- Alpin is now CoreSaaS.
Background: The Current State of SaaS
If you’re reading this blog post and work for a company — any company — there’s a nearly 100% chance you use cloud software.
You may have even signed up for that software without telling anyone.
It’s almost certain that everyone at your company uses more cloud software than you or anyone else imagines. IT or executive leadership has encouraged, allowed, tolerated, or ignored many years of “distributed purchasing.”
All of these software expenses — are they on your department’s budget, or IT’s? Where should they be? You may find that no one has an official, consistent answer. Maybe IT pays for and administers Salesforce company-wide, but not other software used by Sales and Marketing. Is that defined by a policy, or did it just happen?
Thankfully, you can see good news emerging — assuming you want to get this situation under control.
Executive leaders are beginning to officially recognize that cloud software will be a huge part of their budgets — doubling in just a few years. Executives also believe their companies will use cloud services for handling mission-critical applications.
What does this mean for you? It could be the perfect time for you to take charge of this chaotic situation.
Note: If you have a more security-focused organization, you may be able to get to the same end result by approaching this as a shadow IT discovery project.
Why Saas Budgeting Matters Now More Than Ever
Big SaaS spending increases: CIOs expect to double their spend on cloud-based services, from 22% to 44%, over the next 3 years, according to 2018 data from Deloitte. This category screams for controls and oversight. And did we mention that if you undertake this project, you could save up to 30% on total SaaS costs?!
You can actually do something now: while this has been a problem for a number of years, you now have tools to help. Alpin provides the visibility necessary to plan and budget SaaS. If you can see, over time, rapid growth in spending on communication apps like Slack (or whatever), then it’s possible to assign a budget and prevent unchecked growth.
Prepare for a potential slowdown: A recession or slowdown could be here by 2019 or 2020 – now is the time to be prepared to cut costs. Visibility and budgets make that possible.
How To Start Budgeting for SaaS
1. Discover – Get Visibility ASAP
There are many ways to discover SaaS. It all involves compiling disparate data.
“Data” becomes “visibility” when it has been organized in a helpful, SaaS-focused way.
For some companies, conducting internal surveys or asking department heads to provide a list of software has been… probably the only option. You can imagine this method lacks efficiency.
Tools have improved this situation. Alpin offers over 12 ways to discover SaaS, including API integrations with leading apps, connections with SSO platforms, data extraction from accounting and expense systems, browser plugins, on-device agents, firewall log analysis, email scanning, and more.
Once Alpin starts discovery, it automatically runs through a set of next steps:
- Scanning through records, matching them with a database of over 40,000 SaaS applications.
- Categorizing each application according to its business function. Categorization is essential to getting organized and reporting, which we will cover further on.
- Matching records, categories, and expenses with users and departments.
Discovery without organization focused on SaaS, such as you might get from firewall or proxy logs, would only give you a big pile of data. That’s why Alpin considers firewalls or proxies one of many sources of data needed to get a complete picture.
After initial discovery, you can see how many apps your company uses by department, by category, per user, and more. Apin can show you how recently and how often apps get used, and even what actions people are taking inside those apps.
Special Tip For Getting Started with Discovery: Prepare Expectations
Expect at least 0.5 to 1 unique cloud software subscription per user that you have. However, assume that your leadership team will drastically underestimate the number of SaaS applications. You may look prophetic because they are almost guaranteed to be wrong. As recently as last year, CIOs and other leaders mis-guessed the number of SaaS apps by orders of magnitude.
2. Connect Expenses And Add Payment Or License Information
Connecting with expense systems, whether that’s an integration or just a .CSV export, should be your highest priority. Connecting accounting systems provides the shortest path from discovery to budgetary reporting for obvious reasons.
However, using other discovery methods, in addition to expenses, can impact budgeting positively. Why?
- Payments could come from some other method, like a contract or purchase order. They may not be tracked in the expense system alone.
- Some users’ freemium accounts could have cost implications: (license compliance because they should be using the paid account; or, as is often the case, a freemium app quickly grows out of the “free” tier).
- Usage may differ from expenses, so seeing both spend and users/apps will help paint a complete picture.
- Some apps may have fewer users but cost a lot.
- High usage in a SaaS category may indicate future expenses.
You may see now why having a tool for the 40K+ expenses out there will save you a lot of time.
Keep in mind — even with automation and machine learning, every organization has its own quirks within its SaaS environment. Alpin helps provides hands-on support team through this setup process to ensure you are able to get your account up and organized in a timely fashion.
Alpin can help by uploading information about past payments made under a contract or inputting license types and their per-user cost en masse.
How does that help you?
Past payments will give you historic information for reporting and making future budgets.
Users and their specific license types and costs can vary by company, based on a negotiated Enterprise agreement. License types will help you accurately forecast costs.
3. Ensure Subscriptions And Their Related Costs Are Assigned To The Correct Departments; Create Tags And Report On Categories
Every organization differs. After initial data dumps, adding some payments, and identifying license types, you will have a lot of information to report on. If you’re using Alpin, we’ll automatically categorize every app by its business function.
You will want to review and ensure that the right apps are assigned to the right departments if you plan on using this information for departmental budgeting.
Additionally, you may surprise yourself with the insights you obtain from this type of reporting. Analyzing how spend breaks down can change your perspective on the role of SaaS. The reports you generate form this analysis can be used to make persuasive proposals to executive leadership.
If you find this all exciting, take it a step further. Make your new database much more powerful with tags. And you need not tag alone – you can add department heads or other people to Alpin to help you.
