Complete guide to SaaS management

SaaS management is the process of identifying, managing, and governing the software applications that exist within an organization’s technology portfolio.

When software goes unmanaged, it not only puts the business at risk of data breaches and security issues, but it can also lead to a substantial amount of wasted spend as a result of redundant and duplicate SaaS apps, not to mention unused licenses.

How SaaS became essential to modern business operations

Standing for software-as-a-service, the SaaS industry has enjoyed exponential growth in recent years. According to Statista, the SaaS market grew by 18% between 2022 and 2023 to $197 billion. In the US alone, the market is forecast to be worth $225 billion by 2025.

For the modern business, SaaS adoption is practically synonymous with IT operations: by 2025, it’s expected that SaaS solutions will contribute to 85% of the average company’s entire tech stack.

At the start of the millennium, rapid improvements in cloud technology made it possible for software companies to host, install, and maintain applications on servers in far-away locations. The industry grew steadily, but remote working models brought on by the pandemic further enhanced the proliferation of software products to establish the SaaS boom we’re experiencing today.

Rather than hosting IT infrastructure on-site, businesses can instead opt for cheap, flexible, and more efficient software solutions — whether on-premises, in multi-cloud environments, or a hybrid of the two.  

These curated SaaS environments enable organizations to access the specific platforms they need in order to continue their growth. From technical solutions like GitHub to simple messaging platforms such as Slack, these products are available on-demand and accessed through subscription agreements.

The subscription-based economy upon which the SaaS industry runs has become a pervading influence in our working lives. The ability for businesses to cultivate a bespoke package of software tools allows them to develop more streamlined workflows, improve functionality, and stimulate higher levels of productivity and collaboration in their teams.

While SaaS has been a boon for businesses in all industries, SaaS management represents a number of challenges. The process of identifying the right SaaS solutions, vetting software providers to ensure they’re legitimate, negotiating and procuring contracts, and then managing purchased platforms eats up substantial resources.

SaaS management tools offer relief from these challenges.

Why do businesses need SaaS management?

There’s no denying that cloud-based software applications offer substantial benefits to businesses, including lower costs and greater flexibility to scale. But the accessibility of software has ultimately transformed the way that companies purchase these applications. Or more specifically, the way that employees purchase them.

Ultimately, with increased autonomy comes decentralized purchasing — something that’s causing huge issues for IT, procurement and finance teams alike.

Challenges that include:

• Lack of visibility into the software being used across the organization
• Wasted SaaS spend caused by duplicate, redundant, unused and costly licenses
• Increased security and compliance risks, including shadow IT and data exposure

Vertice’s SaaS management platform equips businesses with the tools they need to regain control over their software portfolio and put an end to wasted spending.

The SaaS management cycle

An effective SaaS management lifecycle can be crystallized into the following four steps.

1. Identification:

• The first step in successful SaaS procurement initiatives is to consult all relevant stakeholders to establish the current problem and how the right SaaS platform can resolve it.
• Market research will then identify which platforms are viable, affordable, and provided by reputable suppliers.
• After you’ve researched the current market, create a shortlist of three potential solutions and rank them in order of preference.

2. Negotiation and purchasing:

• Once you’ve selected the platform you’d like to purchase, file a request for proposal (RFP) and arrange meetings for procurement negotiations and contract finalization.
• Prepare for these meetings by thoroughly researching the supplier’s product, listening to advice provided by end-users — they’ll be the ones using the platform, so it’s important their objectives are met.
• Decide on your non-negotiables and establish a best alternative to a negotiated agreement (BATNA).
• During discussions, agree on KPIs and service-level agreements (SLAs) so that the platform can be fairly assessed and account support is on hand when required.
• Leverage unique market intelligence via Vertice’s customer purchasing teams to ensure your company doesn’t overspend on subscriptions.

3. Management:

• Use the Vertice SaaS Purchasing platform to continuously monitor the performance of your entire SaaS stack. Through real-time insights on usage data, our platform enables managers to see which elements of the solution are working and which aren’t.
• Make decisions based on insights generated by the Vertice platform, such as suggestions on how existing subscriptions can be tweaked to better service the business.
• Respond to platform notifications alerting teams to upcoming renewal dates — these are given well in advance, giving users time to decide whether they’re happy with their existing contract. With the right SaaS management platform, your business will never again pay for an unnecessary subscription.

