How SaaS Expense Management Can Help Your Business Cut Costs

The increased reliance on software-as-a-service subscriptions has left businesses with ballooning expenses. Thus, it is crucial to have SaaS expense management so you can mitigate the associated costs.

SaaS supports various business functions. While inherently significant for your business, you also need to track your expenses to see which apps to retain and manage the purchases to get the best value.

What Is SaaS Expense Management?

SaaS expense management covers controlling and optimizing SaaS subscriptions. You can either do it manually or choose a SaaS expense management software to track how much you spend on software that your business uses.

There is an average of 80 SaaS applications that organizations were using in 2020. And in 2025, only 15% of an organization's software will be non-SaaS, according to the same study by Statista.

In terms of costs, Gartner expects SaaS end-user spending worldwide to reach $138 million by 2022, a 35% increase from 2020 spending. More companies are now investing in public cloud computing applications that help automate various functions.

Additionally, the broader term for SaaS - cloud computing - has many versions. Vendors are providing specific public cloud computing platforms, such as the definitions below:

• Cloud application services (SaaS)
• Desktop as a Service (DaaS)
• Cloud system infrastructure services (IaaS)
• Cloud application infrastructure services (PaaS)
• Cloud business process services (BPaaS)

With the different purposes and functions of each cloud app, you would need to organize them cohesively. Using simultaneous SaaS apps makes it hard to manage and track which tool benefits your organization. You also have to control the cost of each subscription, which is time-consuming when done manually. This is how SaaS expense management will allow you to look into accurate details of each application, from its usage, fees, and other important information needed to assess each app.

What Are the Benefits of SaaS Expense Management?

It's worth investing time, money, and effort to do SaaS expense management. Instead of spending unknowingly on various apps, SaaS expense management lets you evaluate which software to continue paying or minimize the fees. Conversely, this leads to reduced costs for your business. You can allocate financial resources to valuable tools and many other benefits cited here.

1. Allows you to measure app usage

With several users at once, it can be tough to monitor app usage for every single app. Proper SaaS expense management allows you to see which apps are used more or not very often.

By having SaaS expense software, you can identify the app usage accurately by looking into specific metrics that help in decision-making. You don't need to ask each user if they're actively using the app. A SaaS expense tool allows you to automate the process.

2. Avoids using various apps with the same function

Using various apps can sometimes result in duplicate functions. Typical of these are communication tools, which can become redundant in an organization.

For instance, you may have an existing subscription to Zoom while using Google Hangouts and Slack. Your staff will be confused about which app to use, whether for communication or productivity. Thus, you need to decide on only one app to use instead of having more than one subscription that serves the same function.

3. Identifies apps that employees no longer use

Other unforeseen expenses in an organization are dormant apps that you don't know are still being charged. You need to identify these apps to discontinue using them and have more leeway for more vital tools.

Some artificial intelligence development companies may design a tailor-made solution built just for your demands, which can is built just for your demands, which can assist to improve your overall performance and the delivery of commercial prospects.

Instead of surveying individual users and which app they are using, the data is readily available in the software. SaaS management tools can identify the frequency of their use automatically.

4. Optimizes the purchasing process

When it comes to apps that you need to subscribe to, you can further optimize the process. You don't have to subscribe to or renew apps by processing them manually.

SaaS expense management can automate things like renewals, billing methods, or annual software subscriptions. It's easier to renew licenses more efficiently, so you'll have more time for your business.

5. Reduces the number of subscription software

Once you identify which apps do not have frequent usage and which ones do not contribute to your organization, you can decide on unsubscriptions easily.

You can effectively reduce the number of cloud-based apps you have. Whether it's to stop using the app altogether or go for a shorter subscription, SaaS expense management helps you determine the tools.

How Can You Reduce SaaS Expenses?

Ideally, you would not want to spend more than enough for your SaaS subscription and related expenses. Let's explore some of the tips to reduce costs efficiently by doing SaaS expense management.

Use software instead of a spreadsheet to track expenses

While a spreadsheet is free to use, it provides certain limitations on what you can do in terms of monitoring SaaS expenses. You can only list subscriptions and do limited calculations. With software, you have more options to optimize your current SaaS subscriptions.

There are possible loopholes in your SaaS subscriptions that you can't manually calculate in a spreadsheet. The software enables you to manage your SaaS expenses in detail and with great accuracy.

Count the number of licenses currently on the subscription

It may be time-consuming to count how many licenses you currently have and pay for. However, you need to check which licenses your organization is using. Count every license you have, especially if it's a per-user subscription. You may be paying for a license that nobody is using anymore.

Control the renewals

For apps that you will use long-term, auto-renewals are beneficial. However, for apps that you are still trying out after a 14-day free trial, remove the auto-renewal in the meantime. Try out all the features first before deciding to renew for another month or an annual subscription.

Minimize unnecessary additional features

SaaS companies are tricky as they automatically add features when you're on the payment page. Avoid these unnecessary expenses by carefully checking what is on your cart before proceeding to pay. A SaaS expense tool enables you to manage any unnecessary additions. You will only be able to add features that will benefit your organization.

Assess how many users engage with the app

App engagement tells you which software your organization uses frequently. When you monitor them, you can identify which app to discontinue using. For those apps which the staff frequently uses, identify ways how to optimize the licenses. It can be sharing account access or removing unnecessary features.

Detect instances of shadow IT

Shadow IT is when a staff subscribes to apps that didn't go through proper channels. At times, these apps have no use for your business, only for the personal purpose of the staff. Usually, this happens when employees can access payment systems that allow them to subscribe to apps without informed approval. Your SaaS expenses could unknowingly balloon when instances like this happen.

Centralize the procurement method

Instead of giving access to any staff who needs a cloud-based app for their work, have only one person or team in charge of the purchasing process. Only one point of contact or decision-maker will determine which apps will come into your budget. This minimizes any unnecessary subscriptions, reduces instances of shadow IT, and prevents adding unneeded features.

Compare available app options

With so many cloud-based apps built nowadays, you have more options for the tool or functionality you're seeking. You don't have to choose the first one that you tried using. What you can do is compare different apps to see which one brings more value for the subscription.

App Usage and Its Impact on Managing SaaS Expenses

Keep tabs on whether employees are using the software you are paying for and monitor their level of engagement. App usage indicates if the subscription you're paying for is active and contributing to your company. It helps you identify which apps to focus on or discontinue use altogether.

Instead of paying for an app that your employees do not engage with actively, you can monitor which ones contribute to the overall efficiency. Consequently, you can then invest in more valuable SaaS apps.

SaaS subscriptions have to complement your business and deliver results. These tools have to increase the productivity of your employees and not be a source of distraction or unnecessary expenses. Thus, you need to identify which app enhances the efficiency of your staff. This way, you'll have more tangible returns on your SaaS expenses.