How to Reduce SaaS Costs?


More and more companies are now considering reducing SaaS costs. Here are some serious stats that will tell you why you, too, need to do so.

According to Gartner, the annual dues of owning and managing software apps can be four times the initial purchase cost. Subsequently, companies have to spend more than 75 percent of their total IT budget just on running and maintaining their existing software infrastructure. 

The number of software applications that a business may need is almost infinite. In contrast, the resources to operate these apps are finite.    

With forecasts suggesting that worldwide public cloud end-user spending is likely to grow by 23.1 percent in 2021, this article will discuss steps companies can take to control their cloud expense management. Let’s get started!

  • Improve Utilization Rate 

Software as a service is a neglected area of costs. Many CEOs and executives are usually under the dilemma that their personnel effectively use the software they have invested in. But in reality, the utilization rates are way lower than anticipated. 

It means the companies have the opportunity to reduce SaaS costs and save some serious cash. One good solution is to identify unused licenses since a large portion of the IT budget is wasted on them. Arrange a meeting with your personnel and discern who is using which subscriptions. Transparency of usage allows for a re-allocation of licenses and lets your organization decipher its future licensing needs. 

  • Relinquish Duplicate Apps and Overlapping Features  

Department-specific SaaS tools constantly emerge. Many a time, companies possess a suite of tools that do the same thing. This situation gets worse when line of business (LOB) purchases remains undocumented with IT. 

Overlapping functionality is a frequent occurrence for project management, team collaboration tools, sales intelligence, file storage, and sharing. To relinquish overlapping features for future purchases, make sure to compare and contrast the set of functions across all SaaS apps. 

  • Establish a System of Records for SaaS Apps      

Another step to reduce SaaS costs is the implementation of a central system of record that will maintain all your SaaS app details. Bear in mind that optimizing the SaaS stack is not an easy feat, so it would be best to continue using the information collected. 

Preferably, companies should record all these details in a single system of record and assign a SaaS manager to manage SaaS negotiations and contracts. 

Frequently maintaining records will aid budget optimization and allow metrics to serve as a beacon of light when making a SaaS purchase. 

  • Increase the Speed of Cloud Deployment 

A specific portion of your SaaS expenditures also goes towards un-provisioned subscriptions. Typically, organizations evade the ‘contract minimum’ strategy often preferred by perpetual license agreements. However, an inevitable lag between purchase and deployment still occurs in a majority of cases. 

While an app rollout is barely a fast procedure, lags show a huge problem that spooks the organizations. But the good news is a lot of SaaS vendors are open to negotiating contracts by keeping the deployment pace in mind. 

This could significantly reduce upfront commitments and also allow you to increase the speed of your cloud deployment.  

Struggling to Get Your SaaS Idea Off the Ground

DFY SaaS can help you avoid costly pitfalls by building in the right way from the start, so you can go the extra mile and increase your chances for success.

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