Full disclosure, we’re SaaS subscriptions superfans.
We got the badge, bought the t-shirt and pre-ordered the latest subscription.
And we’re not alone.
Our latest research revealed companies have an average of 66 software subscriptions (that they’re aware of), and this jumps to over 100 for bigger businesses.
Clearly SaaS subscription use is soaring – and it’s easy to see why. They are the high-octane fuel of choice for scaling companies.
Far removed from rigid, expensive and painstakingly slow on-premise predecessors, SaaS applications free you with the innovation you need to grow quickly – minus the headaches and heavy investment.
But it’s not all rainbows and rocketship emojis. 🚀🚀🚀
Because our research also uncovered that managing all this SaaS can breed new problems.
These challenges range from the unsurprising, like companies not making the most of their investment in SaaS. To less obvious issues, including increased data risk and damaged company culture.
So, without further ado, let’s look at where these issues are coming from, explore their knock-on effects and see how you can fix them.
SaaS subscriptions numbers: perception vs reality
We’ve already seen that SaaS subscription use is skyrocketing.
But when we tallied up our survey data it wasn’t the sheer number of subscriptions that shocked us.
The real eye-opener was the gap between the perception of how many SaaS subscriptions companies thought they had – and the reality of how many they could have.
Because it turns out they don’t really know.
The looming presence of Shadow IT
Almost 6 in 10 (59%) respondents thought employees have more SaaS (estimated at 93 additional subscriptions) than their company is aware of.
Yep, you read it right the first time.
That’s 93 extra subscriptions companies aren’t actively tracking or managing.
This distorted view of a company’s software is an open invitation to shadow IT (the somewhat foreboding label for unaccounted SaaS).
But shadow IT lives up to its billing. Its looming presence not only adds costs that are impossible to budget or forecast for – it also increases data and compliance risk from unvetted software.
Companies aren’t making the most of their SaaS
With what we’ve learned, it’s no surprise that companies don’t think they’re getting full value from their SaaS.
In fact, only 14% believe all their SaaS subscriptions add value to their business
This has led to 51% canceling a SaaS subscription in the last six months (with an average of 8 cancelations).
The top three reasons cited for canceling SaaS?
Number one was expense, closely followed by SaaS not being used enough to justify cost. Duplicate or unused purchases came in third on the list.
Not being able to measure SaaS subscriptions’ ROI and paying for unnecessary SaaS largely stem from the same weakness that lets shadow IT flourish...
A lack of oversight.
But along with increased costs and data risks, we’ve also seen problems with SaaS are spreading beyond tangible assets – they’re starting to hurt company culture too.
Poorly managed SaaS is hurting culture too
63% of the employees surveyed think problems with SaaS are damaging their company’s culture.
Again, considering how key SaaS software is in empowering people do their jobs – and helping companies grow – this is a shocking stat.
But what exactly are these negative impacts? And who do they affect most?
Let’s start with the people tasked with managing SaaS.
Finance and IT shoulder SaaS admin
Usually, evaluating, approving and managing SaaS tools falls on the shoulders of Finance or IT teams.
While this presents an opportunity to take control, without the right processes or tools, the heavy administrative burden of SaaS management inevitably takes a toll.
Spending time chasing invoices, pushing back on requests or completing mundane manual tasks aren’t on anyone’s dream job description.
And this was reflected in the data:
- 64% want more time to focus on higher value work.
- 62% say manual SaaS tasks stop them doing strategic tasks.
- And 57% say chasing teams for SaaS assets like invoices is creating tension across teams.
There’s a wider cultural cost
The cultural cost doesn’t stop with the teams tasked with managing a company’s SaaS software.
SaaS touches every part of a business, so its impact – both good and bad – does too.
Employees want easy access to the best tools to do their jobs. And they don’t want to go through a long-winded approval process to get them. Meanwhile, if a request isn’t approved, teams can quickly feel hard done by, particularly if they think another team is getting preferential treatment.
These cultural issues combine to undermine collaboration across teams, demotivate employees and increase the risk employees will either underperform, or move on all together.
Clearly there’s more nuance to managing SaaS subscriptions than first meets the eye.
But when it’s so simple for employees to buy in the first place, it’s hard to keep a handle on your SaaS.
SaaS convenience is a double-edged sword
From Heroku and HelpScout, to Hubspot and HelloSign, there’s a sea of SaaS tools for every department in your company.
And it can take just a couple of clicks to sign up for a new SaaS subscription.
It’s so easy.
But the low barrier to entry that has seen the subscription economy boom has become a double-edged sword – particularly for the teams tasked with managing SaaS.
With no central place to see and manage SaaS tools, keeping a handle on subscription numbers and costs is proving a tricky task.
And it only gets harder as companies scale.
The data shows it’s already a tangible problem for the teams tasked with managing SaaS. And we heard the same in our recent interview with Lapis Kim, Head of Finance at Bond.
“Sometimes it’s really hard to track across our billing system, expense reimbursement systems and credit cards. It’s a lot, and every month it’s growing...We don’t have one centralized SaaS management system with oversight over everything we’re paying for. That makes it really hard to manage the balance between sorting out month-end and looking at future budgets.”
The lack of oversight Lapis talks about is a common theme in our research.
As we’ve seen, it means your SaaS can quickly go from an administrative annoyance to something that damages culture, productivity and becomes a hidden cost center for your business.
So what’s the solution?
How can you get more from your SaaS?
While this blog has focused on the problems companies are facing with SaaS, we’re not questioning how powerful SaaS can be for your business.
What we are saying is: you can get even more from your software. And it’s relatively simple to do so.
7 in 10 companies think a simple tool to see all their subscriptions in one central place would make managing SaaS easier.
The good news? That tool already exists.
Enter SaaS management software.
Ironically, a SaaS management platform does mean having another subscription. But in the long run, this one subscription will help your business make the most of all your SaaS.
The right SaaS management tool will remove the administrative burden from finance and keep SaaS data secure. What’s more, with total visibility and control over the end-to-end lifecycle of all your SaaS applications, it will eliminate the likes of duplicate or unused SaaS and make your subscriptions’ value clear.
It’s the SaaS subscription that unlocks all the things you love about software.
Hungry for more SaaS data? Download our full State of SaaS management report here.