4. Redundancy and cancellation:

• In instances where software licenses are no longer required, the Vertice platform enables smooth and timely cancellation.
• When specific features of subscriptions have become redundant, our negotiating teams are prepared to re-enter discussions to strike a more suitable arrangement.
• Remember that software providers suffer when they experience a high degree of client turnover — just one of the facts our purchasing teams can leverage on your organization’s behalf, all in the interest of securing you the right contract at the right price.

What is a SaaS manager?

A SaaS manager is the person responsible for the oversight of SaaS subscriptions within a company. Distinct from procurement teams, SaaS managers must be finely tuned to the functions of all departments within a company, understanding the frequency with which platforms are used and the importance they hold for end users across business units.

One of the key functions of the SaaS manager is to monitor platform use in order to identify areas in which subscriptions can be more focused. With these insights, SaaS managers can make recommendations on which platforms and features are worthwhile, which aren’t, and which could be enhanced with simple modifications.

When company SaaS usage was lower, SaaS management was much simpler, but with the average employee now using twice as many apps as they were in 2019, the role of the SaaS manager is becoming infinitely more complicated.

And with 130 different subscriptions to manage, platforms to review, and contracts to monitor, SaaS management is increasingly more difficult without support from a SaaS management platform. Depending on the quality of the SaaS management solution — and the company’s own approach to SaaS management — these platforms can either augment or entirely replace the role of the SaaS manager.

The risks of poor SaaS management

From security breaches to spiraling costs, there are many organizational risks associated with poor SaaS management. Finance, procurement and IT teams have been reckoning with these risks for years, but SaaS solutions can now alleviate threats with greater levels of visibility, efficiency and control.

Below are four of the key risks of poor SaaS management:

• Security — When a new SaaS license goes live, businesses are presented with immediate security risks. Without clear oversight of SaaS operations and integrations, businesses boost the potential for security breaches. Improvements to security in license management are inherent to SaaS management platforms. The ability to identify shadow IT spend, for instance, enables companies to spot where potential security breaches may occur across SaaS services that have limited business-wide visibility.
• Onboarding — GDPR’s introduction has placed a greater emphasis on data protection than ever before, and introducing new employees to SaaS products without sufficient management solutions in place represents a compliance risk.  Leveraging the Diligence Insights tool, Vertice’s SaaS management solution includes automated checks for compliance with frameworks such as GDPR, ISO 27001 and SOC2. This process makes employees more aware of compliance risks, protecting sensitive data in the process.
• Offboarding — When employees leave your organization, an appropriate approach to offboarding involves a comprehensive review of the individual’s interaction with SaaS products. Without this, former employees can retain access — often entirely without malice — to confidential information. Poor SaaS management here poses another security risk. Individuals are unlikely to adhere to the same security standards as companies do when it comes to their devices, leaving valuable information more susceptible to malicious online threats. This issue is exacerbated when just one member of an organization has access to a specific SaaS license, thereby limiting the chance that IT, security and compliance teams can identify and resolve the risk.
• Wastage — Most importantly of all, few organizations can afford to waste the money lost to ineffective SaaS management. We estimate that 90% of businesses are overpaying SaaS vendors by 20-30%, while many others are failing to utilize subscription products to their full extent. For startups and SMEs in particular, this waste simply isn’t sustainable. The Vertice SaaS management platform cuts wastage in a number of ways: taking stock of all products in the stack; analyzing product utilization at a granular, department and business-wide level; and notifying users when contracts are up for renewal. Money, and time, can then be better spent elsewhere.

The scale of SaaS wastage

In the context of an exponential increase in SaaS adoption, there are some alarming figures regarding SaaS wastage. We estimate that a third of all software spending goes entirely to waste within the average organization. If current market projections are accurate, this amounts to a staggering $77 billion worldwide.

