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HIPAA Compliance Checklist for 2025
SaaS applications have emerged as a key technology solution for modern businesses, providing organizations with flexible and scalable operational capabilities.
This widespread use of SaaS applications brought a new challenge - SaaS sprawl.
Even though using SaaS applications has its competitive advantages, too many of those applications without proper mitigation and management can lead to SaaS sprawl, resulting in security lapses, increased spending, and operational risks.
In this article, we’ll discuss more about SaaS sprawl, its impact on organizations, its risks, and other challenges it brings in its wake.
Only by embracing a proactive approach can help organizations prevent SaaS sprawl, optimize their SaaS investments, and derive maximum value from their SaaS portfolio
So let's get started;
1. SaaS Sprawl: The Hidden Cost of Unmanaged Software
SaaS sprawl refers to the uncontrolled proliferation of SaaS apps within an organization, resulting in increased costs, security concerns, and difficulties in managing and organizing data.
It occurs when various departments within an organization independently purchase software applications without proper coordination or approval, resulting in duplication and inefficiencies.
The unsupervised use of cloud apps can disrupt your firm's workflow. Also, this can cause increased costs, security issues, and difficulties in effectively managing the applications and data.
SaaS sprawl and shadow IT
Let’s deduce the common misconception: SaaS sprawl is not similar to shadow IT.
SaaS sprawl is a consequence of shadow IT. The common factor between the two phenomena is that both reveal that the internal departments are not communicating or coordinating, and there is no ideal process to keep these unverified activities manageable.
2. What Are the Common Signs of SaaS Sprawl?
SaaS sprawl rarely announces itself. It builds gradually until the financial and operational damage is already done. Watch for these indicators:
Multiple tools doing the same job. Sales uses one CRM. Marketing uses another. Both have overlapping contact databases; this is redundancy in action.
Exploding software spend with no clear owner. Invoices appear across expense reports, corporate cards, and department budgets, with no single person tracking the full picture.
Low SSO coverage. Only 21% of apps at the average organization are behind Single Sign-On. If most of your stack sits outside SSO, you have a visibility and security gap.
IT can't answer basic questions. "How many apps do we have?" "Who owns this contract?" "When does this renew?" If these take days to answer, SaaS sprawl is already a problem.
App fatigue among employees. 46% of workers report their job feels chaotic from jumping between too many apps. If productivity complaints center on tool overload, sprawl is likely the cause.
Renewals no one remembers authorizing. Auto-renewing subscriptions for tools no one actively uses are a classic sprawl tax.
3. What Causes SaaS sprawl?
SaaS sprawl is not an isolated event; a string of causes leads to it.
Some of them include the following;
a) Uncontrolled Access
SaaS applications are designed to be easy to purchase and use, making it simple for employees to buy and install new applications without seeking approval from the IT department. This can lead to a proliferation of poorly managed or monitored cloud-based applications.
b) Lack of Centralized Management
When firms do not have a centralized process or approach to managing SaaS apps, employees will download and use multiple applications, often with the same functionalities, resulting in duplication of efforts and inefficiencies.
c) Bring Your Own Device (BYOD) Policies
The growing trend of BYOD policies allowing employees to use their devices for work purposes has also contributed to the growth of SaaS sprawl.
This is because employees will install cloud-based applications on their own devices, and there will be no company-wide monitoring software tracking their devices for unverified purchases and usage.
d) Increased Popularity of SaaS Applications
The increasing popularity of SaaS apps has also contributed to the growth of SaaS sprawl, as employees can now access a broader range of applications and services through the cloud that can be installed on their devices in just a few minutes.
e) Lack of Awareness
Sometimes, employees may not be aware of other, more appropriate SaaS applications for their needs, leading them to download new applications for their work tasks.
f) Need for Speed
In some cases, employees may download new SaaS apps to meet immediate demands without considering the long-term implications and the impact they may have on the company's network.
g) Lack of culture
But the most practical SaaS sprawl causes is poor company culture. If the company is not open to procuring cloud-based applications for employees’ daily needs. In that case, they’ll end up purchasing them without the approval of management, leading to uncoordinated and unmanageable applications in the stack.
4. SaaS Sprawl Examples: How It Shows Up Across Teams
Marketing. Multiple CRM, email, and social media tools running in parallel; data fragmented across systems, attribution reporting unreliable.
Sales. CRM instances and prospecting tools bought by individual reps or regional teams. Pipeline data lives in multiple places and forecasting becomes guesswork.
