How to achieve a lean SaaS tech stack and eliminate software bloat

For the past decade, business leaders have been told to “go digital” in a bid to boost productivity and unlock new opportunities for growth. Because of this, most organizations have been adding more applications to their SaaS stack — and now, the average company deploys as many as 130 different software applications. But could it be time to cut back?Countless organizations’ SaaS tech stacks have been proliferating at an unsustainable rate, often without any centralization or oversight. In fact, SaaS now takes up as much as 14% of total business spend, which has caused a domino effect of consequences including depleted IT budgets, decentralized purchasing behavior, and poor portfolio visibility, among other challenges.Ironically, a bloated software stack can actually start to cause the same problems for businesses that digital tools were brought in to address — slowing down productivity and driving up costs.But just what’s causing this to happen? And what can be done about it?Below, we’ve covered everything you need to know about the causes of software bloat and how you can manage it.,

What is software bloat?

Software bloat refers to the accumulation of many software applications in an organization’s SaaS tech stack that are often redundant or underutilized. It typically occurs gradually, as different teams adopt new SaaS systems to address their needs and fulfill work responsibilities.And it’s affecting practically every modern organization.Our own data indicates that software stacks within the average company are growing by 18% each year, with staff leveraging SaaS to coordinate everything from sales to HR processes. But even though these tools are typically procured to automate, streamline, and organize a team’s workflows for the better, they can come at a cost.If an organization’s software sprawl goes unaddressed, it can lead to a portfolio with overlapping functionalities, increased subscription costs, and challenges both for operational efficiency and spend management.This poses a substantial risk to an organization's IT budget, particularly in the current climate of rising SaaS costs. Each year, SaaS prices are increasing by 12% and rapidly outpacing the market rate of inflation. So, as subscriptions, memberships, and licenses continue to pile up, the proliferation of digital tools could pose a threat to your bottom line.,

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What causes a bloated software stack?

To address the software bloat taking hold at your organization, you’ll first need to understand some of its root causes. Here’s what to be aware of:

Maverick buying of SaaS solutions

When individuals or departments take it upon themselves to procure SaaS solutions, this is a type of maverick spending, or unauthorized purchasing that bypasses the established procurement processes.It usually occurs as a result of a company having inadequate processes for procuring new software tools, leading employees to make their own purchases independently. This decentralized style of procurement causes a lack of coordination between departments, and redundant or overlapping tools are likely to be adopted, resulting in a bloated software stack.Many companies reported higher rates of software bloat when pandemic-related lockdowns were enforced around the world. With workers forced to adapt to the sudden rise of remote working, and businesses failing to provide the digital infrastructure to facilitate a smooth transition, many employees procured their own tools without company approval.

Feature overlap and duplicate software

When software procurement happens without full visibility on the wider portfolio, tools with overlapping functionality are likely to be procured — otherwise known as redundant tools.These applications typically fulfill the same business function as another app that already exists in the portfolio. They’re especially common across communication tools (like Slack and Skype) and project collaboration suites (for example, Monday and Asana).Tools with overlapping functionality bloat the SaaS tech stack, lead to increased subscription costs, and complicate user workflows. Essentially, feature overlap hinders collaboration as teams may choose different tools for the same tasks, resulting in data silos and a lack of process standardization.On a related note, many businesses also suffer from duplicate tools in their stack. This occurs when multiple licenses are procured to the same software tool, which usually stems once again from poor procurement practices. Duplicate tools lead to increased subscription costs, resource inefficiency, and potential difficulties in data synchronization, contributing to a bloated software stack.

SaaS license overprovisioning

Our data shows that 33% of SaaS licenses within the average organization are barely used or not used at all by the intended staff member. For a company with 500 employees, this equates to around $875,000 of SaaS spend being wasted every year., Our data shows that 33% of SaaS licenses within the average organization are barely used or not used at all by the intended staff member. For a company with 500 employees, this equates to around $875,000 of SaaS spend being wasted every year., So, what’s going on?One critical reason for this is SaaS overprovisioning. When an organization subscribes to a higher tier of software plan than is actually necessary, it ties up resources that would be better off allocated elsewhere and contributes to license underutilization. This happens for a variety of reasons, including:

• Planning for future growth
• Poor visibility on SaaS adoption rates
• Lack of negotiations to secure best-fit contract terms

As a result, many organizations are paying hand over fist for a seat count or usage threshold that isn’t needed, bloating their software stack with unnecessary licenses.

