Optimize your SaaS spend with Vertice

SaaS spend management is the process of actively discovering, documenting and optimizing software expenses — whether that’s new procurement, renewals, or other subscription costs.

Monitoring and managing these costs is essential if you’re going to maximize the return on investment taken from each app in your portfolio — whether it’s your cloud file storage solution, project collaboration suite or HR platform.

SaaS spend management typically involves:

• Real-time discovery tools
• Portfolio management strategies
• Software negotiation tactics

These practices help to track and reduce the amount that your company spends across its SaaS stack.

How to identify and offboard redundant SaaS licenses

Identifying redundant licenses (or unused features within those licenses) is a major cost-saving and value creation opportunity afforded by SaaS spend management software. 

These opportunities are increasingly hard to find for businesses using manual SaaS cost management techniques, with ever-increasing adoption leading to sprawling software ecosystems. Here’s how this process works with a SaaS spend management platform in operation:

1. Invest in a SaaS spend management tool

IT managers could sift through all the licenses in their tech stack to search for redundant licenses, but with software specifically designed for this purpose, it would be a tremendous waste of time and labor. The average organization now deploys well over 100 software tools to carry out its daily operations, so the size of the task is clear to see.

With so many software products to oversee, contracts to manage, and vendor relationships to maintain, investing in a tool that can eliminate this burden makes perfect sense. SaaS spend management software does just that.

2. Continuously monitor your software licenses

The best SaaS spend management software continuously monitors your ecosystem, with full-stack observability illuminating cost-saving opportunities. 

It does so by analyzing each platform’s usage data, highlighting wherever subscriptions — or features within those subscriptions — are being underused or neglected altogether by relevant stakeholders. This also enhances tail spend management, another cost avoidance strategy.

Platform monitoring also takes place with the added context of KPIs, service level agreements (SLAs), and other performance metrics, as agreed upon during contract negotiations with the supplier. SaaS spend management solutions can subsequently make recommendations on which platforms to retire on the grounds of poor performance, not just redundancies. 

3. Cancel your redundant subscriptions

If your spend management platform successfully identifies subscriptions ripe for cancellation, it’s best to start the offboarding process right away. Get in touch with your supplier and inform them that you won’t be renewing your subscription. Of course, it’s likely that you’ll be committed to seeing out the remainder of your contract, which typically run for a year at a time. 

If you’re cancelling for redundancy reasons, you won’t be able to exit the contract early. However, if your reasons for cancellation cite underperformance on behalf of the platform or provider, there may be grounds to end the partnership immediately for breach of contract.

One of the best money saving features of SaaS spend management software is that contract renewal dates are automatically highlighted well in advance. This feature ends the tyranny of auto-renewal licenses, which often commit companies into an extra year at hiked prices — without any added benefit. But once you’ve used a spend management tool to highlight a redundant subscription in your stack, your contract won’t ever roll over unintentionally again. 

How to identify and onboard the most appropriate SaaS tools

Identifying the right SaaS tools for your business needs is the first step of an effective procurement process. After that, your supplier should assist your team with onboarding initiatives. Let’s take a look at the necessary steps:

1. Review your stack

Your SaaS spend management tool has already highlighted the features and subscriptions you no longer need, so ask yourself why this is. Do we already subscribe to a similar product, can an arrangement with an existing supplier be upgraded to cover additional solutions, and is there a better product out there? 

Your stakeholders are key here. Ask the potential end-users of a new system for their input — failing to do so can lead to uncertain contract negotiations, or worse, ending up with a solution your team neither wants or needs. 

2. Identify the solution

A review of your existing software and conversations with relevant stakeholders should reveal the kind of solution your team needs. 

3. Research and shortlist

Carry out extensive market research on a range of potential tools. Consider each platform’s features, capabilities, business suitability and pricing structures — this final point can be tricky due to the industry trend of pricing obfuscation, but Vertice’s customer purchasing teams can help here. 

Once you’ve narrowed the list down, create a shortlist of your top three choices ordered in terms of preference. Hand this list over to your procurement teams, or enlist the support of Vertice’s expert procurement operatives. 

4. Purchase the solution

Send a request for proposal (RFP) to the supplier, review their quote, and enter the first stages of contract negotiation. 

