5 Clever Ways To Optimize SaaS Spend

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As the growth continues, businesses must be careful about how much money they spend on these IT applications. This expansion makes it challenging to monitor pricing and ensure they get the best return on their investment.

By 2023, the Software-as-a-Service (SaaS) industry will be worth over $195 billion. This industry is rapidly growing and has quickly become the most crucial technology for the success of a business. 

With this development in the SaaS industry, many businesses are looking to adopt SaaS applications in their tech stack. By 2025, around 65.9% of spending on software is expected to go to SaaS technologies. 

Though SaaS applications benefit organizations, uncontrolled SaaS spending can significantly impact your revenue. This arouses the need for SaaS spend optimization to prevent businesses from overspending on SaaS applications and increasing their ROI. 

As a result of the economic uncertainty in 2023, businesses have already started to optimize their SaaS spend, and this article will provide effective strategies to help reduce SaaS expenses.

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1. What Is SaaS Spend Management?

SaaS spend management is the ongoing discipline of tracking, controlling, and governing your company's SaaS portfolio. It brings together visibility, governance, and operational processes to reduce waste while maintaining productivity and compliance.

• Centralized Discovery: Identifies all applications in use across the organization.
• License Optimization: Tracks allocation and reclaims unused licenses automatically.
• Contract Governance: Manages renewal dates and approval workflows in one system.
• Access Control: Ensures the right people have appropriate application access.‍
• Cost Reduction: Eliminates SaaS sprawl and enables data-driven spending decisions.
  

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2. What is the need for SaaS spend optimization?

Previously, an organization's expenses would be managed by one department—finance.

But, with an increase in autonomy for employees and IT spend, it has become harder to track and manage these expenses. SaaS has altered the game, making it much more difficult for IT teams to manage their budgets across the organization.

By optimizing SaaS spend, businesses can effectively manage their budgets, prevent shadow purchases, avoid overspending on SaaS, and ensure that they are only paying for the services they need.

This can help improve the organization's overall financial health and enable it to allocate resources more efficiently toward other critical areas of the business. A SaaS spend management platform can assist you here.

It is essential to make strategic decisions about SaaS spend optimization, as it can save thousands of dollars every month that would’ve otherwise gone to waste.

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3. How Much Is Wasted on SaaS Spend?

SaaS waste drains budgets through unused licenses, overpriced tiers, and duplicate tools scattered across teams. Identifying these leaks before renewals is the fastest path to meaningful cost reduction.

• Unused Licenses: Multiply purchased seats minus active users by price per seat.
• Premium Tier Waste: Count users on premium tiers who don't use key features and multiply by tier uplift cost.
• Duplicate Applications: Flag the lower-adoption tool when 2+ apps serve the same function.
• Auto-Renewals: Review contracts rolling forward without usage checks.
• Offboarding Gaps: Audit paid seats still active after employees or contractors leave.

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4. What are the Best Benefits of SaaS Spend Optimization?

SaaS spend optimization delivers outcomes that extend far beyond simple cost reduction. By establishing reliable visibility into every application, owner, contract, and actual usage, teams replace guesswork with evidence-based decisions on reducing waste.

• Visibility & Ownership: Fewer blind spots enable faster stakeholder alignment for right-sizing decisions.
• Governance & Security: Lower shadow IT and fewer unauthorized accounts create simpler access reviews.
• Risk Management: Controlling unauthorized usage reduces exposure from unmanaged accounts and data sharing.
• Renewals & Budgeting: Fewer surprise auto-renewals and accurate forecasts deliver cleaner budgets.
• Employee Experience: Faster access provisioning and fewer redundant tools improve productivity from day one.

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5. What are Some Challenges in SaaS Spend Management?

Fragmented purchasing across teams and credit cards leaves procurement and finance with incomplete spend visibility. Partial app discovery, especially shadow IT, and unreliable usage data make waste reduction challenging.

Operationally, the biggest blockers to SaaS cost optimization show up in day-to-day workflows:

• Manual renewals and auto-renew traps that roll forward unused seats and outdated tiers
• Scattered contracts, invoices, and terms that delay renewals, audits, and budgeting
• Approval bottlenecks that push employees to bypass controls, increasing risk and spend
• Weak offboarding and access governance that leaves ex-employees active and licenses unreclaimed

For IT and security, these gaps create unmanaged access and compliance exposure; for procurement and finance, they prevent accurate forecasting and negotiation. 

Until discovery, ownership, and renewal governance are unified, SaaS spend optimization efforts to reduce SaaS spend remain reactive, making “what’s the best strategy to reduce SaaS and cloud spend?” hard to execute consistently.

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6. How to optimize your SaaS spend

You have now decided to reduce your SaaS spend. But where do you begin? Here are some ways that can help you control SaaS spending.

A. Eliminate duplicate, redundant, and unused apps

More than 35% of spending on SaaS is wasted in organizations. Many companies have given employees the autonomy to spend on IT solutions as and when required, which often results in them buying similar applications due to communication gaps.