It’s hard to fathom how this could be possible, but much of this waste can be attributed to the absence of sufficient SaaS management processes. When these processes aren’t in place, the potential for SaaS sprawl and shadow IT to spread increases significantly.

The business model upon which many SaaS vendors operate relies on this sprawl. Mechanisms such as auto-renewals entrap many businesses into paying for subscriptions they don’t need or perhaps aren’t even aware of — and standard yearly price hikes then exacerbate the problem.

Without a SaaS management platform in place, it can be almost impossible to effectively monitor platforms in the stack, and the value-adding features within them. Indeed, failing to look for redundancies within existing SaaS stacks is one of the leading contributors to such eye-watering waste figures.

Our latest SaaS Purchasing Insights report highlights that SaaS inflation reduced by 2.1% in the first quarter of 2024, despite the fact that average subscription costs have increased by 13% since the first quarter of 2023. It pays to pay attention to market fluctuations such as these — they can have a major influence on the price you pay for your SaaS subscription, and whether or not you should look to renegotiate the terms of an existing contract.

It’s important to note that SaaS wastage doesn’t just refer to finances. The process of managing SaaS contract renewals single-handedly accounts for the loss of 385 business hours every year. And from start to finish, it takes 100 days on average to purchase a new SaaS product without assistance from a SaaS management platform.

To drive significant money and time savings, it’s clear that effective SaaS management is an essential function of modern businesses.

Opportunities yielded by effective SaaS management

SaaS procurement is inextricably tied to your organization’s development: as your company’s ambition and workforce grows, so too does the number of SaaS licenses you require.

In a broad sense, then, opportunity for growth is the benchmark of effective SaaS management, but here’s how it applies to specific areas of license management:

• Automations — The ability for SaaS management platforms to automate processes across your organization’s entire workflow represents significant time and cost savings potential. For instance, a Monday pricing tier includes an automation feature that notifies workers when pieces are ready for review or have progressed to the next stage. When these platforms integrate with one another, automations trigger responses across different teams and departments within your organization. This cuts the time required for approval checks, and employees across respective projects are automatically kept abreast of progress and bottlenecks.
• Integrations — A key part of the SaaS management process is to ensure integrations are not only possible but smooth. The underutilization of software integrations is common among misfiring SaaS spend management projects. To use a simple example: if your company is using both Google Calendar and Slack, then it makes sense to sync the two together, bringing Calendar notifications to the instant messaging tool that employees will tend to check more frequently throughout the day. This simple solution that might mean your team never misses a virtual meeting again.
• Actionable insights — In order to manage SaaS subscriptions effectively, feedback on things such as use cases, usage data and contract renewals must be easy to interpret and action. For instance, the process should involve highlighting scorecard dates well in advance so that teams have time to prepare for SaaS contract negotiations and renewals management. Forecasting key dates like these gives procurement teams a level of insight and control that are invaluable amidst SaaS negotiations.
• Optimized vendor management — Underutilized features of products, or underutilized products on the whole, aren’t working hard enough to contribute to wider efficiencies and profitability. Continuously monitoring usage data and interaction with SaaS products paves the way for highly optimized vendor management, along with more proactive vendor relationship management. By looking closely at how employees interact with subscription services, SaaS management platforms separate the wheat from the chaff. With these insights, procurement teams are equipped with a deeper understanding of the products and features that are most valuable to their company — subscriptions adding true value can be retained or improved, while the rest can be whittled down or retired altogether.
• Efficient spending and cost saving — Automations, clever integrations, and easily digestible data bases all amount to significant cost savings. Comparative analysis of the platforms performing well — along with those falling short — enables companies to quickly identify where improvements can be made. By supporting the buyer and negotiator between vendors and users, high-quality SaaS management platforms can significantly empower procurement teams across the business spectrum. The transactional data available on these platforms reveals the prices organizations pay for their subscriptions, equipping procurement teams with huge amounts of leveraging power during negotiations.

What do SaaS management platforms offer over spreadsheets?

SaaS management of the recent past was conducted primarily on messy spreadsheets, where keeping track of renewal dates and contract details required extensive manual data entry. This system may have worked fine when companies used just a handful of subscriptions, but the number of applications present in businesses today has made this method unsustainable.

