What is SaaS Management?

And how to implement it in your company
illustration of a man searching for rocks with logo on them
The management of software subscriptions, or SaaS management, has recently gained prominence due to the escalating use of online applications in businesses.

The plethora of these solutions, their subscription-based model, and the diverse spectrum of users has added complexity for managers. For executives, finance departments, or team leaders, it has become a daunting task to answer a seemingly simple question: "What are we spending on software across the company?"
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SaaS management raises a few crucial questions:

- Are we using the most suitable applications internally?
- Are employees truly leveraging the company-paid solutions?
- Who oversees the SaaS licensing budget?
- What procedure should be established to bring clarity to expense management?

This article addresses these questions while offering actionable advice on adopting a SaaS management strategy in your organization.

How do I manage SaaS in my company?

The starting point lies in identifying your data sources. Here's a list that ranks sources from the most reliable to those susceptible to human errors.

1/ Invoices, the indisputable documents

First off, invoices. However, these can sometimes be challenging to access. They can either be too many, in the case of monthly payments, or elusive (rather well-hidden) for yearly payments.

2/ Transaction records on the company's bank account(s)

These are your accounting lifeline! Missing an invoice? At least, you know where to look... Ideally, each invoice should correspond to a transaction from the company's bank accounts. Reconciling each transaction to justify expenses comprehensively is a legal necessity, known as "bank reconciliation."

3/ Software-dedicated payment cards

If you have an expense management tool in place, you also have the opportunity to categorize and track expenses through this platform. This would then hinge on employees meticulously tracking who handles each subscription.

4/ Routine reports from managers and/or teams

Perhaps you've already created a shared internal document (like a spreadsheet) that records and updates the team's SaaS expenses. This source, while simplistic, can give you an approximate idea of SaaS budgets.

5/ A Single-Sign-On (SSO) solution

Usually adopted by IT teams for security considerations, SSO enables employees to access various company software applications with a single login. This provides visibility into software usage, but doesn’t provide insights into associated expenditures.

Centralizing software spend data (and keeping it up to date)

Identifying sources is only the first step.

It's a recurring, laborious task that adds little value. However, the silver lining here is the possibility of automating data gathering and centralizing this information.

This is where SaaS Management tools come in handy. Data sources may vary between tools. At LicenceOne, we’ve opted to operate with various sources:

For expenses:

  • Linking to bank accounts
  • Integration with your accounting software
  • Manual entry or csv upload

For user logins:

  • Google Workspace integration
  • Browser extension

Other options exist, like using expense management tools with a dedicated card for software expenses. However, you won't be able to cross-reference user login data with this approach.

That’s the next step.

Cross-reference and gauge the value of software purchases.

Having gathered the necessary data, it's time to sort and categorize this information. You can now answer some of the questions posed earlier:

Are the internal applications in use truly relevant?

Armed with your list, you have the ability to continually question or challenge the significance of each application.

Are employees actively using the solutions that you pay for?

By juxtaposing the software's cost with its usage, you can pinpoint apps that were bought a while ago and are no longer in use.

Additionally, many SaaS tools operate on a user-based pricing model. An employee who has left your company but still maintains an active account represents an often overlooked cost! This doesn't even begin to cover data access issues, which we'll discuss further down.

Who’s in charge of overseeing the SaaS license budget?

Categorizing software by team allows you to assign or identify a budget manager for each expense.

Avoid the hassle of tracking down account administrators. Instead, turn to a universally accessible single source of truth.

What steps should you take to streamline the handling of expenses?

Upon concluding the analysis, it's action time. You have several alternatives.

Option 1: Set up a procedure and trust in your team's diligence (even though they likely have more critical tasks). You'll then need to ensure these new tasks are being carried out correctly!

Option 2: You can schedule all tasks via a project management tool. The tricky part will be connecting the actual information (usually in a separate document) with the successful task execution.

Option 3: Certain SaaS management platforms come with features like onboarding/offboarding, team assignments, role assignments, etc. Their main advantage is that they rely on real-time updated data.

Let's dive deeper into the management of processes.

Putting it into Practice: The Nuts and Bolts of Managing Your Company's Software Subscriptions

This isn't a one-size-fits-all recipe. It needs to be fine-tuned to your company's specific situation. We provide here a general framework, offering guidance on implementing an effective internal SaaS management policy.

1/ Pin down a single, trusted source for tracking expenses

  • A frequently updated spreadsheet
  • A dedicated project management tool
  • A specialized application

2/ Assign oversight roles

  • Invoice tracking (coordinating with bookkeeping and accounting)
  • Forecasting renewals, particularly for annual subscriptions
  • Negotiating or adjusting contracts

3/ Oversee employee access: onboarding and offboarding

  • Keep a tally of the number of users (particularly if pricing depends on it)
  • Manage additions, deletions, and role assignments

4/ Regular regulatory and compliance checks

  • Create a data map
  • Catalogue existing third-party integrations
  • Confirm legal aspects with the DPO (Data Processing Agreement)

The responsibility lies with you to create an internal policy. Establish best practices and engage your teams. Employees need to understand the financial, regulatory, and security implications of their online application choices and their usage patterns.

SaaS Management: Definition, Challenges, and Future Outlook

What is SaaS Management?

SaaS management pertains to a company's internal policy concerning the selection, steering, and expense tracking of software subscriptions. It extends to overseeing user access and their application usage.

Furthermore, SaaS Management can also encompass supplier contract management and negotiations. This involves services that can either be outsourced or kept in-house based on the company's policy.

The market is quite fragmented. With the aim of providing more clarity, we have detailed the technical characteristics and functionalities by category and positioned the different actors that can belong to multiple groups.

