What is SaaS Management? A Detailed Guide

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Are you tired of manually tracking your organization's SaaS apps using spreadsheets? Not only is it time-consuming, but it can also lead to errors and inefficiencies.

Here’s an easier way to manage SaaS apps and optimize your stack.

A few years back, SaaS apps were rarely seen in businesses, but now they have gone mainstream. These apps are an inevitable part of organizations, pushing back legacy apps.

According to reports, companies are using an average of over 371 SaaS apps, which continues to increase. Experts refer to this rapid adoption of SaaS apps by businesses as a ‘SaaS explosion.’

But the ‘SaaS explosion’ came with consequences.

Using 100s of SaaS applications is good, but organizations relied on spreadsheets to manage and scrutinize their SaaS stack, and things spiraled out of control.

Without a proper SaaS management strategy, businesses risk overspending, data security breaches, and inefficiencies that can negatively impact their SaaS ecosystem.

So, the need for effective SaaS management arises.

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TL;DR

• SaaS management refers to the process of managing and optimizing all software-as-a-service (SaaS) applications used within an organization.
• It includes tasks such as tracking subscriptions, monitoring usage, managing renewals, and ensuring compliance with security and privacy regulations.
• Effective SaaS management helps avoid redundant subscriptions, reduce costs, and improve software utilization.
• Automation tools for SaaS management streamline operations by handling tasks like license tracking, expense management, and vendor communication.
• A robust SaaS management strategy is crucial for businesses to scale efficiently and maintain control over their software ecosystem.

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What is SaaS management?

SaaS management is the practice of overseeing the entire lifecycle of SaaS apps within an organization. This includes various stages, such as acquiring new applications and integrating them into existing systems.

It doesn’t stop there; it also includes monitoring their usage, renewing subscriptions as needed, and managing licensing agreements.

SaaS apps enable organizations to enhance operational efficiency. They help establish a collaborative work setting and produce high-quality products or services. However, neglecting SaaS app management can lead to increased costs, an inferior work culture, and subpar outcomes.

Relying on outdated methods like spreadsheets for managing and tracking SaaS applications is neither practical nor secure. As the number of SaaS apps in your stack increases—such as Zoom, Salesforce, Asana, and more—it becomes crucial not to neglect enterprise-level SaaS management.

Therefore, it's important to decommission apps that are no longer appropriately needed to eliminate wasted resources. Thus, SaaS management becomes crucial in managing the usage of SaaS apps in organizations.

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What are the key components of SaaS management?

SaaS management addresses various aspects that collectively optimize organizations' SaaS environments effectively.

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The challenges of poor SaaS management

Managing multiple SaaS apps and their licenses often makes it hard for the IT department to implement the best practices for SaaS management.

Let’s check out the key challenges companies face concerning SaaS operations when they don’t use a SaaS management platform.

1. Lack of app visibility

Only one-third of the companies can routinely check their corporate network and SaaS subscriptions. In addition, when anyone can download and use SaaS apps, it becomes difficult for the IT team to check the actual usage data.

Insufficient visibility into app usage can lead to security threats and increase shadow IT. This poses risks to company data and escalates overall costs. For instance, multiple individuals might unintentionally subscribe to the same SaaS tool due to a lack of enterprise SaaS management.

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If your IT team lacks visibility into SaaS applications, it’ll be hard to differentiate sanctioned and unsanctioned applications. Poor SaaS management will lead to excess shadow IT, increased costs, and security risks.

Duplicate apps: Lack of visibility will often lead to an increased number of duplicate applications within the stack. These are apps that have similar functionality to Mailchimp and SendinBlue. Spreadsheets cannot identify these overlapping applications; you’ll need robust app management software.

Redundant apps: Enterprises use 370+ SaaS applications, and there is a high chance that users will abandon some of these applications.

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Identifying redundant apps can be challenging if you don’t use SaaS management software to discover all apps and track app usage regularly.

2. Increased spending

“Poor SaaS management is a recipe for increased SaaS costs.”

Let’s talk about two compelling scenarios,

Unused licenses: Let’s say you purchased 100 licenses for Hubspot, and your teams only utilize 70; the remaining licenses will be considered abandoned.

But you’ve already paid for those 30 abandoned licenses, wasting SaaS spending.

