Within any software portfolio, each tool has its designated purpose. Project collaboration applications like Asana or Trello help to manage workflows, while messaging tools like Slack and Microsoft Teams exist to enable internal communications.
The problem is, without total visibility of your company’s software, there’s every chance that more than one of each tool type is being subscribed to.
But these tools — often referred to as redundant SaaS apps — come at an unnecessary cost to organizations. A cost that is likely to escalate as companies increase the tools in their SaaS stacks by 18% every year.
So, what can you do about it? More specifically, how can you prevent these redundant tools from taking hold of your software spend?
Here’s everything you need to know.
What is a redundant SaaS app?
Before you can tackle this issue, it’s important to understand what a redundant SaaS app is and what is likely to have caused it.
In short, redundant software applications are tools that fulfil the same business function as another app that’s also being subscribed to. This could be within the same team or across different departments.
While it’s an issue that tends to arise during a significant period of business growth — where a large number of new SaaS products are often purchased within a relatively short timeframe — the reality is that it can happen in any business where maverick spending, and therefore decentralized purchasing is at play.
Examples of redundant software
1. Communication apps
Video conferencing tools enjoyed massively increased rates of adoption during the Covid-19 pandemic. The problem is, without a streamlined and centralized procurement process, there is a chance that different teams within your organization will be using different applications.
As an example, your marketing department might subscribe to Zoom, while your finance team uses Skype for Business.
The same is true for in-house comms, with personal messaging spread across tools like Slack, WhatsApp, ProofHub and more.
2. Project collaboration tools
Project collaboration software is another type of SaaS app that is commonly duplicated when department heads manage siloed workflows. For instance, one team might subscribe to Trello for project collaboration, while another utilizes Monday.
But it’s not even just a problem across teams. One study estimates that as many as 95% of project managers are using at least two different apps to manage their projects. Having an understanding of where examples like this exist — and why — can help you understand if there’s a genuine requirement for both tools, or if there’s an alternative application that can support all functionality requirements, while providing you with greater buying power.
3. Email marketing software
Companies also tend to employ multiple tools for different email marketing functions. For example, the sales and marketing teams might distribute their campaigns using a marketing automation platform such as HubSpot or Marketo, while another team such as customer success may use Mailchimp for outreach.
These are just a few examples, but it’s clear how poorly managed SaaS can lead to redundant applications being used within an organization, contributing to unnecessary license purchases and therefore wasted SaaS spend.
Redundant SaaS apps vs duplicate SaaS
One important distinction to make is between redundant and ‘duplicate’ SaaS tools. While redundant software applications refer to tools with overlapping features, duplicate SaaS tools, on the other hand, refer to those being subscribed to by more than one employee or department. This is something that often occurs as a result of decentralized procurement practices.
How software overlap is costing your business
With a better understanding of who is using which tools within your organization, their utilization rates, and the bodies responsible for governing the contract, you’ll be able to spot any cases of redundant or duplicate SaaS — but we’ll get to that later.
For now, let’s take a look at how overlapping software could be having significant consequences for your business, even if you didn’t know that it was there.
Unnecessary SaaS license costs
The primary way that SaaS overlap drives up IT costs is through its fees. The good news is that with visibility of these tools, redundant applications can easily be consolidated, allowing for potentially significant savings on your SaaS spend.
Being aware of these overlapping tools is, however, only the first step. If either or both of these contracts stipulate auto-renewal clauses, then you will need to be leaving yourself a sufficient amount of time ahead of the renewal deadline to amend and terminate these contracts. Better still, you should be actively tracking these software renewals, ideally with an automated software renewal management platform.
Unless it’s a business critical application, we would also suggest requesting the removal of any auto-renewal clauses — something that the vast majority of vendors will do when asked.
Reduced buying power
By spreading your usage between various tools that fulfill the same purpose, your business inadvertently reduces its buying power when it comes to negotiating software contracts. This is because your team is likely to be paying for a reduced number of seats than reflected by your ‘true’ usage, which is spread across multiple different applications.
So, from the perspective of your software vendor, your company may be considered a lower-value contract — and therefore lower priority — than if you consolidated and had all of this usage tied to one app. As a result, the vendor may be less keen to retain your custom, meaning that you have less buying power when it comes to negotiating a cheaper price or more flexible terms.
Underutilization across apps
Software overlap contributes to the under-utilization of SaaS, with organizations procuring whole software solutions for select features that could be provided by another tool in their portfolio. Our data shows that on average, organizations are under-utilizing their SaaS applications by 33%. This is an alarming statistic considering that the average company now has as many as 110 tools in its stack at any given time.
Based on this, our data suggests that companies with over 600 employees could be wasting close to $1 million on underutilized SaaS.
How to reduce redundant SaaS apps
To regain control, you need visibility on the company’s entire SaaS stack, so you can trim any instances of redundant software. These are our recommendations:
Create a SaaS system of record
Discovering the tools in use and building a central knowledge base to store important contract information can help you to locate redundancies in your stack. This documentation can take many forms — some choose to use a collaborative spreadsheet, while others favor a dedicated piece of software to automate the process in real time. This is known as a system of record, and can be used to assess existing SaaS overlap and potential redundancies that might emerge with new software procurement.
For a full guide on how to effectively document your SaaS, visit our SaaS system of record walkthrough.
Consolidate unnecessary licenses
Application rationalization can help you to assess the tools in your stack and cut out any redundancies. This involves auditing company usage and ROI for each application and making decisions on whether to retain, terminate, or consolidate its license. Even if you can’t afford to lose an app altogether, there may still be an opportunity to adjust the contract terms and reduce its fee based on your usage behavior.
Some vendors, for example, allow buyers to unsubscribe from certain features or lower the seat allowance associated with their contract.
According to our expert team of SaaS negotiators, going into discussions with a clear understanding of your usage and feature requirements can allow you to negotiate bespoke contract terms.
Use Vertice to gain total SaaS visibility
Addressing your redundant SaaS can be a challenge, especially for a larger enterprise with many software needs to consider. However, Vertice can help you manage your portfolio and get ahead of the curve before redundant software takes hold.
We do this by providing total visibility of your entire software stack, identifying whether or not each tool is being utilized, those that can be consolidated, and which contracts are coming up for renewal. Our risk-free service combines all the relevant information into one convenient dashboard, and our negotiators can help you to secure the best possible deal on all future procurement, using the pricing benchmarks of over 13,000 global SaaS vendors.
See for yourself how much you could be saving on your annual SaaS spend with our free cost savings analysis tool.
