What is SaaS Spend Management? The Definitive Guide

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The SaaS market hit $266.23 billion in 2024 and is projected to grow to $1,131.52 billion by 2032, driven by hybrid cloud adoption, AI-powered automation, and rapid digital transformation.

While SaaS tools offer speed and flexibility, many finance leaders are now facing the hidden costs: duplicate apps, unused licenses, and unmanaged renewals that quietly drain budgets and expose compliance risks.

That’s where SaaS spend management comes in.

It’s a finance-led strategy often aligned with FinOps principles that helps CFOs and procurement teams gain full visibility into software usage, optimize costs, and drive ROI across every department. 

This definitive guide will help the finance and procurement teams devise a plan using a SaaS spend management platform to optimize SaaS costs.

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What is SaaS Spend Management?

SaaS spend management is an approach under the SaaS management umbrella that refers to the governance and optimization of spend related to SaaS applications.

It involves getting complete visibility into apps, usage, and spending, from the individual to the departmental level. It also includes identifying low-usage, unused, redundant, and duplicate applications and eliminating them to optimize costs and save on spend.

The goal is to align SaaS spend with your business objectives while maintaining cost-effectiveness, scalability, and sustainability.

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How much do companies spend on SaaS applications every year?

According to Gartner’s forecast, global SaaS spending is projected to grow from $250.8 billion in 2024 to $299.1 billion in 2025, representing a 19.2% increase year-over-year. This rise reflects the continued adoption of SaaS across all company sizes and industries.

Meanwhile, the 2025 SaaS Capital survey of over 1,000 private B2B SaaS companies reveals how companies allocate SaaS-related costs based on size, funding model, and revenue level.

Startups (1–100 Employees)

• Annual SaaS Spend Range: ~$250,000 to $1 million
• Spending Behavior:
  
  
  • Bootstrapped startups spend a median of 95% of their Annual Recurring Revenue (ARR).
  • Equity-backed startups spend 107% of ARR, indicating many are operating at a loss to scale faster.
    
    
• Cost Allocation (Median % of ARR):
  
  
  • R&D: 22%
  • Sales: 13%
  • Marketing: 8%
  • General & Admin: 14%

Midsize Companies (100–1,000 Employees)

• Annual SaaS Spend Range: ~$1 million to $15 million
• Growth Impact: Mid-market companies growing faster than the median tend to spend:
  
  
  • ~20% more on sales
  • ~40% more on marketing
  • More on customer success and support
    
    
• Cost Allocation (for $3–5M ARR firms):
  
  
  • Sales: 15%
  • R&D: 20%
  • Marketing: 7%
  • G&A: 15%

Enterprise Companies (1,000+ Employees)

• Annual SaaS Spend Range: ~$20 million to $100+ million
  
  
• Global Benchmark (Gartner, 2024):
  
  
  • The SaaS category alone is expected to cross $299 billion globally in 2025.
    
    
• Spending Patterns:
  
  
  • Enterprises typically manage 275+ SaaS tools.
  • While per-employee cost may stabilize due to volume discounts, total SaaS costs surge due to complex operations across global teams.
  • SaaS often represents a double-digit percentage of total IT spend, with rising costs driven by compliance, automation, and AI integrations.

(Source: Gartner, SaaS Capital)

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Importance of effective SaaS spend management

With SaaS adoption at an all-time high and the global market projected to reach $1.13 trillion by 2032, companies clearly don’t hesitate to invest in cloud applications. But that doesn’t mean they’re spending wisely.

The idea that cost savings don’t matter at the enterprise level is flawed. When SaaS spending eats up 95% to 107% of ARR, even a 5–10% optimization can unlock millions in savings annually.

For CFOs leading FinOps strategies, this isn’t just about cutting costs; it’s about creating a repeatable framework for accountability, forecasting, and spending governance across teams.

And the payoff is real: many companies already using SaaS spend management have seen measurable savings and stronger procurement outcomes.

So what can an effective SaaS spend strategy help you achieve?

1. Visibility on unused SaaS apps

A SaaS application might’ve served a purpose at the time of purchase, but it would’ve become redundant as the requirements changed, resulting in low SaaS usage.

However, these SaaS applications are only partially removed from the stack due to low accountability, increasing the resource load for no specific gain.

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With a robust strategy, you can easily identify these unused licenses and redundancies, rationalize them, and save on spending.