HR. Separate tools for applicant tracking, onboarding, payroll, and performance management with no integration. Offboarding means manually deactivating accounts across a dozen platforms.
Finance. Overlapping accounting and spend management tools purchased by different stakeholders. Month-end close requires pulling data from multiple disconnected systems.
IT. Monitoring, ticketing, and network management tools from different vendors, each requiring separate logins and maintenance cycles. IT ends up managing tools instead of using them strategically.
5. The Business Impact of SaaS Sprawl: A Look at the Statistics
"The reason why companies have high SaaS costs is because they aren't combating SaaS sprawl."
— Carter Busse, CIO, Workato
Financial Impact
Uncontrolled use of SaaS applications can lead to unexpected costs, such as unnecessary duplicated services, licensing fees, and maintenance expenses.
- According to a study by Bitglass, the average enterprise has more than 1,000 SaaS apps, with 17% of those being rogue apps that are not managed by IT. These rogue apps can add up to significant expenses over time.
- As per Productiv data, 56% of apps aren't managed by IT. Gartner reports that large enterprises spend 30% to 40% of IT spending goes to shadow IT. Everest Group found it to be 50% or more.
- More than 41% of organizations say that up to 19% of their total SaaS spend is unused or underutilized licenses. Up to 9% say they're wasting 40% of their SaaS budget. (BetterCloud, 2021)
- As a result of SaaS sprawl, 30% of a company's SaaS spend is wasted on unused seats, duplicate or redundant SaaS
- 2022 State of Business Technology Report from Systematic+ and Workato, which found 57% of IT teams are under pressure to reduce SaaS spending.
Operational Impact
SaaS sprawl can result in inefficiencies and duplicated efforts, as different departments or teams use different applications to perform similar tasks. This can lead to data silos and confusion, negatively impacting productivity and collaboration.
- A recent survey found that over 30% of businesses reported duplicated work due to multiple SaaS applications.
- The average company wastes more than $135,000 on unused, underused, or duplicate SaaS tools.
- According to a RingCentral and CITE Research survey of 2000 knowledge professionals, 7 out of 10 employees waste up to an hour of their workday just hopping between business tools.
Moreover, 50% of employees claim that they find it challenging to look for resources in the jungle of applications in their office, and 46% of workers report that their job is chaotic while juggling between apps, a phenomenon currently represented by the expression "app fatigue."
As a result, up to 80% of productivity is lost, as are various other workplace difficulties such as stress, knowledge loss, and a drop in output quality.
Security Impact
Uncontrolled SaaS applications can increase security risks, as data can be stored in unsecured systems or shared with unauthorized individuals.
- 51% had experienced a ransomware attack that targeted their SaaS data, and 52% of these attacks were successful.
- 43% agree that security misconfigurations lead to security incidents. To minimize these risks, companies must implement proper security measures and monitor SaaS usage within their organizations.
According to a recent survey, 75% of respondents believe that the most significant risk of SaaS sprawl is safety. It is given that SaaS applications hold a large amount of confidential data, consumer financial data, records, and other information.
In conclusion, the uncontrolled use of SaaS applications can significantly impact businesses, including increased SaaS expenses, duplications, inefficiencies, and security risks.
6. What Are The Challenges Of SaaS Sprawl?
SaaS applications have become increasingly popular due to their flexibility and cost-effectiveness, but with this growth comes the challenge of SaaS sprawl.
Let us delve into these challenges and explore their implications for organizations,
1. Financial Challenges
These are associated with SaaS sprawl and can significantly impact an organization's bottom line.
Uncontrolled spending
One of the main challenges is uncontrolled spending. As there are no guidelines or software to prevent these purchases, employees will be encouraged to purchase SaaS services without proper approval or budget allocation. This can lead to unnecessary costs and spend tracking hassles.
Want to put every dollar to good use? Here's a guide for startups on building a great SaaS stack on a budget.
Lack of visibility into SaaS expenditures
It makes it difficult for organizations to monitor and manage their spending effectively. Attributing the spending to each department will be cumbersome as the purchases are decentralized.
Difficulty in negotiating group licenses
Additionally, negotiating group licenses for multiple SaaS services can be challenging, as the costs can quickly add up, leading to higher expenses and less control over spending.
Organizations must implement proper budgeting and tracking processes to overcome these financial challenges, monitor SaaS expenditures, and negotiate better pricing arrangements.