Ultimately, they end up paying for different apps that serve the same purpose. Having multiple duplicate applications in an organization, like employee collaboration apps, web-conferencing applications, and project management tools, can waste company resources.

When there is no proper SaaS spend management system to control all SaaS subscriptions in one place, you won’t know which applications are being consistently used by your teams.

There will be a few unused apps by your teams; your IT team won’t be able to identify these redundant applications if they don’t have visibility into your tech portfolio.

By using a SaaS management platform, you can identify all the applications that currently exist in your SaaS stack, including those that are being used, duplicated, or redundant. It is recommended to remove these redundant apps, as the finance team is still paying for them, which can result in savings on SaaS expenditures.

B. Enhance license management

The management of licenses is crucial to waste reduction and optimization in general. Often, companies overspend on licenses and pay a substantial amount of money.

Each year, approximately $34 billion in licensing waste is generated between the United States and the United Kingdom alone. Additionally, due to improper offboarding of employees, companies also end up paying for unrevoked licenses.

Use license management equipped SaaS spend optimization software to ensure that there are no unused or under-used licenses that a company is paying for.

These days, most businesses keep an inventory of all the SaaS apps they use, including details on the license, people who have access, and the data used. This facilitates efficient licensing management, which reduces costs and minimizes SaaS expenditure.

Another effective technique to improve the licensing management process is to automate license tracking. It assists in keeping track of licenses and identifying usage trends to identify the best opportunities to optimize that distinctive license.

C. Streamline SaaS renewals

Renewing an existing SaaS subscription is usually done annually or biannually. As a result, a subscription gets renewed without anyone’s knowledge, leading to needless spending. Still, most apps now offer auto-renewal, which many forget to switch off manually.

With the help of a SaaS spend optimization tool, companies can have full visibility into their SaaS stack and regularly review their software renewal strategy.

Spend management platforms like CloudEagle is equipped with SaaS renewal workflows to help finance teams stay proactive about renewals.

These workflows begin 90 days in advance and escalate to various members of the team until someone acts on them and renews the contract, thus saving needless expenses.

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Check out this exciting customer story of how Falkonry streamlined SaaS renewals using CloudEagle →

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D. Follow the ‘Pay only for what you use’ approach

One of the most convenient ways businesses optimize SaaS spending is by following a  usage-based pricing approach rather than paying a fixed subscription fee during the upcoming renewal/transaction window.

To make this possible, you’ll need a SaaS management platform to check app usage details. Understand how your users are utilizing the applications and licenses and prepare a renegotiation plan.

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If the teams are not utilizing some features of a SaaS application, you can renegotiate with the vendors to exclude those features from future transactions. If your team lacks the bandwidth to renegotiate, you can seek help from assisted-buying experts to negotiate for you and slash your spending. 

For example, suppose you’ve purchased 100 licenses for HubSpot, and only 60 are used. In that case, you can eliminate the unused licenses during the next renewal window and request vendors to charge you only for the licenses you’re using. 

Or, if you’re yet to purchase the application, communicate with your team to understand their requirements and necessary features clearly. Negotiate the pricing for the features and licenses you need instead of paying the list price for applications.

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E. Streamline SaaS buying

Spending on SaaS increases year over year by more than 20%. A SaaS buying tool equipped with procurement workflow and assisted buying services can help companies find the best deals on SaaS applications and track and control spend to maximize their value.

Streamlining software procurement processes with a centralized procurement platform can save an organization time, money, and other resources. Also, SaaS buying partners assist clients in avoiding pricey contract pitfalls through effective negotiation.

Shadow IT is also prevalent in organizations that lack a centralized procurement process. And guess what? Shadow IT leads to increased SaaS spending.

So, to optimize your SaaS spend, one of the best practices is to streamline your procurement process using a tool like CloudEagle.

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7. Common Areas of Waste & Opportunities to Reduce SaaS Costs

SaaS waste typically hides in orphaned accounts, shelfware, redundant tools, unused features, misaligned tiers, and unmanaged auto-renewals. Prioritize fixing identity gaps, eliminating unused licenses, and leveraging price benchmarking to reduce your SaaS spend effectively.

• Deprovision and reclaim access: remove inactive users and right-size permissions.
• Measure utilization: identify shelfware and unused features driving plan bloat.
• Rationalize overlap: consolidate redundant apps by category and standardize vendors.
• Fix renewals and pricing: map renewal dates early and benchmark before negotiating.

These checks naturally set up the five tactics below, from eliminating redundant apps to tightening license, renewal, and buying controls, often the best answer to “what’s the best strategy to reduce saas and cloud spend?”

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8. 8 Steps to Reduce SaaS Costs

If you’re asking “how to reduce unused saas spend in my company,” start with a repeatable operating system that makes costs visible, assigns accountability, and turns renewals into decision points. This end-to-end framework supports saas cost optimization and helps reduce saas spend without disrupting critical work.