Spreadsheets cannot point out these discrepancies, and all 100 licenses would’ve been auto-renewed every time, resulting in increased SaaS spending.

Auto-renewals: SaaS contracts are crucial documents, but most businesses don’t track them formally.

Poor contract management will lead to auto-renewed contracts. Even though your team only uses 70 licenses for Hubspot, all 100 licenses will be paid for during every contract renewal.

You must manage your contracts using a contract management system to stay ahead of renewals. With such a system, you can automate SaaS renewals and right-size your licenses by renegotiating with vendors.

3. Data security risks

According to an IDC survey, eight out of ten organizations in the US have experienced data breaches due to a lack of SaaS tool monitoring and cloud misconfiguration.

Data breach possibilities may increase without centralized control when companies use cloud and SaaS services.

Intruders are only a step away from accessing data from multiple locations. Without a SaaS management system, it is challenging to discover misconfigured and unauthorized SaaS applications that might leave hackers with a backdoor.

Further, manually reviewing the settings of each authorized and unauthorized app makes the cybersecurity audit complex.

4. Compliance risks

When a purchase request for an application is raised, the IT, finance, and procurement teams conduct detailed research on the vendor and the application.

They carefully vet the application's pricing, compliance, and security standards before purchasing.

But what about the application purchased through shadow IT? Those unsanctioned purchases wouldn’t have followed the same vetting process that the IT teams did.

Some apps might not comply with security standards like SOC 2, GDPR, AICPA, and more, resulting in compliance and security risks for your organization.

5. Issues due to manual tasks

Many organizations rely on manual processes to manage their SaaS applications. These processes involve provisioning new users, adjusting access permissions, and deactivating accounts when employees leave. Manually performing these tasks can be time-consuming and error-prone.

For example, setting up a new employee across multiple SaaS platforms like Salesforce, Slack, and Google Workspace might require separate actions in each system, leading to delays in access and potential mistakes in permissions.

6. Unauthorized access

Properly managing the lifecycle of SaaS users is crucial for security and operational efficiency. This lifecycle includes onboarding new users, monitoring usage to ensure compliance with licensing agreements, and offboarding users when they no longer need access.

Without automation, these processes can be cumbersome and prone to error. For instance, failing to remove access promptly when an employee leaves exposes the organization to security risks if the ex-employee retains access to sensitive data.

7. Managing SaaS app renewals

SaaS applications typically operate on subscription models with renewal dates spread throughout the year. Manually managing these renewals can be challenging, especially for organizations using multiple SaaS tools.

It requires tracking renewal dates, negotiating terms with vendors, and ensuring uninterrupted service. For example, missing a renewal deadline for essential software like Microsoft 365 could lead to service disruptions or unexpected costs to reactivate licenses.

Also, without a centralized management system, enterprises store sensitive contracts in shared folders and employee inboxes, leading to misplaced and lost contracts.

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Effective SaaS Management – The key to ending mediocrity

As the business grows, SaaS applications become essential, especially in enterprises, to keep SaaS spending on track. Effectively managing SaaS applications doesn’t just save on SaaS spend; here’s how it can benefit your business,

1. Prevent shadow IT

The first aspect of SaaS management is application visibility. A 360-degree view of your SaaS stack will help IT teams differentiate between sanctioned and unsanctioned applications purchased via shadow IT.

Shadow IT can cause financial damage to the company and leak the organization’s sensitive data. Therefore, the organization must route all SaaS procurements via the IT department to avoid shadow IT practices.

2. SaaS license management

SaaS licenses can be thoroughly scrutinized and vetted to avoid abandoning them. A SaaS app management tool will track app usage data and highlight underused and overused licenses.

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Underused licenses can be right-sized through vendor negotiations. Overused licenses might result in a contract breach, but it indicates that your team needs more licenses that can be purchased formally.

3. SaaS renewal management‍

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Manual or spreadsheet-based tracking of SaaS subscriptions might result in missed renewals and automatic cancellation of one or more SaaS tools.

So, to ensure all the subscriptions are up and running, companies need to have a SaaS renewal management tool to keep track of renewal and cancellation dates.

Check out this exciting customer story of how they streamlined SaaS renewals:

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4. SaaS spend visibility and analysis

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When employees use the pay-as-you-use SaaS model, the IT team finds it difficult to track the actual usage compared to the charges billed by the vendor. Sometimes, SaaS vendors may charge a higher amount based on actual usage.

