If you’re here, you probably have an ever-growing tech stack that’s getting complicated to manage.
You’re at the helm of it all—juggling renewals, allocating software budgets, and taking control of the overwhelming number of subscriptions your business has racked up over the years.
Effective SaaS spend management helps you track and optimize the costs of your organization’s SaaS stack.
In this article, we take you through the management techniques, benefits, and best practices of SaaS spend management—starting with a SaaS management definition.
What is SaaS Spend Management?
SaaS spend management is the practice of monitoring, analyzing, and optimizing software solution spending. It’s an ongoing process that helps businesses minimize tech stack costs by providing a birds-eye view of all the SaaS solutions you use.
Some of the main SaaS spend management techniques include:
- Usage monitoring: Tracking how employees use software across your organization to spot redundancies, like duplicate licenses, underused tools, and platforms with overlapping functionality.
- Cost analysis and allocation: Breaking down software spending into department- or team-specific allocations for budget transparency.
- Contract analysis and negotiation: Analyzing your agreements and finding opportunities for better deals. This technique includes creating a negotiation plan for chatting with providers and getting new tools.
- Aligning software spend with organization goals: Checking if current software tools and spending contribute to your organization's long-term goals and business objectives.
How Much Do Companies Spend on SaaS Solutions?
So, what’s the current state of SaaS spending? Why is SaaS management so crucial? We gathered data from over 1 million transactions with more than 5 thousand vendors for an understanding of current SaaS expenditure, and found that:
- Smaller companies of 0–20 employees spend an average of $121,336 annually on software
- Mid-sized companies of 50–100 employees spend around $193,716 annually
- Larger SMBs of 100–200 employees invest approximately $251,119 in software annually
That’s a lot of spending on tech stacks alone. If those SaaS solutions aren’t managed, businesses can easily end up paying more than they need to.
What Are the Benefits of SaaS Spend Management?
The main benefit of SaaS spend management is maximizing your tech stack’s ROI. By taking out unused software, renegotiating contracts, and ensuring you only use platforms that support business goals, you’re ensuring only valuable tools make the cut.
Fewer tools = lower SaaS costs. Simple.
However, it doesn’t stop there. Here are some of the other benefits that come with effective SaaS spend management:
- Better SaaS budgeting: Managing your spend lets you allocate budgets more effectively and accurately, especially if you use a SaaS spend management system that gives you data-driven insights (more on that shortly).
- Improved visibility and an easier-to-manage tech stack: SaaS spend management gives you an overview of your entire tech stack, complete with usage and costs. By gathering more information, proactively choosing tools, and canceling redundant subscriptions, you simplify your tech stack and make it easier to manage over time.
- Effective risk mitigation: Managing software spend is also about ensuring compliance with your license agreements and reducing the risk of cyber threats posed by shadow IT—both of which could cost your organization money through fines or compromised cybersecurity if left unchecked.
SaaS Spend Management Challenges
The road to an optimized tech stack is often filled with hurdles. You need to review multiple software accounts, analyze use, and actively follow renewal dates. It’s a complex, resource-intensive process that requires cross-departmental cooperation.
SaaS spend management isn’t a one-and-done deal either. Keeping your tech stack tidy takes constant monitoring and managing. Otherwise, you’ll just go back to using redundancies and duplicates that drain your budget.
Fortunately, there are multiple ways to make the process simpler, ranging from standardizing your SaaS purchase process to using the right spend management tools for the job.
4 SaaS Spend Management Best Practices
Here are four best practices that can help you turn even the messiest tech stack into a lean, ROI-making machine.
1. Standardize and centralize your SaaS processes
Your organization’s departments purchasing SaaS on a whim leads to a decentralized and hard-to-manage tech stack, inconsistent pricing, and even shadow IT. Instead of adopting an “each department-to-their-own” approach, establish a standard process for SaaS procurement. This should include:
- A formal policy that outlines how teams can request tools, along with the process for evaluation, approval, and procurement.
- A SaaS procurement team and workflow that guides employees through the process of sourcing, negotiating, and purchasing new tools.
- A single point of contact, such as the Head of Finance, to oversee and manage software spend across the organization.
Thomas from Swapped goes on to explain how centralizing their SaaS made managing tools more efficient:
“Initially, we had issues with departments having various tools that did similar things. To address this, we brought our subscriptions into a single place. It was easier to see what we had, and to manage our tools in a more efficient manner, which saved us money and made life easier for our employees.”
2. Conduct Regular SaaS Audits
With SaaS audits, you can identify inefficient tools and eliminate waste. It’s also a time to assess whether your tool stack supports your long-term goals.
The steps to conducting an efficient tech stack cleaning audit include to:
- Create an inventory of all your SaaS tools: Complete with names, annual or monthly costs, and terms.
- Analyze regular use: Get granular with who uses licenses, how often, and even which features are going unused.
- Measure ROI for each tool: Together with your IT team, analyze the tool’s usage and compare its value to its cost. Consider benchmarks for efficiency, productivity, and revenue generation.
- Identify and eliminate redundancies: Once you’ve gone through all the tools, continue by finding the redundancies; platforms performing similar functions and low ROI solutions. Eliminate them from your tech stack.
With a SaaS audit, you have the information you need to cut down on software spend.
3. Understand Vendor Contract Terms On Your Software Subscriptions
Say you’ve identified redundant software during your audit. You go to cancel your subscription only to find out that your contract requires a 60-day termination notice—effectively locking you in.
Your SaaS contracts can also contain price escalation, hidden fees, and minimal commitment clauses nestled in the fine print. That’s why it’s important to analyze your SaaS agreements in-depth before you purchase software or attempt renegotiation.
Doing so lets you choose the best vendors for tools, cancel subscriptions, and establish favorable pricing for current ones.
Implement SaaS Spend Management Software
Attempting to manage dozens (potentially hundreds) of your organization’s tech solutions with a spreadsheet leads to one thing: headaches. Tracking multiple platforms, renewal dates, usage, and engagement levels across your entire organization is resource-intensive, taking up time, money, and effort for multiple departments.
If you’re doing it manually, that is.
A SaaS spend management tool like Cledara makes this process easier by providing the tools you need to effectively manage your tech stack. From finding inefficiencies to analyzing your spend, Cledara helps reduce SaaS costs by 20% and saves you 13 hours of time each month.
Cledara alerts you to price changes, highlights unused seats, and compares overlaps in your tech stack. Using the dashboard, you can see your total software spend, monitor upcoming renewals, and even gain insight into your projected spend for the coming months.
With approval flows, team members send requests to admins before they can buy an application, helping you monitor every new purchase.
A comprehensive SaaS spend management platform makes your life easier, and avoids lots of the challenges typically associated with this process.
The Future of SaaS Spend Management
SaaS spend management is an effective method for finance leaders to maximize software ROI while cutting down costs. It also makes the often overwhelming task of SaaS budgeting easier and more efficient.
As company size grows, so does the importance of managing software spend. Despite this, companies in the US, UK, and Europe are wasting an average of $79,639 on unused SaaS solutions every year.
So, if you’re one of the 58% of businesses planning to increase SaaS spending in 2025, you need to do it right. By monitoring usage, analyzing costs and contracts, and aligning spending with your strategic goals, you’ll be a lot closer to a tech stack that works for you, not against you.
For more insights on what the future holds for businesses like yours, download Cledara’s 2025 Software Spend Report today.