The software comparison platform G2 Crowd has also made this classification effort, and we have focused on providing more details.

See the different categories listed by G2 Crowd for IT Management

SaaS Management Platform: Key Features

These software solutions bring together all the information and functionalities necessary to gain control over SaaS in the enterprise.

  1. Detecting SaaS expenses (SaaS Spend Management)
  2. Compliance and usage tracking (SaaS Operations)
  3. Purchase optimization and negotiation (SaaS Negotiation)

Each of these features corresponds to a sub-category with specialized players.

Discover our list of the best SaaS Management platforms.

1. SaaS Spend Management Software

Expenses are first identified, ideally kept up-to-date at a reasonable frequency, then attributed to responsible parties, allocated by teams, subscription type (monthly, quarterly, yearly), and renewal date.

The sources used vary among different actors, from issuing dedicated payment cards, integrating with accounting solutions, to connecting to the company's bank accounts.

Key features:

  • Renewal detection and alerts
  • Expense history and evolution
  • Role management: allocation by team, by responsibility
  • Up-to-date information sources: bank account connection, accounting software integration, spreadsheet or CSV import, self-declaration, dedicated payment cards, etc.

Actors in this sub-category might prioritize different options.

2. SaaS Operations: Compliance and usage tracking

Compliance and access remain critical points. SaaS Operations platforms use different data sources to map out actual application users.

This can involve self-declaration, Single Sign-On (SSO) solutions, password managers, or browser extensions.

This information provides necessary visibility to manage enrollments when employees join, as well as unenrollments upon their departure or internal movements.

This tracking is mandatory for compliance on one hand and expense optimization on the other.

Key features:

  • Application usage tracking per employee
  • Task management and assignment (onboarding / offboarding)
  • Internal messaging integration / HRIS / notifications
  • History (log) of actions or tasks performed
  • Configurable alert for absence of connection
  • Detection of free applications
  • Integrations: Single Sign-On (M365, Okta, onelogin...), password manager (Bitwarden, Dashlane, LastPass...), web browser extension, etc.

3. SaaS Negotiation (or Procurement): Negotiation with SaaS vendors

Having the previously listed information and keeping it up-to-date are the two necessary conditions for effective negotiation with online software vendors.

This work is mainly done for the most expensive solutions used by the company. This involves negotiating discounts in advance, updating/optimizing the number of users, or proposing alternative solutions.

Key services (not features!):

  • SaaS partner marketplace (negotiated conditions)
  • Cost optimization: analysis of effective users, evaluation of best plans for internal use
  • Stack analysis: duplicates or overlapping features
  • Call for tenders / benchmark with equivalent SaaS solutions

Internal Challenges Surrounding SaaS Governance

Financial implications for the company:

Proper management of software expenses can unveil significant potential for savings. This expenditure has been on an upward trend for all types of businesses over the past decade, and it shows no signs of slowing down.

For context, here are some key stats:

  • Counter-intuitively, the smaller the company, the higher the SaaS budget per employee, around €10,000 per year per employee for SMEs. (Productiv)
  • Regardless of size or sector, companies subscribe to an average of around one hundred software packages. (Paddle)
  • Shadow IT accounts for 30 to 40% of SaaS spending! (Gartner)

The main stumbling blocks include unused licenses, unanticipated automatic renewals, and redundant solutions, and the list goes on. A SaaS management solution can help you wrestle back control over your budgets.

Regulatory and compliance implications for the legal team:

Data within a company, whether relating to employees or clients and prospects, is governed by various regulations, like GDPR in Europe and CCPA in the US.

Furthermore, the data held within software, its storage format, and responsibility in case of a breach are all detailed in the Data Processing Agreement (DPA). This legal document sets out the relationship between a data controller (the company) and the data processor (the software).

Access to this data, the DPAs, and the visibility of information within the company fall under the purview of the Data Protection Officer (DPO). Centralizing this data and improving internal visibility are key benefits of utilizing a SaaS Management solution.

Protection and security implications for the IT team:

The SaaS model has made it incredibly simple for employees to sign up for a plethora of tools on behalf of their company, adding to the complexity for IT departments to monitor and control access.

The initial task of cataloguing and listing the company's software has become a daunting task in itself. Moreover, managing user roles, tracking usage per employee, and the onboarding/offboarding capabilities of SaaS Management solutions can help mitigate these risks.

Navigating SaaS Subscription Management in Business: What's Next?

Major corporations have weathered the shift from on-premise to SaaS solutions, two radically different eras.

Traditional on-premise software often spurred competitive bids, centralized decision-making, and a strictly overseen rollout that demanded significant change management.

SaaS, on the other hand, has fragmented this information landscape. The simplicity of subscription models and their ease-of-use have empowered every employee to leverage online solutions bypassing traditional procurement procedures.

However, corporate IT departments quickly fought back. They confronted the emergence of Shadow IT and associated security issues head-on. Their response was implementing Single Sign-On solutions and putting a robust framework in place to manage software licenses.

Yet, SaaS usage isn't exclusive to large corporations. Small and medium-sized enterprises (SMEs) also utilize a suite of online tools, and they too grapple with budgetary, compliance, and security challenges. This is where LicenceOne steps into the picture, serving this emerging need by helping SMEs regain control over their SaaS Management, just as their larger counterparts do.

FAQ about SaaS Management

What is shadow IT? What is its connection to SaaS Management?
Is SSO an alternative to SaaS Management?
What is the difference between SaaS Management and IAM/SCIM provisioning?
Does a SaaS management platform offer negotiation services?
Are SaaS Operations Management, SaaSOps Automation, and SaaS Management synonyms?
Is SaaS Spend Management a sub-category of SaaS Management?
Is SaaS Vendor Management a sub-category of SaaS Management?