To manage this challenge, companies need to analyze their SaaS spending and manage plans accordingly. This situation can be easily handled by using a SaaS spend management platform.

Spend visibility will also reveal your stack's free apps that resulted from shadow IT. You can track app usage and consolidate the free license into paid licenses.

Learn valuable insights on optimizing SaaS spending from Nicole Jordan-Dahdal, CFO and Head of HR at Clover. You will gain practical strategies to trim costs and promote sustainable growth within your organization.

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5. Data security, risk mitigation, and compliance

SaaS application misconfiguration can lead to security breaches that can affect the privacy of employees and customers. Unsecured SaaS purchases may cause serious compliance issues and might not allow the company to negotiate the terms effectively.

Therefore, companies must pay close attention to compliance management and risk mitigation while auditing the SaaS subscription. A SaaS application management tool is handy to make this job more manageable.

6. SaaS utilization and Rationalization

Companies require a strategic SaaS software management platform to achieve significant ROI and maximize SaaS subscriptions. With numerous SaaS tools in use, organizations often pay for subscriptions they rarely use, which can unnecessarily inflate operational costs and reduce overall efficiency.

A comprehensive enterprise SaaS management solution offers IT administrators detailed insights into each application's usage. This data enables the administration team to conduct application rationalization, evaluating the necessity and value of each tool.

Organizations can streamline their SaaS portfolio, eliminate waste, and optimize licensing costs by identifying underutilized or redundant applications.

Through effective application rationalization, organizations can ensure they invest in the right tools that align with their operational needs, ultimately enhancing ROI and driving more cost-effective SaaS management.

7. SaaS governance and shared access

Lack of efficient governance and controlled access can lead to shadow IT in the organization. Thus, business owners must implement centralized control to manage SaaS subscriptions and shared access.

Properly organizing shared access enhances agility and allows admins to make quick adjustments to improve team performance. An efficient SaaS management system monitors the app inventory and boosts security.

Centralizing access management simplifies permissions and helps IT teams monitor and adjust access efficiently. Effective SaaS governance frameworks and identity and access management (IAM) help control access and prevent shadow IT.

Enabling IAM and automated workflows allows you to streamline onboarding and offboarding, ensuring timely access and reducing security risks. Automated workflows make managing user access easy and efficient.

When new employees join, the system automatically sets up their access to the appropriate SaaS apps and suggests useful tools. When someone leaves, their access is quickly revoked.

This centralization simplifies permissions, helps IT teams manage access, and enhances security by keeping records up-to-date and streamlined for audits.

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How do I create a SaaS management strategy?

Creating a SaaS management strategy is straightforward if you follow a dedicated step-by-step process.

Step 1: Discover

It begins with discovering the applications your team is using. There is a high chance that your spreadsheets are not tracking the actual size of your SaaS stack.

Use a SaaS application management platform to discover all your SaaS apps. These tools can integrate with your SSO, financial, and HRIS systems to comprehensively view your applications, spending, and user data.

Step 2: Segmentation

Now that you know the SaaS applications used by your teams, how many were sanctioned by IT, and how many resulted from shadow IT?

With the app and spend visibility provided by an SMP, segment the applications based on various conditions like

• Sanctioned paid apps
• Unsanctioned paid and free apps
• Apps with no renewal date
• Apps with overlapping functionalities
• Low-usage apps and redundant apps
• Apps with abandoned licenses

Segmenting the apps is easier, as the platform provides all the necessary usage and spending data. Some platforms even highlight applications based on usage, spending, and contracts.

Step 3: Scrutinization

Once the segmentation is done, perform a detailed analysis of the applications and classify them based on your team's requirements and usage.

Eliminate the ones with poor usage, compliance, and security standards. Ensure that all the applications existing in your tech stack are carefully vetted and paid for.

Negotiate with the vendors to right-size your licenses based on usage and define renewal periods so you can start automating them using workflows.

De-provision ex-employees from the apps; most breaches occur through this vector. Use an SMP to automatically provision and de-provision users when an employee joins or quits.

Step 4: Governance

Now, your SaaS stack is free of redundancies, but you must take the necessary steps to avoid them in the future.

Set guidelines and define the roles and responsibilities of users managing the SaaS application.

