What is SaaS Governance? (And Why You Need It)

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February 1, 2024
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Around 85% of business app stacks will be SaaS-based by 2025. Gartner also predicts 2023’s $200 billion SaaS spending will rise by 18% in 2024.

This rise in SaaS adoption has brought new challenges for organizations. It is mainly in the areas of data privacy and regulatory compliance.

Compliance and data security can get significantly more challenging as your SaaS landscape grows and gets more integrated.

According to Forbes Technology Council, cloud computing is a relatively new technology. Some standards for SaaS are underdeveloped, with compliance differing across industries.

It will pose security and privacy challenges when you use SaaS tools that lack industry standards and do not comply with international regulations or your organizational policies. Thus, a well-designed SaaS governance is the first step to filling the risk and compliance gaps.

So, what is SaaS governance? How can it help your company ensure data privacy and regulatory compliance? Read on to find out.

What Is SaaS Governance?

SaaS governance is a framework and approach your organization can adopt to effectively identify, control, and manage your SaaS applications and their relevant usage.

This approach will help ensure your SaaS stack aligns with the organization’s goals. It also helps to enhance operational efficiency and mitigate potential security and privacy risks.

Image of centralized saas management

SaaS governance encompasses the processes, policies, and frameworks to maintain and manage the usage and compliance of your SaaS portfolio. When you implement robust data governance practices, you can ensure your portfolio is safe from data breaches or unauthorized access. Therefore, safeguarding sensitive data.

It is vital to reducing compliance risk and saving money by providing visibility, compliance management, and cost control across the enterprise.

What Is the Importance of SaaS Governance?

SaaS governance gives your organization the framework and process to manage your SaaS effectively, ensuring it delivers the desired results.

With the growing adoption of SaaS, governance is becoming increasingly important for organizations of all sizes. It is essential to maintain your SaaS environment efficiency, reduce SaaS sprawling costs, and protect your IT portfolio from unnecessary risks.

It creates a system in which all employees are educated on the how and why of the management program. And as a result, your enterprise, becomes SaaS conscious as a matter of structure.

As a result, the sprawling costs arising from Shadow IT, unoptimized licenses, and redundant applications are mitigated, freeing up spending to reallocate to essential areas.

Other important aspects of SaaS governance are:

  • It helps reduce compliance risk and ensures that the organization adheres to data regulations. Thereby avoiding severe penalties, legal complications, and reputational damage.
  • It helps organizations effectively manage risks associated with using SaaS, such as data loss or unauthorized access, and optimize the performance and cost of their SaaS applications.
  • SaaS governance helps ensure an organization's use of SaaS products aligns with its overall goals, policies, and risk tolerance.

Consequences of Poor Data Governance

Poor data governance can have severe repercussions for your organization. Here are some significant consequences:

Decreased Data Quality

Poor data governance often results in low-quality, inconsistent data. This result leads to inaccurate analytics, poor decision-making, and damaged business performance.

Security Breaches

It can lead to insufficient security controls. It increases the risk of data breaches, resulting in substantial financial costs, legal repercussions, and reputational damage.

Reduced Efficiency

Overlooking governance can result in redundancies, inefficiencies, and confusion. It can hamper operational processes and trust in the data, leading to inefficient decision-making.

Misuse of Resources

Inconsistent data availability, integrity, and security due to the absence of data governance will lead to the misuse of resources, inefficiencies, and decreased trust in the data. It will ultimately impact your business performance and decision-making.

These consequences show the critical importance of implementing strong data governance practices.

Why Should SaaS Governance Be a Priority for You?

SaaS governance should be a top priority in your company for the following reasons:

1. Cost Control

SaaS governance helps organizations optimize their SaaS portfolio. It helps you do this by reducing unnecessary spending on redundant or unapproved SaaS applications and freeing up spending to reinvest in the enterprise.

