The Most Common SaaS Management Challenges for Startups in 2023 [& How to Solve Them]

In 2023, process efficiency will be key for startups. In this post, we explore the most common SaaS management challenges and how to overcome them.
The Most Common SaaS Management Challenges for Startups in 2023 [& How to Solve Them]

2023 will be both a promising and challenging year for startups. 

Growing companies will prepare to optimize their processes and run more frugally. Their motivation? To lower the cost of expanding. Downscaling companies, on the other hand, will focus on reducing operational costs, so they can remain solvent until their next funding round. 

Regardless of what's driving you, if you're reviewing your expenses, there's something you shouldn't overlook: There may be unnecessary costs hiding in your software stack. 

In this post, we'll explore some of the most common SaaS management challenges startups will face in 2023. And we'll also share some tips so you can overcome them.

Without further ado, let's get started!

Top 5 SaaS Management Challenges Startups Will Face in 2023

In this section, we’ll dive into 5 common SaaS management challenges you’re likely to face in the upcoming year. 

These SaaS challenges include:

  • Tool redundancy
  • The need to reduce costs without disrupting processes
  • Avoiding shadow tech
  • Onboarding team members more efficiently 
  • Offboarding team members safely

Let’s take a closer look.

Tool Redundancy

The average startup has a stack of over XX tools and adds XX new ones every month. 

Consequently, one of the top SaaS challenges for 2023 is avoiding tool redundancy (i.e. having multiple tools serving the same purpose). But, what’s the true cost of tool redundancy? 

Aside from being wasteful, tool redundancy can result in:

  • Inconsistent processes
  • Information silos

As tools become more full-featured, you're very likely to find new instances of redundancy across your stack. For instance, your prospecting tool may become an unnecessary expense, considering your CRM's latest update. 

Moreover, the SaaS industry's market size is estimated to reach $195 billion by 2023. As new tools are released every day, your team will become more likely to try out new software. And sometimes they’ll do it without the proper overhead. 

But what are the most common redundant applications to watch out for? 

Frequently redundant apps

You can find redundancy across your SaaS stack. But some software categories are more likely to cause redundancy than others.

Namely:

  • LMS and online training apps (e.g. Skilljar, Cloud Academy, and Lessonly)
  • Team collaboration apps (e.g. Slack, Monday, and Confluence)
  • Project management apps (e.g. Asana, Airtable, and Smartsheet)

There’s a significant overlap between these tools. And since they’re not expensive, subscribing to them is an easy decision. But small charges can easily accumulate into thousands of dollars in inefficient spending. 

At this point, you’re probably wondering: "How can I identify and mitigate redundant SaaS applications in my stack?"

Let's see.

How can you detect redundant SaaS applications?

To reduce SaaS tool redundancy, we recommend you:

  • Connect with your team and inquire about your current stack
  • Identify and catalog all your SaaS applications
  • Keep track of software usage
  • Analyze your financials to find previously unrecognized SaaS purchases
  • Find out which apps your team considers essential
  • Compare the costs of your software to its impact on your teams’ workflows

In addition to saving money, this process will make you more aware of what your company needs. Hence, in the future, you'll likely make more mindful software purchase decisions too. 

However, handling this process manually can be fallible and time-consuming.

Reducing Costs Without Harming Internal Processes

In 2023, startups optimizing their spending will have to reduce costs without compromising internal processes.

Each company is unique. But there’s a key concept that will help you know which costs you should cut and which are worth keeping. That’s the concept of “mission-critical” software. 

Let’s take a closer look.

Prioritize mission-critical applications

A mission-critical application is a platform that’s essential for a startup’s daily operations and long-term success.

Here are some examples of software that may be mission-critical for you:

  • Your customer support platform
  • Your team’s design tools
  • The platform your website runs on
  • Your payment processing software

In most cases, you shouldn’t get rid of mission-critical applications. And, if you’re considering replacing them, you should be extremely careful. 

You may be implementing an aggressive cost-cutting strategy. But do everything in your power to preserve your mission-critical stack.

Avoiding Shadow IT

Shadow IT involves the purchase of SaaS applications without the knowledge of your IT department.

Usually, shadow IT is the consequence of having an IT department that doesn’t keep up with the functional needs of the business. As a result, your team rushes to acquire new tools without going through an IT audit.

Shadow IT accounts for 40% of large enterprises’ IT spending. While startups are usually smaller and more efficient, your percentage of shadow IT may be close to the 40% range. 

Your non-IT team members may know the best SaaS apps to do their job and drive innovation. But shadow IT can produce huge unidentified costs and undermine the ROI of your software spending. And, in the worst-case scenario, shadow IT can also cause security vulnerabilities. 

What can you do to prevent shadow IT?

Preventing shadow IT may be easier than you think. 

We recommend you:

  • Streamline your software approval and credential management processes
  • Establish consistent approval workflows for software purchases
  • Adopt a SaaS management platform that gives you full visibility of your software stack

Designing Efficient Onboarding Processes for New Team Members

Successful onboarding is another one of the major SaaS challenges you may face in 2023.

Team member onboarding is a multi-faceted process. And it can extend for weeks or even months. One of the key aspects of onboarding is giving your new colleague access to all the tools they'll need.

But it isn't so simple. This aspect of onboarding can get very tricky as your team and tool stack grow.

Ask yourself:

  • Do you know what tools a new team member would need to do their job?
  • Are these tools listed somewhere? 
  • Who has the ability to create new user accounts for those tools? 
  • Do these charges have to be approved?
  • If the user needs credentials (such as a password or recovery code), how will they be shared? 

As your startup scales, you should aspire to have "obvious", straightforward answers to these questions. Especially when it comes to purchasing approval and credential management, you don't want your team to be figuring things out on the spot.

Designing Safe Offboarding Processes

There are three key priorities you should have in mind when offboarding a team member:

  • Minimizing the loss of information
  • Preventing data breaches
  • Restricting the team member’s access to your tool stack 

Lost information, data breaches, and inappropriate access to the tool stack are consequences of two problems we’ve already covered:

  • Poor credential management
  • Shadow IT

So, at the end of the day, the formula to overcome most of these SaaS challenges is simple. Centralize your SaaS management. And optimize your processes, so transparent tool management becomes a part of your daily operations.

Efficient SaaS Management Is Possible with Cledara 

Most of the SaaS management challenges we covered in this article are the consequence of not having a centralized view of your software stack.

Do you know how many software trials your team is currently on? What are your most used tools and who has access to them? And, what about redundant tools? Are you paying for the same features twice?

Cledara streamlines your SaaS management, so you can get true answers to these questions, instantly and effortlessly. 

With Cledara, you will: 

  • Get full visibility into your software stack, from a single platform
  • Easily identify redundant apps
  • Manage your software invoices and reconcile them automatically 
  • Make onboarding and offboarding easier
  • Optimize your software spending
  • Set an approval workflow for software purchases
  • Keep your software credentials safe 

Interested in how Cledara can simplify your software management? Book a Cledara demo today.

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Jenny Liu
Head of Finance @ Marshmallow