SaaS sprawl: definition, consequences & solutions

How to prevent SaaS sprawl from taking hold of your business

Anna Markowska | NOV 15, 2022

There’s no denying that the SaaS industry is booming. As of 2022, the market is worth an estimated $186 billion — but additional research forecasts that this figure will in fact grow to $255 billion by 2025. And is it any surprise, with organizations now using an average of 177 active SaaS applications to coordinate everything from customer relationship management to the office coffee order?

But as these subscriptions, memberships and licenses continue to pile up, the question is when this endless SaaS proliferation will end? Can companies indefinitely add to the number of seemingly essential software tools that they use for business?

The data suggests that no, they can’t. At least not without a complete oversight and control.

Because while these digital tools have been embedded as a critical component of any modern business, there are growing concerns that too large of a SaaS technology stack could create more problems than it solves.

In this article, we’ll discuss the causes and consequences of SaaS sprawl, and vitally the best practice solutions to prevent it from taking hold of your business.

What is SaaS sprawl?

SaaS sprawl, also known as software sprawl, occurs when an organization’s SaaS stack consists of a large — and often unmanageable — number of applications.

Ultimately, as business needs grow, the number of digital tools required increases, which leads to new applications being subscribed to, be this through a centralized process or at the will of individual employees. But this latter point is a huge issue for IT, finance and procurement teams.

Why?

Because when software is purchased without their knowledge or approval, it opens the door to a whole host of issues, covering everything from productivity, to security, right through to wasted spend.

The causes of SaaS sprawl

So, what exactly is causing SaaS sprawl?

Lack of standardization

With around 30,000 different SaaS companies globally, organizations now have a huge choice of applications for almost every software category. But while choice can be advantageous, it can also be overwhelming. What’s more, it can also become costly. At least when the purchasing process isn’t centralized, that is.

But, what do we mean by this?

Well, despite the sheer volume of SaaS tools now available to you, many do in fact have overlapping functionality and features. Which means that you may be using multiple tools that essentially fulfil the same purpose.

This is particularly common for tools that are used across multiple departments. Tools such as project management software — for example Asana or Monday.com — cloud storage solutions, and even email marketing platforms.

The bottom line is that when department heads and employees are given the autonomy to purchase their own software — typically the tools they are most familiar with — you could end up paying for redundant or duplicate apps.

When department heads and employees are given the autonomy to purchase their own software, you could end up paying for redundant or duplicate apps.

Shadow IT

Another challenge that organizations are increasingly faced with is Shadow IT — something that happens when employees purchase or use software without the approval or knowledge of procurement, IT and finance teams.

Ultimately, when these teams aren’t aware of the services and applications in use across their organization, it can result in security and compliance issues, as well as wasted spend.

But just how big of a problem is Shadow IT?

According to a 2022 Gartner report, a company’s actual cloud usage is estimated to be up to 10 times the size of its known cloud usage. That’s a staggering amount of tools that could be being used without your organization’s knowledge.

Distributed workforces

A more recent development contributing to SaaS sprawl is the increase in distributed workforces. Following the pandemic, the burgeoning trend of companies offering remote or hybrid working has accelerated, with as many as 44% of US employees now working from home at least five days per week, up from 17% before the Covid-19 pandemic.

As a result, companies have had to quickly adapt and invest in tools that enable productivity at home, for example video conferencing and collaboration suites. In the process, many have rapidly expanded their SaaS stack to keep up with these new demands.

But that’s not the only way that distributed workforces are contributing to SaaS sprawl and more specifically shadow IT.

With employees that work remotely left to their own devices — both figuratively and literally —  these employees are increasingly side-stepping company-sanctioned software in favor of their own tools.

The consequences of SaaS sprawl

So, why does SaaS sprawl matter?

Increased costs

To start with, an unmanageable SaaS stack can drain a business of valuable time, resources and money.

But as organizations of all sizes fight to keep their outgoings to a minimum — particularly in the wake of soaring inflation rates — it’s never been more important to get a handle on the amount of money being wasted on unwanted software, unused licenses, forgotten subscriptions and duplicate SaaS. Because the reality is that these costs very quickly accumulate.

Security risks

SaaS tools are often used to store employee and/or customer information, spanning everything from confidential financial records, to contact details and address history.

When dealing with this type of sensitive information, however, standards must be met in order to protect data from leaking externally, while also maintaining compliance with legally enforced regulations such as GDPR, FISMA and HIPAA.

The problem is, when SaaS sprawl occurs, data may be made vulnerable to external threats or leak risks. The main reason being that unmanaged applications won’t have been adequately vetted for use or secure in transferring data between different applications — one recent survey by Adaptive Shield and CSA showed that in the past year alone, up to 63% of CISOs have reported security incidents from SaaS misuse.

Reduced productivity

SaaS sprawl can cause significant fragmentation in the workflow if different employees and departments are working out of several separate applications for a common goal.

For example, a company’s web design team might collaborate with the content team on a project, but use separate workflow management software to track project progress. This can contribute to a silo mentality across the organization, as well as other operational inefficiencies such as decentralized data management and context-switching.

Together, these issues can significantly reduce productivity across entire organizations — all stemming from poor software management practices.

Strategies to prevent SaaS sprawl

The good news is that steps can be taken to mitigate against software sprawl and prevent your SaaS stack from becoming entirely unmanageable.

How?

By following these proven strategies.

1. Rationalize your application portfolio

Application rationalization is the process of assessing which of your SaaS tools should be kept, consolidated or retired from your operations. More specifically, it requires to you to assess and justify each and every application that is being subscribed to, so that you can gain total visibility of your SaaS stack and make informed decisions about which software should be retained for business, and which should be renegotiated or terminated.

Not sure where to start? Have a read of our dedicated article on application rationalization here.

2. Centralize the procurement process

To prevent further sprawl, it’s wise to ensure that all software purchases pass through the correct channels: at the hands of IT, department heads or a dedicated procurement team. This means that if employees would like to start using a new tool or suggest changes to an existing plan, this can be assessed by those with visibility of the entire SaaS stack.

Otherwise, purchases could happen without the organization’s knowledge or consent, resulting in shadow IT and potentially unnecessary additions to the software portfolio.

3. Provide thorough onboarding and training

In addition to targeting the existing tech stack, investing in employees can pay dividends for digital operations. Ensuring that all new and existing members of staff receive comprehensive onboarding, training and regular supervision can make them more adept at using the standard software purchased by the company.

A workforce that fully understands the functions and features of the tools they are using is a workforce less likely to go and purchase new tools independently, reducing the likelihood of sprawl.

How Vertice can help reduce SaaS application sprawl

For many businesses, software sprawl is a hidden weak spot that can significantly undermine productivity — and ironically, via the very applications that are purchased to enable it. But with so few organizations being aware of the risks and solutions, software sprawl often goes completely unchecked.

At Vertice, we can help you to manage your SaaS portfolio and ensure optimum levels of productivity, profitability and security. We assist businesses of all sizes to govern their subscriptions from one single point, streamline purchases and renewals, and identify any signs of duplication — so that you can save on software costs without lifting a finger.

For more information about how we can help to optimize your SaaS stack, get in touch with us today.

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