2. Compliance and Risk Management

SaaS governance is critical as it helps you with compliance, risk management and cost control.

It contributes to risk management by providing real-time monitoring, analytics, and automated controls. This helps identify and address potential risks, safeguarding data privacy and compliance.

3. Improved Security and Visibility

SaaS governance gives you an overview of all your SaaS applications. This visibility helps you mitigate security risks and gain complete visibility of your SaaS stack.

It also helps you reduce the risk of data breaches and cyber-attacks. Consequently, SaaS governance safeguards individuals' privacy rights and maintains the confidentiality of sensitive information.

4. Vendor Management

As organizations continue to use SaaS apps, there are more vendors to manage.

SaaS governance is instrumental in vendor management as it helps establish clear expectations and standards for SaaS providers. It ensures compliance with security protocols and data privacy regulations, fostering accountability.

Continuous monitoring guarantees that cloud service providers must adhere to agreed-upon terms, maintaining a secure and trustworthy IT sector.

5. User Access and Permissions

SaaS governance helps you provide a framework for data protection from unauthorized access. This safeguards your employees' privacy rights and maintains the confidentiality of sensitive information.

It ensures access and permissions align with your organization's goals, policies, and risk tolerance. It provides a structured approach that ensures SaaS investments align with the company’s objectives.

Key Components of Effective SaaS Governance

Effective SaaS governance is critical to manage your organization’s SaaS usage. It ensures your SaaS usage aligns with your organization’s goals, enhances operational efficiency, and mitigates potential risks.

Here are some of the key components of effective SaaS governance:

1. Access Controls and User Permissions

Effective SaaS governance helps manage and regulate your organization’s user entries. It ensures that employees have the appropriate levels of access aligned with their roles.

Enforcing access controls can prevent unauthorized entry and potential data breaches.

User permissions further refine this, tailoring access to specific functionalities. This helps enhance data security and also ensures compliance with privacy regulations.

By meticulously managing who accesses what, these components help your organization maintain the integrity of its data, promoting a secure and efficient SaaS stack.

2. Data Encryption and Security Measures

This forms the bedrock of robust SaaS governance. Encryption transforms sensitive data into unreadable code, safeguarding it from unauthorized access.

Security measures encompass a range of protocols, including firewalls, intrusion detection systems, and regular security audits. These components actively protect against cyber threats, ensuring the confidentiality and integrity of data.

By integrating encryption and cybersecurity protocols, SaaS governance fortifies against potential breaches and helps align with regulatory standards, fostering trust among users and stakeholders in securely handling sensitive information.

3. Compliance with Regulatory Standards

Compliance with regulatory standards is a cornerstone of effective SaaS governance. It involves aligning SaaS practices with legal requirements and industry standards to ensure data privacy and security.

By adhering to regulations such as GDPR, CCPA, LGPD, HIPAA, CSA, or others relevant to the industry, your organization demonstrates a commitment to ethical and lawful data handling.

This mitigates legal risks and potential fines, fostering trust among users. SaaS governance ensures continuous monitoring and adaptation to evolving regulations, establishing a resilient framework that safeguards data and upholds the integrity of your organizational practices.

4. Incident Response and Disaster Recovery

Incident response and disaster recovery are essential for ensuring your company can respond effectively to security incidents and data breaches.

Your SaaS governance strategy should include measures to ensure that incident response and disaster recovery plans are in place and tested regularly.

5. Regular Security Assessments and Audits

You must conduct regular security assessments and audits. These are critical for identifying vulnerabilities and ensuring that SaaS applications are secure.

Regular security assessments and audits are essential for the SaaS governance strategy to identify potential risks and ensure up-to-date security measures.

What Are the Types of SaaS Governance Models?

There are many SaaS governance models. Each of them has its unique approach to managing SaaS applications. The following are some of the most commonly used SaaS governance models:

1. Centralized and Decentralized Governance

Centralized governance involves a central IT or SaaS management platform or team responsible for the deployment, management, and governance of SaaS applications. It is effective in large organizations where the IT department has the resources.