Any one of the tag categories below — as well as any you create — allow you to generate informative and actionable reports:
- Annual Cost Range – $1 – $1,000, $1,000 – $5,000…. $500,000 – $1,000,000…
- Per User Monthly Cost Range – $0, $1-$5, $5-10, $10-$15…
- User Count Range – 1-100, 101-1,000, 1,001-5,000….
- Billing Type – Volume, Flat, Free, Monthly, Paid, Per User, Annually
- Contract Type – 2-year, 3-year, Annual, month-to-month, auto-renewal, authorized signature
- Country – Canada, France, Germany, Mexico, USA…
- USA Region – California, Capitol Area, East Coast, Midwest, New England, New York, Pacific Northwest, Southeast, Southwest
- The possibilities are endless
4. Look For Cost-Cutting Opportunities
There are many, many types of cost savings to find in cloud software. Here is a longer list from the link, and then we’ll focus on a few of them:
- Extra licenses
- Inactive users (including former employees)
- Duplicate apps or multiple instances
- Unoptimized licenses (users unnecessarily placed in high-priced tiers)
- Off-the-shelf pricing
- App with tiered users pricing and easy signup
- Non-compliant license fees
- User-initiated upgrades
- Expensed subscriptions
- Converted free trials or free tiers
And even that is not a full list – there are risks and soft costs to consider as well! If you want to learn more about them, check out our ebook on cutting SaaS costs for more details. For this guide, we’ll focus on the hard costs.
That way, you can focus your efforts on the areas that can generate more immediate savings ahead of budgeting.
Excess licenses, inactive users, unoptimized premium licenses for low-use people
Consider the following for some potentially quick, large cost reductions:
Extra licenses, if not stipulated by contract, are prime cost-cutting targets.
Some people never use software. And if IT does not manage an app, some employees may could still need to be de-provisioned, even years later. In our experience, some organizations have hundreds or thousands of inactive accounts.
Some licenses cost more than others, offering access to more advanced features. But what if not everyone accesses these premium features?
Eliminate duplicative software (Ex: try to consolidate Trello, Asana, Jira, Basecamp)
Some employees or departments decide to get their own apps, even when a corporate subscription for a similar app exists. That could result in paying for both the corporate license and the departmental license. Likewise, sometimes employees start separate accounts for an app that’s already paid for, such as a new Slack instance.
Once you see apps categorized and organized by department, you can quickly see the worst offenders in these areas and calculate potential savings.
Renewal management (no surprises from unwanted renewals; negotiate smarter armed with real data)
From the Alpin app, you can see all upcoming SaaS renewals in a simple renewal calendar. And you’ll get email alerts about pending renewals.
How would this help with quick cost savings?
Chances are, many apps could renew in any given month. Getting renewal information to the people managing those apps could prevent unnecessary renewals. If missed, it could even extend some contracts for a year or longer.
Any user, usage, or other data you can provide to contract owners can also help them negotiate with more leverage during renewal.
Compare SaaS spend by category with on-prem software spend in the same categories.
If you have access to on-prem software spend by category, you may find some software has become shelfware.
While some employees may use the on-prem software, you might find that some employees use both the desktop software and a similar cloud subscription. Whether you cut the on-prem or cloud software, you may find some savings.
5. Set Spending Budgets By Category, Department, or Total SaaS Spend
If you’re reading this, you likely know how to budget. If you’ve followed these steps up until now, you may be an Alpin customer (thank you). But you also probably have all the data you need to follow whatever budgeting process you want. You have the visibility and reporting to take action.
Here are a few ideas from us regarding budget allocation:
Budgets could be set and then allotted to departments based on prior spend or number of users. Depending on how far of a lookback you wanted when providing data, you may be able to make that determination without additional work.
Departments could also have a total SaaS budget if you’re concerned about the growth of SaaS as a category over time. Setting up policies, now that you have a means of monitoring and enforcing such policies, could prevent budget explosions.
Comparing SaaS cost per employee across departments, and comparing those costs over time, can be useful for benchmarking.
Important note: Alpin costs money. But it CREATES BUDGET because it identifies even more costs that you can cut now, and in the future. No budget? No problem. You’ll end up better off than when you started. Ask us for the ROI calculator.
6. Continue Reporting And Show Changes And Improvements Over Time
Now that you have this power information, you can continue to impress those around you (hopefully your superiors) via reporting.
You can report based on the tags you made or the existing categories to show trends over time. Questions to ask yourself might include:
- What app categories are growing, shrinking, or staying the same?
- What departments are spending the most or growing their SaaS budgets the fastest?
- How does user activity predict cost increases?
- Is there an 80/20 rule present in our data? What are the apps or users driving 80% of the costs? What categories?
- How many apps does each user have, on average?
- What is the average cost per user for all their SaaS applications?
Ongoing importing of expense data can provide a great dashboard for checking in on attainment to budget with various levels of granularity. You can report on the aggregate level, by region, division, department, team, user, or just about any level via tagging.
You can also leverage reports for audits and assist compliance/security departments. There are many ways to use Alpin, including for third party security and compliance. Alpin records which companies have security certifications or claim compliance with standards such as SOC 2, GDPR, or ISO 27000. If an app in a critical business category lacks certain standards, your security or compliance team will know exactly which departments or users to speak with.
7. Last Step: Apply For A Promotion?
If not a promotion, I hope you quantify the savings and results, because it’s likely unprecedented wherever you work! The opportunity to help your own career while helping your company is here, so long as you are the person to get the ball rolling.
Consider using the reports, working with your Alpin support team, and use our app to show your worth. You’re worth it!
If you’re looking to get more serious about SaaS, we have over a dozen ways to discover SaaS apps, along with financial, compliance, and security tools; contact us for a 10-minute demo. You’ll see how Alpin can work for you.