Check out how to reduce SaaS spend, get to know how industry experts did it in their own words.
2. Operational challenges
These challenges can impact an organization's ability to use its SaaS software solutions effectively, resulting in inefficiencies and increased costs.
Inefficiencies and Duplication
Decentralized buying will lead to employees purchasing applications with similar functionalities, leading to duplications and increased expenses.
Data Silos and Integration Issues
SaaS sprawl can result in disparate systems that are not integrated, leading to difficulties in accessing and sharing data across the organization. This can result in data silos and limit an organization's ability to make informed decisions.
Difficulty in Managing SaaS Updates and Upgrades
SaaS solutions are constantly evolving and require regular updates and upgrades. SaaS sprawl can make managing and coordinating updates and upgrades difficult across all systems. This can result in outdated solutions and increased security risks.
3. Security and Compliance Challenges
These challenges will harm a company’s ability to manage sensitive data and negatively impact its reputation.
Increased Risk of Data Breaches
High-number of unverified third-party SaaS applications increases the risk of data breaches. With multiple sources of sensitive data from various apps, securing the data and preventing unauthorized access becomes challenging.
Compliance with Data Privacy Regulations
SaaS applications may be subject to data privacy regulations such as GDPR, HIPAA, SOC, etc. Organizations must ensure that their SaaS applications comply with these regulations and that data is handled appropriately.
SaaS sprawl will make compliance challenging for businesses, as they’ll have no visibility on the actual size of their SaaS stack.
Difficulty in Enforcing Security Policies
Multiple unsanctioned SaaS applications within an organization will make it challenging to enforce security policies consistently. This can lead to different security levels between applications, making it difficult to secure the data effectively.
Organizations must increase their application visibility and ensure that their security policies are integrated with their SaaS applications to provide adequate protection for their data.
4. User Adoption Challenges
SaaS sprawl will make it difficult for the teams to coordinate and make informed decisions.
Poor integration
Decentralized buying will lead to the purchase of non-compatible applications with limited integration capabilities. This will lead to user frustration and poor coordination between teams.
Training and Support for End-Users
Training and support are critical for ensuring successful SaaS adoption. The end-users must be trained to use the new Software as a service solution and have access to support when needed.
But the uncontrolled proliferation of third-party applications will make it challenging to train the end user, leading to low adoption rates and limited utilization. Users will refrain from using the application, leading to SaaS wastage.
Resistance to Change
Change can be difficult for many people, especially when it involves adopting new technologies purchased without proper knowledge or inter-departmental coordination.
Employees will resist adopting new SaaS solutions due to a lack of familiarity with the technology, perceiving that the new solution is less efficient or user-friendly than existing solutions, or general resistance to change.
A transparent Software as a service purchasing process and policy will be required to make users more welcoming to new purchases, and it's the ideal way to minimize SaaS sprawl.
If you want to understand how SaaS sprawl directly impacts your SaaS compliance posture, this guide covers the regulatory risks in detail.
7. How to Identify SaaS Sprawl in Your Organization
Run a full inventory audit. Identify every SaaS tool in use, whether centrally procured or employee-expensed. Include free trials, browser-hosted tools, and department-specific apps.
Check expense reports. A significant portion of SaaS spend lives in individual expense reports and corporate cards outside formal procurement. Cross-reference this against your known app inventory.
Survey department heads. Ask each team lead to list every tool their department uses. The gap between what IT knows about and what the business actually uses is your SaaS sprawl footprint.
Look for redundancy signals. If multiple teams perform the same function in different tools, project management, file storage, communication, map the overlaps.
Review renewal calendars. Any tool auto-renewing without a named owner and a documented use case is a sprawl candidate.
8. Best practices to mitigate SaaS sprawl
SaaS sprawl is a common occurrence in organizations with decentralized SaaS purchases and poor application management approaches. But the interesting aspect of software sprawl is that you can easily overcome it with proactive approaches.
Here’s a quick rundown of the best practices:
1. Centralize your SaaS applications for easy management
2. Create SaaS adoption guidelines and policies
3. Conduct regular SaaS Audits to identify redundancies
4. Use a SaaS management tool
5. Be proactive in preventing Shadow IT
6. Rationalize your SaaS stack
7. Train and educate your employees
8. Automating your SaaS procurement process
Click here to learn more about the best practices to overcome SaaS sprawl →
To learn tips for optimizing Shadow IT in organizations and increasing ROI, listen to Joshua Peskay, a 3CPO (CIO, CISO, and CPO) at RoundTable Technology. He shares effective Shadow IT management strategies and introduces an ROI score for SaaS tools to optimize business technology investments.
