exist in a category, it is inevitable that different choices will be made. An accessible list of apps to choose from (ie: an AppStore) will help nudge users to use one that you already have licenses for. In addition, as part of your vendor onboarding process, requiring employees to review existing applications in the app catalog can help ensure there’s no overlap.
2. Perform periodic reviews of the apps in use to understand whether new redundancies or overlaps have emerged. For example, within the Lumos platform, customers can set reminders before applications renew. This is especially helpful for expensive apps. These reminders can trigger a ‘consolidation exercise’. About four months before certain vendors renew, customers can review their catalog and determine whether they have another vendor that can do the job better and at a lower cost. This may even be something you can collaborate on with your compliance team as they perform access reviews.
3. Bring functional leaders into the process. They know best how their teams use different apps, whether they could successfully use another with similar features, and the cost of changing over. Instead of decreeing the consolidation of several apps, collaborate with teams to find savings - gather data around which apps people are using and why + coordinate with functional leaders to decide what can be cut.
“Redundant apps: that’s how we can save more money on SaaS”, you respond to your CFO, triumphantly. Optimistic, you march ahead knowing you have a plan to help ensure your organization is intentional with SaaS spend, with data to back it up.
Sound like a dream? It’s reality for Lumos customers. If you want a way to help users find the right apps for their work, a system for periodically reviewing apps, and insight into just how you can save on your SaaS costs, book a demo.