Discovery, assessment, optimization and control represent the four tenets of better enterprise SaaS management, but the vast majority of enterprises have none of these covered. Now one Silicon Valley company is leading the fight back.
Earlier this year, Techcrunch reported that the enterprise SaaS market passed $100 billion run rate revenue. Many see a figure this staggering and assume the market has matured. But SaaS accounts for just 20% of total enterprise software spending and remains small compared to on-premise software.
With consistent annual growth rates of 20-35%, it’s hard to believe that Microsoft, SAP, Oracle or IBM can stay hot. But, as John Dinsdale, Chief Analyst at Synergy Research Group, reminds, these were juggernauts before the cloud was even a concept – and still have huge on-premise customer bases to convert.
Behind the old guard are born-in-the-cloud vendors like Workday, Zendesk and ServiceNow. Jason Lemkin, CEO and founder at SaaStr, highlights the likely market trajectory for these companies:
“We will have at least 100 companies top $1 billion in ARR, probably many more. It is just math. Almost everyone IPO’ing [SaaS company] has 120-140% revenue retention. That will compound $100 million or $200 million to $1 billion. The only question is when.”
Contending with a buoyant SaaS market
In 2017, 43% of organizations relied on SaaS for 80% of their software needs. In 2019, that figure jumped to 86%. But there’s a downside to a workforce intoxicated by on-demand tools and apps. Consumption levels outpace companies’ SaaS management effectiveness. Sadly, few are prepared to handle the shadow IT, onboarding, cybersecurity, unmanaged spend and utilization issues that today’s consumption invites.
With no signs of SaaS letup, companies must move beyond manual management of licenses and costs. They must free HR, finance and IT headcount and improve visibility, savings and employee productivity in a scalable way. For this, Business.com recommends enlisting the help of a management tool. An article detailing the chaos of SaaS uptake suggests:
“Even with a designated employee or team of employees assigned to managing all your SaaS applications, things can fall through the cracks. [...] consider a SaaS management tool, which tracks usage, spending and optimization for each SaaS application at your company.
Don’t overcomplicate. Do organize.
In a recent interview, Cleanshelf’s Business Director, Devin Goodkin, shared a story about a customer’s deployment experience:
“A customer was blown away by how easy it was to setup Cleanshelf. Prospects hear “SaaS optimization” and think of an IT-led, resource-heavy effort with lots of data prep. During her Cleanshelf onboard, we plugged Cleanshelf into relevant data sources and within 30 minutes she had full insight into over 100 SaaS apps.
Re-establishing cloud control can be simple, but it requires a management tool.
Here at Cleanshelf, we break down the enterprise SaaS management process into four elements. As you evaluate solutions, ensure functionality within each of these.
Poor discovery is the root of most cloud issues. Contract non-compliance, renewal overpayment, siloed applications, and inaccessible data are normal when a leader doesn’t know what applications are being used, by whom and where.
Interestingly, most prospects want to mature their SaaS management processes. And security and control are top of mind. For example, PCI compliance is fundamental for many. Yet, this requires a first step of assessing “technology infrastructure” to identify threats. For companies with hundreds of SaaS apps, this is a non-starter. Visibility is only realistic with a management tool.
Inventorying apps is a critical first step. But it is actionable intelligence that turns visibility into a competitive advantage. This is the second enterprise SaaS fundamental: assessing the ROI on spend.
SaaS buyers have little leverage with vendors. Bought and deployed contracts are out-of-sight, out-of-mind for most users. So comprehensive SaaS management should include understanding of an app’s usefulness. Ideally, IT or finance has usage metrics to share with departmental managers.
As well, in an established SaaS management process, contract renewals are flagged in advance. Ideally, this is automated using renewal alerts on dashboard. With Cleanshelf, clients benefit from market insights. When an enterprise knows how much dozens of others pay, unlocking attractive terms and pricing during renegotiation is a reality.
Though SaaS buyers are well-intentioned, they often overestimate license demand and usage. Vendors woo managers through slick sales tactics or volume discounts. (One SaaS company has so dialed-in their sign-up flow, they boast 96% conversion rates). This leads to over-licensing. In many cases, multiple departments buy from the same vendor. The result is that companies over-purchase or miss out on discounts.
Another common issue is redundant tools. For example, take Slack and Microsoft teams. In growing enterprises, one department may favor a tool, while another department opts for a competing one. There, silos form. The problem the app is supposed to solve actually worsens.
In a well functioning enterprise, better SaaS management enables rapid optimization. And with Cleanshelf, AI-derived insights let managers make data-driven decisions on right-sizing.
Netskope found that the real number of cloud services inside enterprises is over 1,000. So while the days of full IT-led procurement versus employee-led purchasing may be over, this doesn’t mean full loss of control. Visibility, automated insights and application usage and engagement data can re-establish IT’s role in controlling technology. This means more than just clamping down on overspend, or regulating shadow IT. Above all, SaaS control rebuilds business partnerships. It adds collaboration, productivity and financial intelligence insights into the technology/business conversation.
Visibility, understanding and communication are essential for every enterprise project. However, in the case of SaaS management, they mean reduced cyber risk, cost-savings and improved productivity.
So, it's a question really worth asking: Is operating without a SaaS plan really worth it?