9. How CloudEagle.ai Helps You Eliminate SaaS Sprawl
CloudEagle.ai is built to solve the exact problems that create and sustain SaaS sprawl: lack of visibility, decentralized procurement, and ungoverned access.
Full SaaS discovery. CloudEagle connects to your SSO, financial systems, browser extensions, and HRMS to discover every app in your environment, including tools IT never sanctioned. You get a complete, continuously updated inventory with no manual data entry.
License management. See exactly which licenses are active, dormant, or unused, mapped to individual users. Identify harvesting opportunities and reclaim spend before the next renewal cycle.
Application rationalization. CloudEagle surfaces redundant apps and overlapping functionality across your stack. Assess which tools to consolidate, retire, or replace with usage data to back the decision.
Procurement workflows. Replace ad-hoc software buying with structured intake-to-purchase workflows. Every software request goes through a defined approval process with the right stakeholders looped in. Employees get what they need faster; IT maintains control.
Shadow IT and shadow AI detection. CloudEagle identifies apps in use that aren't in your approved inventory, including AI tools adopted outside IT oversight. Block risky apps, educate employees, and enforce governance policies automatically.
Contract and renewal management. Centralize every SaaS contract with renewal dates, spend data, and ownership mapped in one place. No missed renewals; no auto-renewals on tools no one uses.
Self-service app catalog. Give employees a curated catalog of approved tools with a built-in access request workflow, reducing unauthorized purchases at the source.
Edge, for example had no structured process for app access. Requests came through emails and messages; new hires waited days for tools. Teams signed up for their own apps, creating shadow IT and compliance blind spots.
After implementing CloudEagle's self-service app catalog with role-based access automation:
- 95% reduction in shadow IT
- 90% reduction in IT tickets
- 1,000+ hours per year saved in access approvals
"Access requests were scattered across emails and chats, slowing teams down and creating security blind spots. With CloudEagle, we now have a single catalog of approved apps where employees can request access instantly."
— Iffi Wahla, CEO, Edge.
Read the full Edge case study →
SaaS Sprawl Grows Every Day You Don't Act On It.
10. Conclusion
SaaS sprawl is undoubtedly a significant crisis vector for enterprise businesses, but it is more alarming that companies are reluctant to accept their inability to manage SaaS applications.
It exists in 70% of enterprises, but only a handful have accepted it and started using a SaaS management solution to increase visibility and eradicate SaaS sprawl.
This article listed the causes and challenges of SaaS sprawl and how it can impact organizations in the long run.
But on the bright side, there is a way to eliminate SaaS sprawl from your system by increasing visibility into your SaaS stack and creating a centralized Software as a service buying process.
Platforms like CloudEagle were built with the primary goal of helping businesses eradicate SaaS sprawl using application visibility, Software as a service management, and centralized procurement features.
To learn more about it,
11. Frequently asked questions
What does SaaS sprawl mean?
SaaS sprawl refers to the uncontrolled proliferation of SaaS applications within an organization. It occurs when employees and departments adopt tools independently, without centralized oversight, leading to redundant apps, wasted spend, security gaps, and operational inefficiencies.
What is the difference between SaaS sprawl and shadow IT?
Shadow IT is the use of software not approved or known by IT. SaaS sprawl is the broader result; it includes both unsanctioned tools (shadow IT) and approved tools that have proliferated without proper management. Shadow IT is a cause of SaaS sprawl, not the same thing.
What are the common signs of SaaS sprawl?
Signs of SaaS sprawl include a high number of software subscriptions, difficulty tracking software usage and spending, multiple teams using different tools for the same function, and difficulty integrating and managing applications.
How does SaaS sprawl affect remote and hybrid teams?
Remote and hybrid environments accelerate SaaS sprawl. With employees working outside the office network, BYOD policies expand and IT loses visibility into what's being installed and accessed. Tools adopted for remote collaboration often bypass formal procurement, creating ungoverned apps at scale.
How can organizations prevent SaaS sprawl?
Managing SaaS sprawl requires centralized visibility into your full app inventory, a software purchasing policy that's communicated and enforced, an enterprise app catalog that gives employees a governed path to the tools they need, and regular audits to rationalize the stack.
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