At this stage, our purchasing teams can leverage exclusive pricing benchmarks from over 16,000 vendors to help negotiate optimized SaaS contracts on your company’s behalf. Included in our negotiation strategy is a discussion on onboarding features according to the assistance you need, such as a personalized account manager, technical assistance, data migration, and standard customer support. 

5. Start the onboarding process

Once the contract has been signed, it’s time to start the onboarding process. Ensure that all relevant parties are aware of this process and encourage their buy-in. Replacing a software tool or purchasing a new one can be awkward, so it’s essential there are no barriers to success within your own team.

What is a SaaS spend management platform?

A SaaS spend management platform is a tool that helps businesses monitor and control their SaaS spend. By analyzing usage data and comparing platform performance to KPIs and other metrics, SaaS spend management software highlight platforms and features no longer needed in your stack. 

Companies that invest in these tools can save enormous amounts of money. In an organization with 400 employees or less, the average amount of waste to SaaS spend is $500,000. For organizations with 2,000+ employees, that figure climbs to an eye-watering $4.5 million.

Investing in a SaaS spend management platform will also save time. Our research shows that the average business loses 385 hours a year on contract management meetings alone; when you automate the process of highlighting redundant platforms and contract renewals, this number decreases significantly. 

How much are companies spending on SaaS in 2024?

According to Younium research, the SaaS market is predicted to grow by 18% in 2024 to a figure north of $230 billion a year. This is up from 2022, where total annual SaaS spend was $145 billion.

In the context of year-on-year growth, SaaS spend management has never been more important. Despite exponential market growth, IT budgets are only predicted to grow at a rate between 6–8.8% in 2024.

These figures reveal that the rate of price inflation in SaaS products is outpacing the rate of IT budgets, meaning that finance teams are expecting higher levels of SaaS spend optimization moving forward.

But with 33% of all SaaS contracts incorporating automated annual price hikes — and in the most egregious cases, this figure can climb as high as 71% — businesses will need to adopt new methods for managing SaaS cost optimization.

Plus, with software vendors now adopting the principles of shrinkflation — where companies pay more for lesser subscriptions — SaaS spend management is fast becoming obligatory for every organization.

The challenges and opportunities of SaaS spend management

Successful SaaS spend management is a fundamental barrier against organization overspending, inefficiency, and slow growth. Optimizing software spend involves several challenges organizations must face to avoid redundant applications, unused licenses, inaccurate forecasting, and various other ROI-damaging factors.

Overcoming these SaaS cost optimization hurdles creates golden opportunities to streamline your portfolio. The advantages aren’t solely cost-effective – effective SaaS management drives cross-collaboration, encourages wider cloud visibility, strengthens security posture, and enhances innovation.

Some of the main SaaS spend optimization challenges and their respective opportunities include:

1. Challenge: The lack of a centralized view of organization SaaS subscriptions leads to limited visibility and a fragmented software landscape. Consistently and accurately monitoring expenditures is challenging in such a heterogeneous and disconnected SaaS environment.
2. Opportunity: Gain visibility and spot rogue applications needlessly draining SaaS budget and renegotiate sub-optimal subscriptions. A tool like the Vertice SaaS purchasing platform offers a bird’s-eye view of SaaS usage, allowing businesses to pinpoint exactly where software spend may be reduced via actionable insights garnered from real-time metrics.

1. Challenge: SaaS purchases and contract management are spread across an organization. IT teams may procure software subscriptions, while finance teams manage continued SaaS expenses. The separation can cause confusion, leading to potential compliance issues and missed opportunities to optimize contractual cost management.
2. Opportunity: Centralized SaaS spend management, ideally spearheaded by qualified Cloud FinOps practitioners who handle the entire lifecycle – from the IT procurement process to managing renewal dates for SaaS licenses. This supports compliance and identifies areas to optimize expense management across an entire organization, not just individual teams.

1. Challenge: Siloed teams obscure SaaS expenses at an organizational level, creating potential wastage across the tech environment. Different departments may procure separate SaaS apps for similar tasks, pointlessly adding to software expenses.
2. Opportunity: Cross-functional teams and greater cloud visibility within an organization empower different departments to collaborate more closely, consolidating SaaS applications to reduce costs and streamline processes. The Vertice platform provides a holistic overview of your cloud environment, enabling a more collaborative approach to SaaS cost optimization.

