The flexibility and scalability of SaaS applications have made them a key solution in the digital transformation of companies worldwide. Yet, with the growing reliance on these cloud-based applications comes a major challenge–managing them effectively.
The Gartner Market Guide for SaaS Management Platform 2023 presents a solution for organizations navigating this complex SaaS landscape. The guide provides in-depth insights and recommendations for managing SaaS applications, which have become increasingly critical for organizations.
This blog provides an extensive exploration of the key findings, strategic planning assumptions, market insights, challenges, and expert recommendations presented by Gartner.
By the end of this article, you'll have a profound understanding of how SaaS Management Platforms (SMPs) like CloudEagle can transform how your organization manages SaaS applications, optimize costs, mitigate risks, and enhance operational efficiency.
What were the key findings and recommendations from Gartner’s research?
1. Rapid Growth in SaaS Spend
SaaS spending is experiencing exponential growth, surging at an annual rate of 15-20%. On average, organizations utilize over 125 distinct SaaS applications, with an annual spend of $1,040 per employee.
The major challenge is that IT departments only know about a third of these applications due to decentralized procurement processes.
2. Rising Financial, Security, and Operational Risks
The uncontrolled proliferation of SaaS applications poses financial, security, and operational risks. Inadequate visibility into the SaaS portfolio can lead to mismanagement of assets (licenses, contracts, etc.), compliance violations, data breaches, and increased operational overhead.
Experts say that without the ability to discover, manage, automate management tasks, optimize spend, and protect data and identities within SaaS applications, organizations find themselves in a precarious position. As SaaS usage grows, a comprehensive SaaS management solution becomes increasingly necessary.
3. Immature SMP Market
While the need for robust SaaS management solutions is clear, the market for SMP remains in its early stages. The immaturity of the SMP market increases the risk that organizations might invest in tools that fall short of addressing their specific requirements.
Understanding the maturity and capabilities of the SMP market is crucial for organizations seeking to make informed decisions about managing their SaaS landscape.
1. Maximize ROI through Collaboration
Effective SaaS management extends beyond the purview of IT departments. To harness the full potential of an SMP, IT leaders must foster strong collaborations with procurement, finance, IT security, and application leaders.
Collaboration will empower your team to make informed decisions and maximize ROI throughout the SaaS lifecycle.
2. Define Attainable Requirements
In the world of SaaS management, one size does not fit all. To avoid falling into the trap, organizations must research SMP market dynamics, the capabilities readily available in the market, and proven use cases.
Clear and realistic requirements set the stage for successful SaaS management, preventing organizations from investing in tools that fall short of their expectations.
3. Build a Balanced Business Case
Investing in an SMP requires a well-structured business case. To build a compelling argument with vendors for adopting an SMP, organizations should compare costs against well-defined objectives that align with their strategic goals. Clear and agreed-upon measures of objective and subjective benefits should support the business case.
Future-Focused Strategy: Assumptions and Projections
Gartner Market Guide provides a set of strategic planning assumptions that organizations should consider as they navigate the SaaS management landscape in the future:
Centralized Management is Essential
Through 2027, organizations that fail to adopt a centralized app management system will be five times more susceptible to cyber incidents or data breaches due to the misconfiguration of SaaS.
By 2027, if organizations don't get a grip on their SaaS apps, they could waste 25% of their money on unnecessary software. To avoid this, they must get a clear view and handle their SaaS wisely.
Overspending on SaaS applications will significantly drain financial resources, making centralized app visibility and coordination crucial.
Rise of SMP Adoption
Gartner predicts that by 2027, 40% of organizations using various SaaS applications will adopt a SaaS management system, an increase from less than 25% in 2022.
The growing awareness of the benefits of SMPs is expected to drive adoption as organizations seek to streamline their SaaS management.
SaaS Management Platform Capabilities as per Gartner
SMPs offer a diverse set of capabilities, each designed to address a specific facet of SaaS management. Understanding these capabilities is fundamental to comprehending the multifaceted role of SMPs in modern organizations.
1. Discover: SMPs help you uncover sanctioned and unsanctioned SaaS use and cost. This discovery process offers organizations a comprehensive view of their SaaS landscape.
2. Manage: SMPs centralize multi-SaaS application management, enabling the configuration of policies, such as access controls and data protection, from a single console.
3. Automate: Managing numerous SaaS applications can be overwhelming. SMPs provide automation capabilities that simplify routine tasks, such as user provisioning and de-provisioning, ensuring that organizations can manage their SaaS applications efficiently.
4. Optimize: SMPs offer features to help organizations optimize their SaaS spending. This involves identifying and eliminating redundant or underutilized applications and licenses, renegotiating contracts, and right-sizing licenses.
5. Protect: Providing analysis, valuable insights, timely alerts, and automation to safeguard organizational identities and data within SaaS applications. This ensures that SaaS policies and configurations align with corporate, security, and regulatory guidelines.
6. Govern: Basic functions encompass generating reports, issuing alerts, and assessing the accessibility of SaaS. This also involves integrations with SaaS applications and other IT tools.
7. Enable: Ensuring there's an accessible store or catalog for employees to request SaaS applications, making the process simpler. Moreover, it provides valuable analysis, insights, and alerts to encourage SaaS adoption and enhance return on investment (ROI).
Benefits of using SaaS management solutions
1. Improved Visibility and Control: SMPs offer centralized visibility, enabling better management, optimization, and security of SaaS applications. They identify both approved and unapproved apps, enhancing security and cost management.
2. Cost Optimization: SMPs help organizations identify redundant or underutilized apps, reducing unnecessary spending and improving vendor negotiations. They enable data-driven decisions on contract renewals, saving costs.
3. Effective Contract Management: SMPs provide insights into contract terms and performance, supporting informed decisions on renewals and terminations while ensuring compliance.