An increasing number of options

Vainu estimates that there are some 72,000 SaaS companies in operation, with ~73% of these having been founded since 2010. To long-standing CIOs, this data will be unsurprising — the breadth of tools for businesses to pick from nowadays dwarfs the availability seen in previous decades.But with such a wide selection on the market, organizations are left with a huge choice of tools across practically every software vertical. This may lead to the proliferation of the SaaS stack if tools are procured without any cohesive strategy.For example, individuals may take it upon themselves to purchase an alternative tool to the one provided by the organization if they’ve used it before in a previous role.What’s more, companies may fall into the trap of copycat purchasing each new trending tool that earns the attention of their peers. As business leaders look to innovate and find a competitive advantage, many feel the pressure to try out each new solution that hits the market in case it provides value. This can lead to a bloated software portfolio.For example, we’ve seen a massive uptick in the popularity of AI tools in the past year. At the start of 2023, only 10% of companies were using AI software — but by April, this number had increased to 33% — and AI now accounts for 3% of all SaaS spending., At the start of 2023, only 10% of companies were using AI software — but by April, this number had increased to 33% — and AI now accounts for 3% of all SaaS spending.,

How to achieve a lean SaaS tech stack

The solution to a bloated software stack is to make strategic changes to your portfolio that trim some of the ‘dead weight’ tools draining your money and time.Here are our top tips for reducing SaaS sprawl and achieving a lean software stack that provides a healthy return on investment.

1. Consolidate redundant tools

To create and sustain a lean SaaS tech stack, you’ll first need to review your existing portfolio. This is typically done by the process of application rationalization, which is a dedicated audit of each of your SaaS tools — namely, their active licenses, terms, and all associated costs.Application rationalization helps identify redundant software solutions that can be consolidated or eliminated, on account of overlapping functionality, underutilization, or otherwise poor return on investment.Then, with renewed visibility on your software stack, you’ll be better equipped to negotiate best-fit contract terms and pricing discounts with vendors., , , ,

2. Refine your procurement process

To prevent software bloating, your business must establish a centralized procurement process that passes approval through the appropriate channels — for example, the IT department, or a dedicated procurement team.With a signposted procurement process in place, any new tool can be assessed for its value and suitability in the context of the wider SaaS tech stack.Otherwise, purchases are more likely to happen without the organization’s knowledge or consent, resulting in shadow IT and unnecessary additions to the software portfolio. This is a real risk — while many of your business tools might be essential, others could be providing very little value compared to their cost, as reflected in low rates of utilization for certain products.Investing in consolidation-led software could be a wise strategic move for companies deploying too many disparate tools. This refers to applications that combine various different services into a comprehensive suite, such as a CRM or ERP system.

3. Track usage and auto-renewals

Streamlined software license management ensures that your well-oiled portfolio of tools never succumbs to software bloat. Organizations should aim to centralize all governance of licences and user access through one unified platform, to reduce the administrative burden of managing pending renewals and any necessary cancellations.Taking this approach, you can discover and monitor SaaS usage on an ongoing basis, helping to inform decision making when auditing your portfolio. Plus, you can supervise and address any unwanted auto-renewals.With 89% of SaaS vendors including these clauses in their software contracts, there’s every chance that you could be subscribing to an unused or over-provisioned contract that shouldn’t be renewed on its existing terms.In fact, 16% of SaaS users are on a higher tier plan than they need to be based on their usage requirements. By monitoring your renewals, you can prevent this unnecessary spending and downsize or terminate your plans accordingly, stopping software bloat in its tracks.,

Manage your SaaS tech stack with Vertice and prevent software bloat

After years of unmanageable SaaS proliferation, organizations are now experiencing some of the consequences of bloated software. To bring your ROI and productivity back up to scratch, you’ll need a comprehensive SaaS management strategy — and that’s where we can help.Using our SaaS management platform, you can gain unparalleled visibility into your entire software portfolio. We’ll help you identify instances of bloated software that could be undermining your workflow and get back to maximum productivity and profitability.No matter the size of your SaaS stack, you could benefit from improved governance, streamlined procurement, and 360 tracking of your full portfolio.Interested? See for yourself how Vertice helped one company optimize its software portfolio and save $170,000 on a single contract. Or, find out just how much you could be saving with a free cost-savings audit.,

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