More businesses are using SaaS (Software-as-a-Service) tools than ever before. While these apps are relatively more cost-effective, they also create new challenges. Many companies struggle to keep track of all their subscriptions, leading to wasted money and potential security risks.

This problem gets worse as companies grow and add more software. 

It’s easy to lose track of who’s using what or keep paying for tools no one uses anymore. Plus, with different teams buying their own software, costs can quickly spiral out of control.

SaaS spend management is a way to tackle these issues. With this approach, you can understand more and control your software expenses.

Today, we are going to explore more about SaaS spend management topics. We’ll talk more about its definition, why it matters, and how it works. Whether you’re in IT, finance, or management, this information can help your company use software more efficiently.

So, without further ado, let’s get to it!

What is SaaS Spend Management?

SaaS spend management is the process of tracking, controlling, and optimising your company’s spending on software-as-a-service (SaaS) applications. It’s about getting a clear picture of all the software your company uses and making sure you’re getting the most value for your money.

Here’s what SaaS spend management typically involves:

• Discovery: Finding all the SaaS apps used in your company, even those bought without IT approval.
• Tracking usage: Seeing who’s using each app and how much.
• Cost analysis: Understanding how much you’re spending on each app and across all your software.
• Optimisation: Cutting costs by removing unused licences, negotiating better deals, or finding cheaper alternatives.
• Renewal management: Keeping track of when subscriptions renew and deciding whether to continue, adjust, or cancel them.
• Compliance and security: Making sure your SaaS use follows company policies and security standards.

SaaS spend management helps you avoid overspending, reduce waste, and align your software investments with your business needs. It goes beyond just cutting costs; it enables smarter decisions about the tools your company uses.

More in Nexalab’s blog: What is SaaS Management? Definition, Implementation, and Best Practices

Why You Need a SaaS Spend Management Strategy

As your company grows, so does your reliance on SaaS tools. While these applications boost productivity, they can also lead to unchecked spending if not managed properly. A SaaS spend management strategy is crucial for maintaining control over your software expenses.

According to Zluri, here’s why you need that strategy:

1. Prevent Duplicate Applications

Without oversight, different teams often purchase separate tools for the same task.

For example, your marketing team might use Asana while your product team prefers Trello for project management. This redundancy not only wastes money but also creates data silos and hinders collaboration.

A spend management strategy helps you identify these overlaps, consolidate tools, and reduce unnecessary expenses.

2. Stop Paying for Unused Applications

Employee turnover and changing project needs can leave you with active subscriptions that no one uses.

Maybe you signed up for a video editing tool for a one-off project, or an employee who used a specific analytics platform left the company. Without a system to track these subscriptions, you continue paying for them month after month.

A proper strategy ensures you regularly review and cancel unused applications, saving you from this silent budget drain.

3. Manage Licence Revocation

When employees leave your company, their access to various SaaS tools should be revoked immediately. However, without a clear overview of who has access to what, some licences inevitably slip through the cracks. This not only wastes money but also poses data security risks.

A spend management strategy includes processes for promptly revoking access when employees depart, protecting both your budget and your data.

4. Take Advantage of Better Pricing

SaaS providers often offer significant discounts for annual commitments or bulk licences.

However, when individual employees or departments make separate purchases, you miss out on these savings. For instance, you might be paying $15 per user for a tool when an enterprise agreement could bring that down to $10 per user.

A comprehensive strategy allows you to consolidate your purchasing power, negotiate better rates, and potentially save thousands of dollars annually.

A SaaS spend management strategy gives you visibility into your entire software ecosystem.

With this insight, you can make informed decisions about which tools to keep, which to consolidate, and where to negotiate better deals. This approach optimises your SaaS investments, making sure every dollar spent boosts your company’s productivity and growth.

SaaS Spend Management Best Practices

Without a strategic approach, you might find yourself dealing with redundant tools, unused licences, and missed opportunities for better pricing. These issues not only waste money but can also lead to decreased productivity and security risks.

Implementing best practices for SaaS spend management can help you regain control over your software expenses, improve efficiency, and align your tech stack with your business goals. Whether you’re a small startup or a large enterprise, these practices can be tailored to fit your needs and scale with your growth.

Here are seven best practices that you might want to consider to get the most out of your SaaS investments:

1. Centralise Your SaaS Inventory: Keep a single, up-to-date list of all your SaaS subscriptions. This helps you track what you’re using and spending across your organisation.
2. Regularly Audit Your SaaS Usage: Review how often each tool is used and by whom. This helps you identify underused or redundant applications that you can cut.
3. Implement a formal approval process: Set up a system where all new SaaS purchases must be approved. This prevents unnecessary spending and reduces shadow IT.
4. Negotiate Better Contracts: Use your company’s size to your advantage. Many SaaS providers offer discounts for bulk purchases or longer commitments.
5. Manage renewals proactively: Keep track of when your subscriptions renew. This gives you time to evaluate whether you need to continue, upgrade, or cancel the service.
6. Standarise on Key Platforms: Choose preferred tools for common functions like project management or communication. This reduces overlap and improves collaboration.
7. Consider Using a SaaS Management Platform: A dedicated SaaS management platform can automate many of these practices, giving you better visibility and control over your SaaS ecosystem.

These practices will help you take control of your SaaS spending. You’ll eliminate waste, improve efficiency, and ensure your software investments align with your business needs.

Why You Might Need SaaS Management Platform Software for Your Spend Management?

Managing your SaaS spend can quickly become overwhelming as your software stack grows.

A SaaS Management Platform (SMP) can be a game-changer in this scenario.

These platforms offer automated discovery, giving you a complete picture of your SaaS landscape by detecting all applications used in your organisation, even those you might not be aware of.

One such platform is Octobits.

This SMP, like others in its category, provides real-time visibility into your SaaS ecosystem, offering instant access to usage data, spending information, and contract details for all your applications in one centralised dashboard.

With an SMP, you can easily identify unused or underused licences, allowing you to right-size your subscriptions and avoid overpaying.

Using a SaaS management platform can significantly improve your spend management efforts, saving you time and money while improving your overall SaaS governance.

If you’re struggling to keep track of your SaaS applications and their associated costs, an SMP could be the solution you need to bring clarity and control to your software ecosystem.

But remember, this kind of software solution will cost you another monthly subscription fee, so be sure to weigh the benefits against the cost before making a decision.

More in Nexalab’s blog: SaaS Management Platform: All You Need to Know, From Features to Benefits

Conclusion

You’ve seen how crucial SaaS spend management is for your business. By tracking your software use, cutting unnecessary costs, and making smarter decisions about your tech stack, you’ll save money and boost efficiency. Remember, it’s not just about cutting costs—it’s about making sure every dollar you spend on software drives value for your company.

Octobits by Nexalab can help you take control of your SaaS spending. This platform gives you a clear view of all the software your company uses, helps you spot unused licences, and alerts you when it’s time to renew or renegotiate contracts. With Octobits, you’ll have the data you need to make smart decisions about your software investments, potentially saving your company thousands of dollars each year.

Contact Nexalab today to see how Octobits can help your SaaS spend management strategy.