4. Mitigating Unsanctioned Usage: Identifying unsanctioned SaaS apps helps enhance security, streamline operations, and cut costs.
5. Streamlined Onboarding and Offboarding: SMPs automate user management, making provisioning and deprovisioning more efficient and aligning user access with policies.
6. Reduced IT Overhead: Automation in SMPs reduces operational costs and human error, improving security and compliance.
7. Enhanced Collaboration: SMPs promote collaboration between IT, procurement, finance, IT security, and application leaders through a centralized console, ensuring SaaS management aligns with organizational goals and ROI.
SMP Market Direction: How is it evolving?
Gartner says that SaaS spending by organizations increases by 15-20% annually, with organizations averaging over 125 SaaS apps per employee, costing about $1,040 a year.
However, the SMP market, only five years old, remains relatively immature. It is often mixed up with Software Asset Management (SAM) and security tools such as cloud access security broker (CASB), security service edge (SSE), and SaaS security posture management (SSPM), says Gartner.
Gartner Client interest, measured through inquiries and online searches, remains low, while SMP adoption lags behind SaaS spend, raising concerns. Gartner Market Guide shows that up to 25% of provisioned licenses go unused, underscoring the need for better management.
Anticipated Market Changes over the next 12-18 months by Gartner
- Strengthened Partnerships: Anticipate stronger collaboration between procurement, finance, IT security, applications, and LOB to gain control over SaaS sprawl.
- Increased Demand for SaaS Management: Expect a surge in demand and budgets for SaaS management as organizations realize the extent of unmanaged SaaS costs, sprawl, and associated risks during uncontrolled adoption growth.
- Growing SMP Usage: Foresee greater utilization of SMPs to monitor SaaS adoption and measure ROI on strategic SaaS investments.
- Automation for Onboarding and Offboarding: An increased interest in automating employee onboarding and offboarding processes.
- Proactive SaaS Renewal Management: Witness a rising demand for proactively managing SaaS renewals and associated costs, addressing the challenges of escalating SaaS prices.
- Expanding SMP Capabilities: Anticipate more SMP vendors expanding their capabilities to cover all seven functionality categories.
- Convergence of Tools: SAM, SaaS security, and adjacent market vendors are expected to expand their capabilities and evolve into SMPs.
- Sustained Investor Interest: Expect continued investor interest and contributions to SMPs.
- Blurring Base Capabilities: Expect a diminishing distinction between the core capabilities of SMPs.
- Increased Collaborations and M&A: More partnerships, mergers, and acquisitions among SMP and adjacent tool vendors are on the horizon.
- Introduction of Managed Services: Introduce managed services offerings from SMP, consulting, and outsourcing vendors to bridge skills gaps, although few SMPs offer managed services.
Complementary Technologies and solutions
Before getting started with SaaS discovery, you can consider a few complementary tools. They offer some SMP capabilities but not the full package.
- SaaS Security: Covering CASB, SSPM, and SSE solutions, they discover, protect, and restrict risk-based access but can't fully manage, automate, or optimize SaaS.
- SAM: Often marketed as SMPs, Software asset management tools can discover and optimize but are limited to managed devices and lack full SaaS management capabilities.
- SaaS Purchasing Marketplaces: They broker SaaS purchases and manage contracts and costs but fail in complete SaaS discovery and management.
- Digital Adoption Platforms (DAPs): Built to analyze and optimize employee app adoption, they offer discovery, optimization, governance, and enablement capabilities.
- Office Productivity Governance: Primarily focused on Google Workspace and Microsoft 365, these tools lack comprehensive multi-SaaS environment features.
CloudEagle - Notable SaaS Management Platform
CloudEagle is one of the SMPs mentioned as a Notable Vendor in SaaS management section of the Gartner Market Guide. CloudEagle is a comprehensive SaaS management and procurement platform. It can help organizations improve SaaS management, optimize spend, automate renewals, user provisioning and deprovisioning and streamline procurement processes.
It is one of the very few platforms in the industry that offers SaaS management, spend management, vendor management, procurement, and assisted buying features under the same roof.
Organizations have been outsourcing their procurement process to CloudEagle. They leverage the platform's precise usage data, streamlined procurement workflows, and expert negotiation support to expedite procurement, ace vendor negotiations, and reduce SaaS spend.
- Application discovery
- Cost optimization
- Assisted buying
- Procurement and renewal workflows
- Vendor research module
- Shadow IT alerts
- License and contract management
- Price benchmarking
- Custom fields
- Contract management
- Automated user provisioning and deprovisioning.
Future predictions from Gartner's Market Guide show that centralized SaaS management will become indispensable. Companies that do not prioritize this may face the potential risks of overspending, which could negatively impact their return on investment (ROI).
So, now is the time for organizations like yours to adopt an all-in-one SaaS management platform like CloudEagle to centralize app management, reduce spend, streamline procurement processes, and achieve market success.
The digital landscape is evolving rapidly, driven by the exponential growth in SaaS adoption and spending. This uncontrolled proliferation of SaaS applications not only poses financial risks but also jeopardizes security and operational efficiency.
Furthermore, without proper management, organizations could waste up to 25% of their SaaS spending on unnecessary software by 2027. Centralized app visibility and coordination are crucial to avoiding such overspending.
On a positive note, Gartner Market Guide shows that by 2027, 40% of organizations using multiple SaaS applications will have adopted a SaaS management system, a substantial increase from less than 25% in 2022.
In summary, the future of SaaS management is closely tied to adopting SaaS Management Platforms (SMPs). These platforms, like CloudEagle, offer a comprehensive solution to discover, manage, optimize, automate, and secure your SaaS portfolio.
To check out how CloudEagle can transform your business, click here for a quick demo.