1. Challenge: IT resources are wasted on updating spreadsheets and other labor-heavy manual tasks. Onboarding new SaaS products can also bog teams down unnecessarily, reducing capacity for more productive and profitable workloads.
2. Opportunity: Automation is central to successful SaaS spend optimization. Businesses can significantly streamline operations, freeing up resources and creating more value within work processes. For example, the unified Vertice platform can help to automate everything from discount commitments to reserved instances and consistent cost-saving recommendations.

The benefits of improving an organization’s SaaS spend optimization

Improving SaaS cost management creates numerous benefits. Here are a few pertinent examples:

• Reduced costs and increased ROI – SaaS spend optimization naturally reduces costs and increases ROI from your tech stack. The benefits are twofold: organizations can trim stacks to slash expenditure where required and, in doing so, create more resources for strategic initiatives or new tools that directly drive growth.  
• Guards against redundancies – Effective SaaS cost management starts with a holistic overview of your cloud stack informed by real-time logs, metrics, and other usage data. For example, the Vertice platform creates a granular visualization of your entire cloud ecosystem, instantly alerting you to redundant services.
• Proactive remediation – SaaS spend management delivers vital insights into software usage and expenditures that encourage proactive and data-driven remediation. An organization could identify an opportunity to rightsize SaaS subscriptions ahead of a project completion date by forecasting lower demand based on historical usage patterns. Additionally, businesses can take a proactive approach to automation, remediating cloud settings to improve efficiency.
• Enhance SaaS procurement – Cost-effective procurement is a tricky business, as SaaS vendors often obscure concrete pricing information to obtain higher-value contracts. Putting SaaS cost optimization at the top of your commitments helps combat this, enhancing procurement to get the best price. The Vertice platform leverages insights gathered from what our partners are paying to set vital pricing benchmarks for negotiating cheaper contracts.  
• Streamlined integrations – Organizations using SaaS spend management software benefit from streamlined integrations with existing enterprise resource planning (ERP) systems, saving significant time via automation when compared to manual data migration. This breaks down silos, consolidating software costs with wider organization expenses. Consequently, businesses can spot opportunities to add to a wider IT budget, driving growth with potential new projects or applications.  
• Combats shadow IT – SaaS spend optimization helps to eliminate shadow IT usage, where individual employees procure software independently without following established guidance. Tracking credit card usage via regular auditing can highlight cases where SaaS subscriptions are hiding under the surface. This optimizes spend while also creating a significant security benefit, as data breaches are often caused by shadow IT.
• Improved compliance and security – A comprehensive overview of your SaaS contracts and subscriptions is a beneficial byproduct of successful SaaS cost management. This centralized visibility is vital for efficient and in-depth auditing, a fundamental part of maintaining a healthy tech stack. Organizations also achieve stronger security posture via cost management automation like auto-renewals – particularly relevant regarding cyber-security software, of which large businesses can leverage dozens of specific tools. A gap in service can cause grave consequences, demonstrating the importance of effective contract management.

Best practices for SaaS cost optimization

Organizations need a clear roadmap to help with SaaS cost management or cloud expenditure can quickly spiral. Implement the following best practices to optimize your strategy:

• Centralize management processes – Cut through the noise with a centralized SaaS cost management approach. Leveraging a spend management solution like Vertice enables a holistic summary of your SaaS infrastructure, breaking down silos to reveal organization-wide data regarding everything from licenses to usage patterns.
• Standardize procurement guidelines – Centralization doesn’t always permit agile development tactics, so ensure SaaS spend management doesn’t come at the cost of optimized operations. At the same time, businesses absolutely must standardize procurement guidelines and establish clear processes for evaluating, approving, negotiating contracts and onboarding new applications. Integrate the Vertice platform into your procurement strategy and leverage our inside intel to gain the best price.
• Leverage automation where possible – SaaS spend management software helps organizations harness the power of automation to reduce manual workloads and efficiently discover areas for cost saving. Tasks like user provisioning, license management, and contract renewals can be automated, freeing up resources for more valuable processes.
• Optimize your existing SaaS portfolio – Implemented correctly, the best practices above will establish vital foundations for consistent SaaS spend management. Businesses may now analyze data with greater efficiency and accuracy, leveraging improved visibility to optimize their existing stacks. For example, the Vertice SaaS spend management tool reveals opportunities to eliminate app feature overlap, rightsize contracts, proactively protect from auto-renewal clauses, and more.
• Continuously monitor spending and usage – SaaS cost optimization doesn’t stop once you’ve trimmed the fat from your existing tech stack. Leverage automated notifications to guard against overspending or under-utilization whilst continuously monitoring application access. Additionally, create a rigid auditing roadmap and blueprint to maintain an optimal software stack going forwards.
• Promote Cloud FinOps principles – Encourage the Cloud FinOps philosophy at all levels to maintain and enhance cost optimization within cloud-enabled environments. Ensure cloud data is shared in real-time across departments and implement best practices like chargeback or showback to increase accountability for spending.  

Remember, these best practices are iterative and often work together simultaneously. SaaS spend management is a perpetual balancing act – one Vertice is perfectly positioned to help maintain.

The importance of streamlining SaaS spend

Nowadays, the subscription model is the main way that software is purchased — but with so many different apps making up a company’s tech stack, these recurring costs can quickly add up. Thankfully, optimizing SaaS spending offers a host of benefits to the organization looking to stretch its IT budget further.

Firstly, SaaS cost optimization works to eliminate wasted spending. Between duplicated or redundant licenses, under-utilized tools, and forgotten contracts, your software portfolio could be concealing all too many missed opportunities for cost-savings — or at least, that’s until now.

SaaS spend management could also help to highlight any tool use flying under the radar. This is a great method to highlight shadow IT use. When individuals within your organization take it into their own hands to procure unvetted software, there’s an increased risk of poor data security and costly breaches.

Managing your SaaS spend also saves you time. A comprehensive record of each of your SaaS outgoings will illuminate any expenses that you’ve been struggling to explain while auditing your finances — and help to inform future procurement and budgeting decisions.

Optimizing your costs with Vertice could be the difference between a lean stack that works for your business, or a fragmented and unsafe one which quietly drains your money, time, and productivity.

The impact of Vertice’s SaaS Purchasing Platform on SaaS spend management

Our own research reveals that 90% of companies are overspending on SaaS subscriptions by 20–30%. For cloud-based SaaS products alone, 33% of all spend went to waste in 2023.

Through a combination of platform capabilities and access to our white-glove purchasing service, Vertice customers can enjoy guaranteed savings anywhere between this 20–30% mark.

These savings are guaranteed in a number of ways. First, our customer purchasing teams work on your company’s behalf to procure the best products at the best price. These teams have access to price point data from over 16,000 vendors, revealing precisely the amounts competitors pay for the same subscriptions.

Transactional insights such as these afford greater power at the negotiating table, ensuring Vertice customers never overspend on contracts again.

This white-glove service also extends to the process of contract renewals: if you’re happy for us to do so, we’ll return to the table and renegotiate the terms of your deal, delivering further savings over the course of a platform’s lifecycle.

The platform itself is designed to monitor usage statistics across a company’s entire stack for full SaaS visibility. This data then reveals the platforms that are performing well, the ones that aren’t, and the ones that can be modified to better fulfill their purpose at a more affordable price.

Indeed, one of the leading contributors to SaaS spend mismanagement is underused licenses, or licenses that are unused altogether. Auto-renewal features pay no attention to usage data, committing companies to contracts year after year, even if the platform hasn’t been accessed in months.

The business model of software vendors depends on this inactivity. Knowing that most organizations don’t commit sufficient resources to SaaS spend optimization, suppliers can sit back and watch their subscriptions tick over.

The Vertice platform ends this problem by reporting on end-user usage and triggering notifications. When contracts are approaching the date for renewal, the platform will alert its users, giving them plenty of time to prepare for contract negotiation. With Vertice’s platform, businesses will never again pay for an unwanted subscription license.

