€500k savings in 6 months

Backstory

A European HR software company ended 2022 on uncertain footing. A more muted financial climate in tech, coupled with a customer base looking to downsize its HR investments, meant that the leadership team needed to re-forecast for 2023 and beyond. Times were still good and revenue was growing, but spend was now under increased scrutiny.

Working with Vertice, the organization was able to map its entire cloud and SaaS costs into a simple, elegant dashboard, providing the cornerstone for a spend review project that would save the company over €500,000 in only six months.

The Challenge

With the company under increased pressure to reduce spend and improve efficiencies, the leadership team knew it had to recalibrate its investment plan and operate with a leaner business model moving forward.

Having identified cloud and SaaS costs as substantially growing areas of spend — both accounting for a substantial proportion of the company’s total outgoings — the team began searching for ways to streamline costs in these areas to make the business more financially stable and avoid the need for layoffs.

Despite having hired a small consulting firm to evaluate costs and help scale cloud requirements in an intelligent way, the leadership team remained unclear regarding how its spend on AWS was being optimized.

At the same time, the team knew that its SaaS spend was spiraling out of control, with many of the company’s purchased tools going to waste. Although the team was tracking usage and consolidating contracts, products and licenses into a single spreadsheet, keeping track of everything proved to be a difficult and convoluted process.

The leadership team ultimately needed a solution to comprehensively manage its SaaS and cloud spend in a way that would clearly illustrate which actions would yield the most optimum time and cost savings.

The Solution

The software company initially began working with Vertice to gain full visibility of its tech stack and better document its spend. Within days, the team discovered that over 100 different SaaS products were being used across the organization, and after consolidating this list into a single place, it became clear that SaaS spend was even higher than expected. More than €1.4m was being spent on these tools, with many not having a clear purpose, dedicated owner or robust accountability framework in effect. The team now had a crystal clear view on the SaaS landscape within the company, not only from a contracting perspective but also from a usage one.

The picture was a little different for the company’s cloud infrastructure (IaaS). The vast majority of the firm’s cloud spend was with AWS, which not only represented a huge share of the cost, but was also rapidly increasing each year as the product grew more sophisticated and supported more users. Using Vertice, the team was able to analyze the entire cloud environment automatically, running 60 unique tests to determine which areas needed improvement.

From this analysis, eight specific recommendations were generated, covering specific examples for savings. This included identifying areas of needless overcapacity and flagging dated processes no longer required but still contributing towards costs. EDP commitment monitoring also allowed the team to isolate several instances where optimizations could be made by the Vertice purchasing team, restructuring the strategy to make smarter usage of the investment.

The Results

Having inventoried its SaaS stack, the team then worked with Vertice to negotiate a number of its core contracts and renewals. Tools with unclear business objectives or overlapping functionalities were consolidated, and excess licenses were removed across the tech stack to reduce wasted spend. The Vertice platform revealed six upcoming contract renewals that were key opportunities for cost savings through better negotiation.

The company was paying considerably more than the average costs for its subscriptions, with a notable €295k spend on a single CRM product. The Vertice purchasing team secured a more favorable deal during the renewal, removing unwanted contracting terms (such as auto-renewal clauses) and reducing the total cost by more than €110k on that product alone — saving the company well beyond the cost of Vertice in a single contract.

With AWS, the CTO and DevOps teams were able to start implementing recommended actions almost immediately. Equipped with the visibility and automation provided by Vertice, the company also felt confident enough to terminate its contract with its expensive consulting partner, which helped streamline the workflow and reduce costs even further.

The company’s technical leadership team had entered 2023 anticipating a 20% increase in cloud spend over the previous year. By analyzing, optimizing and restructuring its cloud strategy, the company is now on track to reduce cloud spend by 12%.

Ultimately, with the means to make comprehensive evaluations on cloud and SaaS spend through the Vertice platform, the company has gained the ability to make data-driven decisions to lower its operating costs without cutting personnel. Vertice has helped the company become a sharper and slimmer organization, fostering more efficient communication and better working relationships in the executive team.