SaaS management platforms are fit-for-purpose solutions that offer much higher levels of SaaS visibility. Compared to spreadsheets, SaaS management platforms offer considerable advantages.

Through these platforms, IT management teams are given a clear impression of the importance and frequency of subscription use, laying the foundation for optimization. As a result, SaaS visibility — and SaaS management platforms — engender the following benefits:

• Cost savings – The continuous monitoring of SaaS applications leads to suggestions on system improvements, such as products and features that can be retired. Cost savings are also achieved through contract renewal management, with notifications alerting relevant teams on upcoming renewal dates to ensure unwanted contracts never roll over into the following year.
• Time savings – The process of manual SaaS management is both timely and inaccurate, particularly now that application use is so widespread in modern organizations. Businesses can simply no longer afford wasting time on tasks that contribute little towards growth.
• Improved security – Without a thorough understanding of every product within a company’s SaaS stack, the potential for security breaches increases. SaaS management enables security teams to better monitor platforms and act on vulnerabilities or hacks as soon as they occur. Implementing stack-wide processes such as access permissions and single sign-on (SSO) measures further enhance SaaS security provisions.

Gain total visibility over your SaaS stack

In order to effectively manage your SaaS portfolio, you need to know which software applications exist within your organization. More specifically, you need to discover and catalog them.

Vertice’s platform gives you complete visibility of all subscriptions, user licenses, owners, contracts, renewals, and costs. This allows you to make informed decisions about future software purchases and renewals, as well as eliminate any shadow IT eating into your budget.

Get total SaaS visibility with Vertice ›

Reduce your SaaS spend

Once you have total oversight of the software in use (or not) across your organization, you can begin to optimize your SaaS stack.

With so much money being wasted on SaaS, not to mention soaring inflation rates, it’s never been more important to look for ways to streamline your portfolio and reduce your spend.

Vertice can help you to analyze the utilization and value of each software application, to ultimately identify whether it should be kept, replaced, retired, or consolidated.

Reduce your SaaS spend with Vertice ›

Take control of renewals and negotiate better contracts

Vertice’s automated SaaS management allows you to keep on top of your SaaS renewals.

Manual tracking might work if you’re managing only a handful of software applications, but the average organization uses hundreds of tools. This contributes to what can only be described as a Frankenstack — and it can become incredibly easy to lose oversight, miss renewal dates, and end up paying for both expensive and unwanted subscriptions and licenses.

Take control of SaaS renewals with Vertice ›

Ensure your software is secure and compliant

Regulatory legal guidelines safeguard the sensitive personal data belonging to both your customers and your employees. If unvetted applications are being used within your organization to handle this data, you run the risk of breaches that can be costly both financially and for your reputation.

Vertice provides you with the necessary visibility upon your entire software stack, to inspect and verify that every step of the workflow is safe, secure, and regulation-compliant.

This way, you protect your data and your business.

Ensure SaaS security & compliance with Vertice ›

Discover all the software your company utilizes

It can be challenging to locate and accurately document the many tools in use within your organization. Beyond just asking your employees which applications they subscribe to, you’ll need to ensure that you have procedures in place to discover any new software use — sanctioned or unsanctioned — in real-time.

Vertice’s SaaS management platform enables you to uncover these tools, informing decision making and eliminating shadow IT before it puts your business productivity and data security at risk.

Discover all your SaaS usage with Vertice ›

8 steps to effectively adopt SaaS management

Successfully adopting SaaS management practices and tools within your business can unlock significant improvements in operational efficiency, cost control, and compliance. Building a successful SaaS management strategy must include several best practices to maximize the benefits. Here are eight key steps to guide you through the process:

1. Assess current SaaS usage

To begin, taking full stock of your current SaaS tech stack is essential. Conduct a comprehensive audit of existing applications in use across your business. Identify usage patterns, making note of any redundant apps or underutilized licenses, as these are key wasted spend areas.

2. Define clear objectives

Once you’ve baselined your SaaS usage, you can define clear goals for your SaaS management strategy. These should align with your broader business aims to ensure your strategy supports overall organizational success. For instance, you might want to reduce SaaS spend by 15% across the next year as part of a wider cost-saving initiative.