For example, if you designate a procurement leader, the leader should approve all the purchase requests before contacting the vendor. This will eradicate "shadow IT" from the system.

You can use SaaS procurement software to create a centralized procurement process. This will encourage users not to purchase applications without the team's knowledge.

Educate your teams on the risks of shadow IT and increased SaaS spending, and with efficient SaaS software management, create a collaborative and productive work environment.

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Signs you need a clear SaaS management strategy

A clear SaaS management strategy enables organizations to optimize costs, enhance efficiency, and ensure security. Following are the clear signs that indicate the need for such a strategy:

Cost control issues: Your organization faces rising costs from SaaS subscriptions but needs more clarity on their value. A good saas management strategy involves regularly assessing subscription usage to optimize costs effectively.

Underutilized subscriptions: Many SaaS services aren't fully utilized due to changing needs or lack of user awareness, wasting resources. A solid strategy includes auditing subscriptions to optimize their use or consider canceling unused ones.

Low user adoption: Despite investing in SaaS tools, low adoption rates indicate issues like inadequate training or poor user experience. A clear strategy ensures tools are user-friendly and integrated effectively through proper training and support.

Renewal management issues: Chaos in Managing SaaS renewals can lead to rushed decisions or unnecessary costs. A structured strategy involves tracking renewal dates, evaluating each subscription's necessity, and negotiating terms to optimize costs.

Performance and scalability problems: SaaS tools should perform reliably and scale with your organization's growth. With an efficient strategy, you can regularly assess tools' performance and ensure they meet current and future scalability needs.

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Role of SaaS manager in SaaS management

The SaaS Manager is critical in optimizing the use and management of SaaS tools.They find and evaluate new SaaS apps that meet organizational needs, integrate them with existing IT infrastructure, and monitor performance to improve efficiency and cost-effectiveness.

Here's a list of roles and responsibilities for a SaaS Manager:

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The key benefits of SaaS management

The key benefits of SaaS management include:

Cost efficiency: SaaS management helps optimize your organization's SaaS spending. It helps you identify and eliminate unused or underutilized subscriptions, reducing waste and ensuring better budget allocation.

Improved operational efficiency: Effective management streamlines workflows, enhances collaboration, and seamlessly integrates applications. It boosts overall productivity and reduces IT management overhead.

Scalability and flexibility: SaaS management helps organizations to effortlessly adapt to changing resource demands. It enables quick scaling of services up or down based on business needs, all without significant infrastructure investments.

Centralized control and visibility: It provides centralized control over software usage, licenses, and updates, offering clear visibility into IT expenditures and usage patterns across the organization.

Regular updates and maintenance: SaaS management ensures timely updates and maintenance of applications by the service provider, ensuring access to the latest features and improvements without disrupting operations.

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Best SaaS management software

A SaaS management platform can help organizations mitigate the above risks and meet business goals. Here’s a quick rundown of ideal SaaS app management features,

1. Discover your SaaS apps

SaaS management platforms can integrate with your SSO, finance, and HRIS systems to provide a 360-degree view of your SaaS stack.

You can see the apps used by your teams, along with accurate app usage and spending data. With complete app visibility, you can effectively manage your SaaS stack and make informed cost-optimization decisions.

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SMPs will reveal duplicate, redundant apps in your system, making it easier for you to eliminate them from your SaaS stack and keep your ecosystem optimized.

Explore the inspiring success story of Rec Room, which effectively tackled unmanaged SaaS app challenges using CloudEagle. This solution enabled them to gain control, eliminate redundancies, and effectively manage shadow IT.

2. SaaS spend analysis & optimization

Spending analysis and optimization of SaaS subscriptions help companies save money in the long term.

SMPs integrate with financial systems to provide spend visibility. You can verify how much each department spends on applications and vendors and compare it with your SaaS budget to make informed spending management decisions.

3. Centralized administration: Unified view of SaaS vendors

Maintaining a healthy relationship with vendors is essential for long-term success and more cost-optimization opportunities.

SMPs will help you manage all your SaaS vendors and their applications in one place. You can store all the details relevant to you and retrieve them easily during audits and renegotiations.

WeFunder reduced SaaS costs by 50% using CloudEagle, aiming to cut expenses from high compliance tool fees. Despite negotiation challenges, CloudEagle provided a practical solution during economic uncertainty.