The decentralized governance model involves delegating the management and governance of your SaaS applications to individual departments.

It is effective in smaller organizations or those with limited IT resources. The reason is that it allows departments to take ownership of their own SaaS investments.

2. Hybrid Governance Model

The hybrid model combines elements of the centralized and decentralized governance models. It lets you choose the best approach for your organization’s SaaS applications.

This model is effective in organizations that want to retain centralized control while allowing flexibility for specific applications.

3. Policy and Risk-Based Governance

Policy and risk-based governance ensure that your company adheres to data regulations. It also ensures it avoids severe penalties, legal complications, and reputational damage.

The model involves developing policies and procedures that align with regulatory standards and risk management frameworks. It is effective if your organization prioritizes compliance and risk management.

4. Governance as a Service (GaaS) Model

This model involves outsourcing the management and governance of SaaS applications to a third party, like CloudEagle. It is a growing trend as organizations seek to leverage external expertise and resources for SaaS governance.

5. Democratized Governance Model

This model involves democratizing the governance process. It allows end-users to have a say in selecting and managing SaaS applications.

The model is effective if your organization values user input and collaboration in the SaaS governance process.

Listen to Joshua Peskay, a 3CPO (CIO, CISO, and CPO) at RoundTable Technology. He discussed how he manages Shadow IT and introduced an ROI score for SaaS tools to help businesses optimize their technology investments.

How CloudEagle Can Help Make Your SaaS Governance Process Effective?

CloudEagle will enhance your SaaS governance process by providing a modern SaaS procurement and management platform.

It offers complete SaaS visibility, streamlines software buying, and renewals, and provides accurate insights for cost optimization.

With CloudEagle, you can get complete visibility of your SaaS stack, including accurate usage and spend insights. It makes SaaS governance easier and ensures all applications are accounted for and compliant with industry regulations.

Also, CloudEagle's AI-powered vendor recommendation engine helps you reduce the hassles of vendor research. This is done by automatically suggesting the right SaaS vendors based on your requirements and pain points.

Furthermore, its automated procurement workflows help you save time managing and buying SaaS apps. Its insights and reports help you compare, evaluate, and optimize SaaS spending, making it a valuable tool for financial decision-making.

Here’s a quick rundown of additional CloudEagle's capabilities:

  • Automated user provisioning and deprovisioning
  • Centralized user, license, and contract management
  • Assisted buying services
  • Price benchmarks
  • 300+ integrations, desktop agents, and browser extension
  • Slacbot for procurement
  • Renewal and SaaS security posture management.

Elevate your SaaS governance strategy with CloudEagle. Book a demo today and witness firsthand how it transforms governance into a strategic advantage. Unlock the full potential of your IT sector with CloudEagle's innovative solutions.

Frequently Asked Questions

1. Why is SaaS governance crucial for businesses today?

SaaS governance is vital as it actively shapes your digital strategy, ensuring optimal software consumption. It safeguards data integrity, maintains compliance, and positions your business to thrive in the dynamic digital sector.

2. What are the key components of effective SaaS governance?

In active SaaS governance, key components include real-time monitoring, advanced analytics, and task automation. These elements help you to handle challenges, optimize resources, and strategically drive your SaaS initiatives.

3. How does SaaS governance contribute to ensuring data privacy?

SaaS governance actively contributes to data privacy by implementing robust measures like encryption, access controls, and continuous monitoring. It ensures your data remains secure, fostering trust and compliance with privacy regulations.

4. What role does regulatory compliance play in SaaS governance?

Regulatory compliance helps guide your adherence to laws and standards. It helps mitigate risks and prevent legal complications. Compliance ensures your SaaS operations align with ethical and legal considerations.

Written by
Amith Manoj
Product Marketing Manager, CloudEagle
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