May 5, 2021
3
MIN READ

The Hidden Costs of SaaS [+ 3 Ways to Avoid Them]

SaaS Insights

Discover the hidden costs of your SaaS stack and learn 4 best practices to avoid them.

by
Grace Wildsmith

The number of SaaS subscriptions used by SMEs is spiralling.

For many finance leaders this is an under the radar problem. But it's one worth investigating. Because your SaaS is probably costing you time, money and a fair bit of unnecessary stress.

There are two key reasons for this:

1. Unused and duplicate SaaS subscriptions accrue hidden costs you could be overlooking.

2. Finance teams waste valuable time and human resources trying to manually reconcile SaaS costs.

When you’re responsible for protecting margins and ensuring your business scales, any lack of visibility over your SaaS assets is a problem. But a bigger issue is that they might not just be failing to add value – they could be actively costing you money.

According to our data, SMEs today spend an average of £467 per employee, per month on software assets.

That’s already a significant number, and one that’s only set to increase as your business grows. Presumably, those costs are already accounted for in your budget. But what about all the other costs SaaS subscriptions are accruing behind the scenes? 

Hidden to most CFOs, poor SaaS management is eating into your margins. And to keep finance – and the wider business – on track, you need to get a handle on them. Fast.

CFOs should act to stop SaaS sprawl now**

The SaaS market is huge, and only getting bigger.

By 2022, it’s predicted to be worth $145 billion globally, with the majority of CFOs plan to increase their cloud software spend. In part, that uptick is being driven by more remote work: teams now need more digital tools to collaborate and perform effectively.

But the more other teams invest in software to make their lives easier, the harder things get for finance teams.

Even in person, it can be a struggle to get visibility over software subscriptions and control and reconcile spend. Without any processes for card approval and expense management to fall back on, it’s even trickier.

At a time when margins are tighter than ever and the pressure to digitally transform is sky-high, CFOs are at an inflection point. Fail to get a handle on SaaS sprawl now, and you’ll seriously damage your ability to scale.

3 ways poor SaaS management is eating into margins**

Finance teams’ visibility into SaaS subscriptions usually doesn’t go much deeper than a line item on a credit card statement.

But that monthly fee is only part of the picture: it doesn’t tell you the true cost of SaaS. For that, you need to take a much wider view. There are three critical ways that SaaS might be costing you:

Wasted money: Almost 30% of software spend is wasted on duplicated  or unused SaaS

Wasted time: Finance teams waste 10+ hours a month on admin, instead of work that adds strategic value

Fundamentally, finance teams lack visibility and control over the SaaS lifecycle. That’s increasing your workload and impacting your business’ ability to scale.

SaaS management tools can help. Gartner predicts that by 2026, 50% of organisations using multiple SaaS applications will centralise management and track usage through a SaaS management platform. 

For a deeper dive into the hidden costs of SaaS subscriptions, download your free eBook.


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Grace Wildsmith

Grace is Cledara's in-house financial accountant, who thrives in businesses with fast-paced growth. Grace's role is to provide insights to the wider business, she has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures.

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