Dive Brief:
- Businesses still struggle with visibility and governance of SaaS and software spend. Enterprises with more than 10,000 employees add an average of 12 new SaaS applications every 30 days, the latest sign of ongoing challenges in software spend governance, according to a recent Zylo report.
- More than half of SaaS purchases, on average, are not properly categorized as software within expense platforms and other financial systems, the report shows.
- While only 6% of application spend is on shadow IT, the category accounts for 37% of total application quantity, according to the report.
Dive Insight:
Governance challenges won't deter enterprise plans to continue investing in software and SaaS applications. But if businesses want to get the most out of their purchases, tech leaders must address visibility issues.
Wasted spend typically comes from oversubscription, unused subscriptions or some combination of the two, according to Brian Adler, senior director of cloud market strategy at Flexera and governing board member on the FinOps Foundation Governing Board.
“There’s been a lot of attrition, particularly in the tech industry lately, and oftentimes these SaaS subscriptions are associated with seats or a particular person,” Adler said. “When that person leaves, if you don’t have good onboarding and offboarding processes in place, these seats can linger and go unused.”
Another contributing factor is the push from SaaS providers to incentivize spending on bundles or modules.
“It’s kind of like buying a car,” Adler said. “You buy the car that came with the undercoating and windshield wipers, [and] you just need the windshield wipers, but you've got to pay for both.”
Bundles can help when a business needs all of the tools, but oftentimes businesses end up with additional tools that they don’t really need, costing them money and going unused, Adler said.
