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.
Related Definitions
Pricing Benchmarks
What are pricing benchmarks?
In SaaS, price benchmarking often refers to the process of comparing the cost of software to that of an alternative provider. Using this insight, buyers may be able to leverage a more favorable counteroffer from their vendor of choice. The most effective approach to benchmarking prices and securing the best possible deal on any subscription, however, is to find out what other similar companies are actually paying for the software.
Cloud Unit Economics
What is cloud unit economics?
By definition, cloud unit economics refers to the financial analysis and evaluation of both the costs and revenue associated with operating a cloud-based business.
In other words, it’s a way of looking at how much it costs to run your business on the cloud, as well as how much it brings in.
Tail Spend
What is tail spend?
Tail spend refers to the unmanaged purchases made within an organization that fail to pass through an official procurement process. On account of their low value, the costs incurred by these purchases are seldom monitored by financing teams as they are generally too small to be deemed “strategic”. The problem, however, is that they can make up as much as 20% of a business’ total spend.
Price Uplifts
What are price uplifts?
In the context of SaaS, price uplifts refer to an increase in the price of a software subscription. While many software providers will implement price uplifts on an annual basis, typically at the point of renewal, others may review and amend their pricing more frequently, for example on a quarterly basis. It is recommended that buyers negotiate a price uplift cap during the initial contract negotiation stage, placing a limit on the maximum amount the subscription can be increased by within a specified time period.
Reduction Clause
What is a reduction clause?
A reduction clause refers to a provision in a software agreement that allows customers to reduce the number of licenses or users covered by their subscription during the term of an agreement. This provides customers with flexibility to adjust their plan to meet evolving business needs, while avoiding paying for licenses or users they no longer require or needing to terminate the contract. The specific terms and requirements of a reduction clause may vary depending on the SaaS provider and the subscription agreement, for example it may be subject to a minimum number of licenses or users.
Break Clause
What is a break clause?
A break clause refers to a provision within a SaaS agreement that allows either the customer or the SaaS provider to terminate the contract before the end of the initial term. A break clause will typically set out the conditions or requirements that must be met for either party to exercise their right to terminate an agreement early. For example, a break clause can enable users to cancel their subscription if they are dissatisfied with the service.