• Discover and inventory: Pull app, spend, and contract data from finance systems and SSO/IdP to create a single source of truth. Include business owner, users, plan, renewal date, and cancellation terms for each app.
• Assign ownership: Name an executive sponsor and an app owner for every subscription. Make owners responsible for approving additions, removals, and renewal decisions.
• Analyze usage and tiers: Compare active users and feature adoption to current plans. Flag apps where basic tiers or fewer seats meet the same outcomes.
• Reclaim licenses: Set rules to deprovision dormant accounts and reclaim seats after role changes or offboarding. Reassign reclaimed licenses before buying more.
• Rationalize the app portfolio: Group tools by category and pick standard platforms for overlapping use cases. Create a migration plan to retire low-value duplicates.
• Run a renewal calendar with opt-out discipline: Track notice periods and set internal deadlines 60–90 days ahead. Default to “do not renew” unless owners justify value and right-sized quantities.
• Benchmark and negotiate: Use recent utilization, competitive alternatives, and multi-year versus annual scenarios to negotiate pricing and terms. Bundle seat reductions with improved payment terms to maximize saas spend optimization.
• Govern continuously: Hold monthly spend reviews and quarterly rationalization. If you’re wondering “what’s the best strategy to reduce saas and cloud spend?”, it’s maintaining this cadence with clear policies and measurable targets.

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9. Optimize SaaS spending with CloudEagle

Use a complete SaaS lifecycle management platform like CloudEagle to reduce your SaaS spend. However, cost optimization features are not the only reason to choose CloudEagle. The platform offers several other features, including,

Spend optimization

Identify duplicate, redundant applications in your system and consolidate the licenses to reduce SaaS spend. 100% SaaS visibility provided by CloudEagle will enable your IT team to spot overlapping and redundant apps effectively.

License management

CloudEagle tracks user activity on each application and displays accurate app usage insights. The platform will notify you of unused and underutilized licenses and will assist you in making necessary license optimization decisions.

You can use the assisted buying services of CloudEagle to renegotiate with the vendor and eliminate unused licenses.

SaaS renewal management

Streamline renewal management using the automated renewal workflows of CloudEagle. Auto-renewals will incur needless expenses. Never miss out on renewal again, and reduce SaaS spend by automating SaaS renewals.

SaaS procurement

A decentralized purchasing process will give your employees and other teams too much power. Create a centralized procurement process using CloudEagle and automate the process using workflows. This saves time for your procurement team to focus on more strategic tasks.

Workflows make the entire process transparent, and since they become the only source for purchasing, IT teams can significantly prevent shadow IT and increase SaaS savings.

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‍10. What are the Best Practices for SaaS Cost Optimization?

To reduce SaaS spend for good, treat SaaS cost optimization as an operating model: every app needs a named business owner (budget + value) and a technical owner (access + integrations). 

Route all new purchases, upgrades, and renewals through a single intake and approval workflow so spend can’t bypass procurement, IT, and finance. 

If you’re asking “what’s the best strategy to reduce SaaS and cloud spend?”, start by standardizing who can request licenses, what proof of need is required, and when higher tiers are allowed.

Use these guardrails to answer “how to reduce unused SaaS spend in my company” and prevent shelfware from returning:

• Standardize license request rules (role-based tiers, minimum seat counts, and manager approval).
• Implement time-based access for contractors, temporary projects, and privileged roles.
• Automate deprovisioning from HR/IdP signals to reclaim licenses immediately after offboarding or role changes.
• Maintain a renewal calendar with clear owners, opt-out dates, and an internal review deadline.

Before any renewal, require a quick usage review (active users, feature adoption, last-login) plus pricing benchmarking to support right-sizing and negotiation. This keeps SaaS spend optimization continuous instead of a once-a-year cleanup.

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11. How Can You Sustain SaaS Spend Optimization Long-Term?

Sustainable saas spend optimization requires an operating rhythm, not a one-time cleanup. Create a joint governance cadence where IT owns application standards and access controls, procurement owns intake and contracts, and finance owns budgets and chargebacks to consistently reduce saas spend.

• Automate Access Lifecycle: Onboard users through approved requests, offboard immediately, and run recurring access reviews.
• Track Monthly Usage: Spot shelfware early with data-driven insights instead of assumptions.
• Quarterly Rationalization: Remove duplicates, consolidate vendors, and right-size tiers every quarter.
• Renewal Playbooks: Define owners, timelines, opt-out dates, and required usage checks before approvals.
• Shadow IT Prevention: Enforce a single intake path and block unmanaged purchasing to avoid auto-renew waste.

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12. Conclusion

Gone are the days when SaaS subscriptions would be manually tracked on simple spreadsheets. With the increasing use of IT applications, keeping track of their perceived versus actual value becomes impossible.

SaaS spend management may appear to be a minor concern for a company, but if ignored, it can end up costing that company thousands of dollars each year that could have been used more effectively. If done correctly, it can save more than just time and resources.

With CloudEagle, you can streamline your subscription management, control renewals, optimize or eliminate duplicate and redundant apps, and negotiate your contracts to get the best pricing.

So, what are you waiting for? Book a demo now with CloudEagle, talk to our experts and realize potential savings.

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