December 19, 2022
3
MIN READ

Your Guide to Cutting Software Costs in 2023

SaaS Insights

Save money and become more efficient by cutting your software costs using our complete guide.

Accountants are wizards when it comes to controlling costs, stopping unnecessary expenditure and protecting their business’s bottom line.

It’s not an easy job. As businesses grow, balancing the books at month end becomes harder and harder: there’s more headcount, and that inevitably means more expenses. Each expense means a new payment to manage, and a new invoice to reconcile each month. Keeping on top of mounting costs – and doing it in a timely, efficient way – is something close to a superpower.

Unfortunately, the current economic climate means that job has just become even more challenging. In the face of recession, every accounting team across every industry is laser-focused on cutting costs. It’s not just SMEs: even the biggest players out there are thinking critically about how they can optimize costs, and continue to grow on a leaner budget. 

For most businesses, the two biggest expenses are payroll and software. Clearly, both are critical to success – so how can accountants trim the fat without compromising business continuity?

Why accountants should scrutinize software spend

Software expenses can quickly add up at growth businesses. Cloud software helps businesses automate tasks, and make efficiency gains without having to rely solely on new headcount – so it’s no surprise they buy so much of it. Cledara research shows that the average business has at least 66 subscriptions. But since a lot of purchases don’t come through the Finance team, the real number could be much higher, and continues to grow as the business does.

In fact, software spend increases even during times of recession.  Our data shows that in October 2022, companies spent 10% more on software and added over 6% more apps to their stack vs September. Scaling businesses are turning to SaaS to fuel growth and plug the gaps created by shrinking headcount and budget, and Gartner predicts global cloud spending will reach $500 billion in 2022 – a growth of over 20%.

But there’s good news for accounting teams. Poor software management inside businesses means that a significant amount of software spend is wasted, and isn’t actually adding value. That means accounting teams can cut software spend and find cost savings without damaging business operations. 

Where does that waste come from? A lot of businesses have duplicated and unused software that they often don’t know about, and certainly don’t need. Only 14% of business leaders believe all their SaaS subscriptions add value and wasted cloud software was estimated to total $17.6 billion in 2020. 

Wasted software spend by the numbers

Software spending is increasing: 

  • Amount of software grew by 6% MoM September-October 2022
  • Software spend grew by 10% MoM September-October 2022
  • Global cloud spend predicted to grow 20% in 2022
  • Global cloud spend predicted to total $500bn in 2022

Businesses aren’t sure that software is adding value:

  • Only 14% of business leaders believe all their SaaS subscriptions add value
  • 86% cannot instantly generate a global summary of what they are spending on cloud services. 

Businesses are wasting money on redundant software

  • 30-35% of what companies spend in the cloud is wasted money
  • 82% of organisations may be incurring unnecessary costs when it comes to the cloud 
  • Wasted cloud software totalled an estimated $17.6 billion in 2020. 

How to cut wasted software spend

Luckily, there are actions accounting teams can take to cut costs and optimize software budgets. Here’s where to get started:

Step 1: Remove duplicate software

With no central oversight, understanding what software assets your business already has is a challenge. It gets harder as your business grows and scales, and individual teams start to spend on tools that help them reach more people, faster. Revenue growth usually wins over efficiency concerns in order to hit ambitious growth targets, and tools start to multiply without much consideration. Before you know it, you wind up with multiple software subscriptions that all do effectively the same thing. 

The moment Cledara gave us a complete overview of our tools and their costs, it turned out we were overspending by $10,000 because of duplicate software and extra seats we didn’t use. That was a real shocker.” - Jaco Bosman, Head of Technology at Impala Studios

Step 2: Remove unused software

Teams often treat SaaS like shiny new toys: they can find the software they like, trial it for a while, and get excited by preliminary results. But like shiny new toys, the gleam wears off pretty quickly. Eventually, software is abandoned in favor of alternative or upgraded solutions – or team priorities change, and what was once a necessary tool becomes an irrelevant one.

‍“As a high-tech company we use a lot of software tools, and it’s difficult for us in finance to pinpoint exactly how many are used regularly across the company and paid for on a subscription basis.” - Max Sosa, Finance Analyst at Jampp

Step 3: Remove unused seats

When employees leave or move teams, there’s a danger they’ll abandon rather than cancel their SaaS subscriptions. In a team with a high turnover rate, like sales, which also uses a range of costly subscriptions (a LinkedIn premium license alone costs £50 per seat), the expense incurred by unused seats adds up quickly. 

“With growing teams, it was becoming harder and harder to chase down invoices and close the books at the end of the month.” - Kathryn Wright, Chief of Staff at Sifted

Step 4: Implement an approvals process

There’s a large amount of SaaS on the market (cloud software is set to be worth $374 billion by 2026), with tools to optimize every part of every job. It’s easy for employees to find and buy, and while that empowers them, it makes it hard for accounting to retain visibility over what the business already has, what’s adding value, and which new investments are worthwhile.

“Before, I would constantly have requests for software from multiple teams and not only I had to keep track of that, but also budgets, cards, what went on them, etc. Now it’s very easy to give people control over their needs rather than forcing them to speak to me, then wait for things to be purchased. That’s a big step forward in empowering people with the tools they need to succeed.” – Medina Mammadova, financial controller at Seatfrog. 

Step 5: invest in software management tools

Software management tools can help automate the above processes, reduce risk, and give accounting teams valuable time back. 

Whether your business is scaling quickly or retrenching in leaner times, implementing software management processes and tools is an important – and easy – win. Software management ensures sustainable scalability by giving businesses full visibility over subscriptions, while empowering teams to own and manage their applications. It helps accounting teams improve visibility, reduce risk and costs, and protect company culture.

“We wanted to automate tasks so we could focus on more strategic things. As we grew to 85 people, we also wanted to stay as lean as possible from a finance point of view. And that's exactly why we chose Cledara.” - Michael Joyner, Head of Finance at Yotoba

Software management tools help you save costs and scale

At Cledara, we want to help  accounting teams get a grip on their software.  Proactively implementing SaaS management processes means that businesses don’t have to restrict control and prevent creativity, but can thrive by making the most of their software subscriptions.

We help scaling businesses reduce costs make more of their software subscriptions by unifying and automating their entire SaaS journey – from discovery and purchasing, to management and cancellation.

To find out more about how Cledara helps streamline SaaS management so businesses can scale faster, book a demo today.

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