You can use SaaS spend management software to get complete visibility into your SaaS applications, including their spend and usage insights. This centralized visibility will help you make the right optimization decisions.

2. Prevent Shadow IT

Shadow IT refers to employees acquiring SaaS applications without the knowledge of the IT department. These unsanctioned applications will increase your spend, cause security hassles, and lead to budget overruns.

Employees purchase unsanctioned SaaS software without realizing that the organization already has an alternative solution that solves the same problem more efficiently, thus resulting in the rise of duplicate apps.

An effective SaaS spend management software will send proactive alerts when an unsanctioned application is detected. This will help you prevent shadow IT in its early stages and help you optimize spending.

3. Efficient License Management

Organizations often end up buying more SaaS licenses than they need, leading to underutilized software and wasted budget. This is usually due to poor collaboration between teams and limited visibility into actual usage.

Procurement should work closely with department leads to validate how many licenses are truly needed, and finance should be looped in early to align purchase decisions with spending strategy.

With a solid SaaS spend management process, you gain real-time insights into license utilization. You can identify underused seats, reclaim them through license harvesting, and reassign them where needed improving ROI without buying more.

4. Budget Control

Complete visibility into SaaS usage gives your finance team the confidence to forecast spending accurately and allocate budgets more strategically.

Instead of relying on annual estimates or manual spreadsheets, they can use usage data to determine where to cut back, where to double down, and how to track spending against business goals.

This is especially valuable for CFOs driving FinOps initiatives, where budget control is not about penny-pinching but about building a repeatable, data-driven process for managing software spending across teams.

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Benefits of effective SaaS spend management

1. Optimizing SaaS costs

With complete visibility into your SaaS spending, you can identify free, duplicate, unused, and redundant apps in your portfolio. You can then analyze the usage and the ROI and rationalize your stack to save on spend.

2. Better SaaS budgeting

SaaS spend management enables the finance team to analyze usage against spending and make the right budgeting decisions. Based on the requirements and usage, they can allocate funds strategically, directing the budget towards high-impact tools that align with business objectives.

3. Renewal management

Auto-renewals can be annoying, especially when you want to move away from a particular vendor. With a SaaS spend management strategy, you can easily track renewals and configure workflows to send renewal reminders 90 days before the deadline.

This will give you enough time to analyze your usage, prepare a negotiation plan, and renew your contracts on time.

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4. Streamlined FinOps Execution

Spend management tools serve as the backbone of any effective FinOps strategy. By aligning procurement, finance, and IT under one system, they enable cross-functional collaboration and simplify financial operations across the SaaS lifecycle.

5. Confidence for CFOs

CFOs can finally stop chasing down scattered invoices and shadow purchases. With centralized dashboards, usage-based alerts, and contract-level visibility, they gain full control over SaaS spend, making forecasting, compliance, and executive reporting significantly easier.

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SaaS Spend Management Tips CFOs Can’t Ignore in 2025

SaaS spend is one of the fastest-growing costs for modern companies and CFOs are feeling the pressure. Between tracking hundreds of licenses, managing renewals, and proving ROI to leadership, SaaS is no longer “just IT’s problem.”

Here’s how CFOs, procurement, and IT teams can align under a FinOps-ready SaaS spend strategy that’s smart, repeatable, and cost-efficient:

1. Buy SaaS like an investor, not an end user

2025 is not the year for impulsive buying. Before approving a new tool, CFOs must push teams to answer:

• Do we already have something similar?
• How many licenses do we actually need?
• What’s the expected ROI?

With CloudEagle’s request workflows and price benchmarking, you’ll avoid duplicate apps and overpaying while setting the tone for strategic buying across departments.

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2.  Negotiate like you’re spending your own money

Procurement often rushes renewals or signs on vendor terms. That’s where hidden costs creep in.

Instead, arm your team with usage-backed negotiation playbooks, or use CloudEagle’s assisted buying service to let negotiation experts handle it for you based on actual usage, license history, and market benchmarks.

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Follow vendor negotiation best practices to negotiate effectively or seek expert assistance from SaaS buyers. CloudEagle has a team of negotiation experts who can work with your team, analyze the requirements and usage, take charge of negotiations on your behalf, and secure the right deals.

3.  Assign app owners and get visibility

Every SaaS app should have an accountable owner, not just someone who once requested access. App owners ensure that tools are used, not wasted.