Read the inspiring story here.

4. SaaS contract management

SaaS contracts are sensitive documents; they are stored securely in one centralized location using a SaaS contract management tool.

You might ask, "Do we need a separate tool to manage SaaS contracts?

No!

SaaS management platforms like CloudEagle offer contract management capabilities, which help teams centralize their SaaS contracts for easy storage and retrieval.

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SaaS management platforms centralize all SaaS contracts, making it easy for teams to access and manage agreements efficiently.

This organization helps streamline operations, improve compliance, and manage software subscriptions effectively, leading to better decision-making and cost optimization.

5. Renewal automation

Tracking renewals using spreadsheets is a complex task. Automate renewals using platforms like CloudEagle.

The tool will extract renewal metadata from the SaaS contracts and create a renewal calendar. This includes extracting details such as contract expiration dates, renewal terms, pricing, and other relevant clauses.

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Based on the calendar, the platform will initiate renewal workflows 90 days in advance and keep escalating to various stakeholders until the contract is renewed on time.

This early notification allows organizations to start the renewal process early, facilitating thorough review, negotiation if necessary, and timely decision-making.

6. Usage tracking and license management

You must track how your users use the applications. Integrating with SSO and HRIS systems enables SMPs to provide accurate app usage data.

You can leverage the usage data to scrutinize your licenses. SMPs like CloudEagle will highlight underused and unused SaaS licenses, which can be right-sized through efficient vendor negotiations.

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Managing and optimizing software licenses carefully is important to save your organization from resource wastage. To do this, you should take the necessary steps to identify licenses that aren't being used and reclaim them using license harvesting workflows.

7. Administrative control

Administrative control is pivotal in managing SaaS applications and their subscriptions. SaaS management systems help business owners have complete control over every crucial aspect of the SaaS tool.

From defining the usage levels for every user to tracking shadow IT activities, the SaaS management tool offers excellent control over various activities.

8. Real-time reporting

Real-time reporting is essential to understanding how the tools perform and how much value they add to the team’s work.

The real-time reporting feature of the SaaS management platform helps you decide which subscriptions you need to renew and which can be replaced with better alternatives. You can stay up-to-date with your SaaS stack with real-time reports.

CloudEagle provides essential reports like spend visibility, renewal management, budgeting, application visibility, application access, shadow IT, spend optimization, and low usage.

These reports help organizations optimize costs and improve efficiency in managing their SaaS subscriptions and resources.

9. SaaS procurement

Platforms like CloudEagle are raising the bar for SaaS app management platforms.

It is equipped with procurement workflows to help procurement teams automate the complex SaaS buying process. You can create a centralized purchasing process with CloudEagle and prevent shadow IT in your organization.

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It makes the process transparent, increasing the accountability of stakeholders involved and leading to a quicker procurement process.

CloudEagle allows SaaS procurement through Slack integration. The tool offers Slackbot, where employees can request new software or renewals directly in Slack channels using simple commands.

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It automates the approval process, ensuring requests follow budget and policy guidelines before finalizing procurement decisions.

10. Provisioning and deprovisioning

When an employee joins the team, you can automate the provisioning process using an SMP like CloudEagle. You can set up onboarding workflows to automatically assign relevant applications based on their department and job role.

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For example, when a new employee is onboarded, the platform uses automated workflows to assign the appropriate SaaS applications based on their department and job role. This ensures they receive access to all the necessary tools without manual intervention.

Similarly, when an employee leaves the company, the platform will automatically revoke access to all applications, eliminating the need for manual intervention and preventing potential security issues in the future.

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Conclusion

Mastering SaaS management is not just a task; it's a crucial step for organizations to maximize their SaaS investments. You can enhance value and organizational efficiency by tracking all your SaaS applications, managing subscriptions effectively, controlling costs, and ensuring everything is secure and compliant.

A solid SaaS management strategy helps you stay organized and avoid unnecessary costs. As SaaS becomes increasingly central to modern business, adopting these best practices will keep you ahead of the curve and make technology work for you.

For enhanced SaaS management capabilities, consider CloudEagle. The tool offers complete SaaS app discovery, license and renewal management, contract management, automated user provisioning and deprovisioning, advanced reporting capabilities, a self-service app catalog, and many other features.

Schedule a demo today and witness how it can transform your organization’s entitlement management.

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