3. Establish governance policies

All aspects of SaaS usage within your organization — from procurement to decommissioning — should be governed by clear and comprehensive policies. For example, you could mandate a review process for all new SaaS subscriptions to confirm they’re necessary and fit for purpose. These policies should be documented and communicated to all stakeholders to ensure consistent adherence.

4. Choose the right SaaS management platform

Utilizing a SaaS management platform (SMP) can significantly reduce the burden of managing SaaS applications in your business, but you need to pick the right tool for the job. Evaluate tools based on features, scalability, and integration capabilities such as APIs. Additionally, ensure applications align with objectives like cost savings or deep analytics.

5. Centralize SaaS procurement

Implement a centralized system for acquiring SaaS applications. Friction during the procurement cycle is a leading cause of shadow IT and unauthorized purchases. A dedicated procurement portal where all SaaS requests are submitted and approved streamlines the process, helping remove unnecessary roadblocks to new software.

6. Monitor and optimize usage

SaaS management is an ongoing process. Once your strategy is in place, continue to regularly review usage so you can achieve full-stack observability and identify opportunities for further optimization, such as adjusting licenses or removing redundant apps. For example, you might be able to reduce spending on a particular tool if only a few team members use it. SaaS management platforms can help here, offering metrics like number of active users or logins per month.

7. Ensure compliance and security

Maintaining compliance with relevant regulations and standards is essential. Part of this involves maintaining top-spec SaaS security posture management to protect sensitive data. Consider implementing single sign-on (SSO) and multi-factor authentication (MFA) tools like Okta or Entra ID to provide secure access to your SaaS applications.

8. Educate and support employees

Any SaaS management strategy requires a concerted effort across your organization to remain effective. Ensure employees are educated on best practices, such as how to request new SaaS applications. Ongoing support with quarterly training sessions can keep staff updated as your software footprint and management strategy continues to evolve.

Supercharge your SaaS management with Vertice

Managing SaaS applications within your business can get complex — especially considering the average business uses more than 100 different tools — but Vertice is here to make things easier. With our SaaS Purchasing Platform, keeping track of your software and associated spending is simple.

Our solution aids your SaaS management strategy through four key steps, enabling a streamlined and cost-effective stack:

1. Discovery and onboarding – By integrating with your IDP, the SaaS Purchasing Platform identifies software in use across your business, including shadow IT, and unifies your solutions within a single dashboard for full visibility.
2. Usage analytics – The platform provides detailed analytics on software usage, helping you understand which applications are actively used and which are underutilized. From here, you can optimize license allocations and eliminate unnecessary costs.
3. Negotiation and renewals – Vertice leverages its market data on over 16,000 vendors to negotiate the best possible terms for your SaaS contracts. Our experts can liaise with SaaS providers on your behalf, taking the headache out of procurement and renewals while driving the hardest bargain.
4. Streamlined contract management – SaaS contract management is made easy with our platform. A unified dashboard displays all your contracts and future renewal dates, with simple workflows that keep key stakeholders in the know. Security and compliance is also simplified through the Diligence Insights module.

Still not convinced? Take a look at some of our Customer Stories to see just how effective the SaaS Purchasing Platform can be:

● Crunch saved over $100,000 in three months, in part thanks to renegotiating its CRM contract with help from Vertice.

● Spenmo reduced software spending by 25% after centralizing its costs within the SaaS Purchasing Platform and subsequently right-sizing contracts. 

● Encompass achieved six-figure savings and a 6x ROI across over 80 contracts thanks to insights gained through the Vertice platform.

● Shootsta attained 100% ROI in 30 days by using the SaaS Purchasing Platform to eliminate software sprawl.

● Lighthouse saved $170,000 on a single contract after Vertice negotiated more strategic terms using pricing intelligence and industry expertise.

At Vertice, we manage over $3.4 billion in spend across our partners. Our management platform is indispensable for maintaining SaaS cost control and optimizing usage. Want to see how it could help your business? Simply get in touch using the form below to get started.

Vertice in action

How we recently helped a technology company save big on their SaaS costs.