With CloudEagle’s ownership mapping and real-time usage insights, finance and IT teams can enforce accountability, reduce seat waste, and flag underutilized tools before renewals.

4.  Measure ROI beyond just logins

SaaS tools need to show value, not just usage. CFOs should tie license cost to business outcomes (e.g., leads, hours saved, reduced manual work).

Using CloudEagle’s FinOps reporting, you can track the value delivered by each tool, not just cost, and use that data to drive budget decisions.

👉 Learn how CloudEagle simplifies FinOps in 2025. 

5. Set up auto-audits, not calendar reminders

 Instead of quarterly manual audits, use CloudEagle to continuously detect license underuse, duplicate apps, and shadow IT across your stack.

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It’s like a SaaS watchdog that flags inefficiencies before they snowball.

6.  Review contract terms before they bite back

Don’t wait for an auto-renewal email to realize you’re locked in for another year. CloudEagle helps you:

• Track clauses like auto-renewal notice periods
• Flag red-flag terms across your contracts
• Set alerts before renewal deadlines hit

7. Upgrade your tooling; spreadsheets won’t cut it

In 2025, FinOps is about visibility, automation, and alignment not endless rows and tabs.

With CloudEagle, you get:

• 43+ finance-ready spend reports
• License harvesting automation
• Slack/MS Teams integrations for approvals and renewals
• Multi-source usage tracking (SSO + finance + endpoint)
• A Co-pilot that surfaces risks and next-best actions in real time
• A self-service catalog to reduce shadow IT

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Bonus: Make FinOps easy, even enjoyable for your team

When systems are fragmented, accountability becomes fuzzy. CloudEagle centralizes all your SaaS operations under one platform so your finance, IT, and procurement teams stay aligned and your CFO can finally breathe a little easier.

Want to see how top teams are simplifying FinOps?

→ Read: The Role of IT, Finance, and Procurement in Building a FinOps-Ready Organization

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Why you should use a SaaS spend management software?

SaaS spend is now a strategic lever, not just an operational cost. For CFOs leading FinOps maturity, the priority isn’t just cost control. It’s visibility, accountability, and better decision-making.

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That’s where a SaaS spend management platform like CloudEagle comes in. It brings all your apps, vendors, licenses, and financial data into one unified view so finance, IT, and procurement can finally act as one team.

Here’s what CloudEagle helps you do:

• Get full-stack visibility across all apps, users, vendors, and contracts
• Identify and reclaim licenses from low-usage users and assign them to active ones, no more idle spend
• Automate renewals with 90-day workflows, internal reminders, and negotiation prep
• Streamline procurement via Slack/MS Teams workflows and real-time approval tracking
• Centralize vendor contracts and enrich them with metadata like auto-renewals, payment terms, and historical pricing
• Prevent Shadow IT by detecting unapproved app usage before it snowballs
• Generate 43+ types of reports for finance, procurement, and department heads from variance and budget tracking to ROI dashboards
• Benchmark pricing and usage using industry insights to strengthen vendor negotiations
• Integrate with 300+ tools like Okta, NetSuite, Workday, Chrome, and financial systems for accurate, multi-source app discovery

💡 Want to understand the FinOps principles behind these workflows? Read the golden rules of FinOps, a blog that breaks down how leading CFOs implement cost governance at scale.

🎧 To go deeper, listen to Nicole Jordan-Dahdal, CFO and Head of HR at Clover, on our podcast. She shares how finance leaders can balance cost optimization with long-term strategy and why SaaS visibility is central to growth in 2025.

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Conclusion

To control costs and optimize their SaaS stack, SaaS spend management is essential for finance and procurement teams.

In this article, you learned about spend management, its benefits, and the best practices to follow while creating a SaaS spend management strategy.

Though this management process seems like a stretch, it can be simplified by leveraging SaaS spend management tools like CloudEagle. The amount of resources that can be saved is substantial enough for you to reconsider your SaaS spending and start thinking more proactively about your solutions.

“It's amazing to see how CloudEagle's team saved us thousands of dollars within just a couple of months of engagement. With their insights about internal usage and persistence with vendors, it feels like they are our own team that’s working hard to save us money.” Michael Lipinski, ICEYE

Book a demo with us and discover how CloudEagle simplifies SaaS expense management and saves you big bucks!

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