We’ve helped businesses of all sizes and industries with SaaS spend management — whether it’s Holidu reducing its spend by $330k in the first year, stimulating greater SaaS visibility in Spenmo’s stack and saving 25%, or helping Shoosta achieve 100% ROI in the first 30 days of our partnership.

If you’d like to hear about other instances where we’ve delivered SaaS spend optimization, visit our Customer Stories page.

Improve your cost reduction strategy

With SaaS spend optimization, you can take back the power over rising software costs. Discover and gain full visibility over the software in use at your organization, including individual and team licenses, contract terms, and the costs associated with each tool.

Once you’ve gained better visibility, you can make informed decisions about future procurement, renewals, and potential cost-cutting with tool consolidation.

This is how your company can put an end to decentralized procurement and make smarter decisions for your teams and workflows.

• Fight back against soaring SaaS inflation rates
• Prepare a comprehensive SaaS system of record
• Build a coordinated SaaS portfolio
• Optimize your sprawling SaaS stack
• Future-proof your SaaS spending strategy

Vertice can help put an end to your decentralized procurement and support for your team’s decision-making.

Optimize your SaaS spending

Your existing software stack holds untapped potential to reduce your SaaS costs. Discover the different methods that can be used to streamline your SaaS spending and unlock cost savings.

Application rationalization helps to consolidate your SaaS contracts and reduce any unnecessary spending that occurs due to poor procurement practices. You can also uncover and target any instances of duplicate, redundant, and under-utilized SaaS to minimize your wasted spend.

There are savings to be had in your stack, it’s simply a case of knowing where to find these opportunities.

• Rightsize your software stack
• Eliminate cases of redundant SaaS
• Address the problem of SaaS duplication
• Reduce your accumulating tail spend
• Regain control of an unmanaged portfolio

There are cost-saving opportunities in your stack — and our SaaS management platform can help you identify them.

Secure the best deal on new software

When it comes to buying new software, you can reduce the price you pay and secure valuable contract terms for your organization.

The most effective technique is to equip yourself with SaaS vendor pricing benchmarks. This data provides insight into the price points proposed by different SaaS vendors and the discount rates offered to companies similar to your own.

As a result, benchmarks can be used as leverage to secure the best deal for your business. These are used in tandem with other strategies that can deliver savings, like committing to a multi-year contract.

• Use pricing benchmarks for optimum leverage
• Save more with multi-year SaaS contracts

Vertice’s database of pricing benchmarks can be used as leverage to secure the best deal for your business on new software, in tandem with our other competitive strategies that will deliver savings.

Get total SaaS visibility with Vertice ›

Negotiate savings across your stack

Renegotiating your existing software contracts might seem daunting, but it’s one of the most productive ways to trim your SaaS costs.

Vendors employ a range of techniques to ensure a high-value sale, but there are strategies that you can use to reach an agreement that both you and your provider are happy with.

But to guarantee long-term savings, you’ll need to negotiate on more than just price. Learn more about the contract terms to cover in your negotiations here, including auto-renewal clauses, price protection in uplifts, and service-level agreements.

• Learn the most effective software negotiation tactics
• Minimize your RevStack costs
• Learn how SaaS vendors sneakily increase prices

Our expert negotiators can help you to address all of your small-print contract terms, including auto-renewal clauses, price protection in uplifts, and service-level agreements. Cover all your bases during negotiations with Vertice.

Vertice in action

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

If you’d like to learn more about some of the topics discussed on this page, take a look at the list below:

• SaaS management — Additional information on the benefits of SaaS management, including associated risks of mismanagement.
• Cloud spend management — Discover why spend management is just as pertinent when applied to cloud contracts.
• Tail spend management — Definitions, causes and best practices for managing tail spend.
• SaaS contract negotiation — A guide to contract negotiation, with benefits, best practices and challenges.
• Procurement negotiation — A guide on how to approach the negotiation stage of SaaS license procurement.
• Contract renewal management — Benefits and best practices of contract renewal management, and how the Vertice platform approaches it.
• SaaS visibility — A guide to surfacing SaaS licenses in your organization and eliminating the threat of shadow IT.
• Vendor relationship management — A guide to managing vendor relationships, including examples and benefits of win-win partnerships.
• SaaS access management — An explainer on the necessity of SaaS access management and how to control it.