Duplicate Apps, Duplicate Costs.
Gartner says cloud spending will represent 24 percent of the IT budget by 2020 while at the same time, 30 percent of software license costs are wasted through insufficient management. That’s a lot of waste. If a quarter of your IT budget is going to cloud apps, it only makes sense to:
- Know where that money is actually going
- Make sure those costs are necessary
- Find ways to reduce costs
In order to do this, however, you need to be able to answer the following questions:
- How much are you currently spending on SaaS applications?
- Which SaaS applications are being purchased (annually and auto-renewals)?
- Who is really using each application?
- Are there any redundant applications or features?
When we talk about redundancy or duplicate apps, we are considering how many different email, file sharing, sales and marketing automation, project collaboration, messaging, and other cloud capabilities are being used. Startups and smaller companies may not have much of an issue with multiple SaaS apps being used for the same purpose, but as the company grows, so too do the challenges of managing the SaaS infrastructure.
Employees are individuals with differing appetites and preferences for SaaS apps. They work within teams or departments who may stipulate which SaaS apps will be used or leave it up to the individual to decide. This may provide ultimate employee flexibility, but it is costing the company big time, particularly when it is paying for redundant apps.
Employees or department heads may purchase a subscription to an app without informing IT, without checking to see if an open or enterprise subscription already exists, or if there are any standards in place to limit their options. Without an accessible tracking mechanism, no one really knows what others are using.
It’s a free-for-all that’s anything but free.
Smart Ways to Reduce Costs
Set Governance Standards
Serious cost savings can be had when standards are in place and even more so, transparency. IT can put into place a mandate that only one email app will be used, for example. This ensures consistency, control, security and cost containment. It also establishes clear guidelines so employees aren’t confused as to which products they should/can use and ensures data isn’t all over the place.
Make IT Transparent
What good is it if IT is the only ones privy to what subscriptions have room to share? Many employees aren’t even telling IT about their SaaS purchases, so even IT is somewhat in the dark. Companies must bring everything to the forefront, giving IT and employees alike the ability
to search for available SaaS apps across their company which they can leverage before they decide to purchase a duplicate app.
Cloud application subscription pricing is frequently structured in blocks. If someone paid for a subscription for 0-25 employees but has only 15 actual users, there are 10 additional licenses available for any employee who needs that app - inside or outside of their department. Instead of an employee in a different area purchasing another subscription for the same app and creating duplication, they can tag onto the available subscription.
Here are a few valuable insights from Gartner, who calls this process “recycling software licenses.”
- Recycling software licenses is the recovery of unused license rights for reuse to avoid new license purchases.
- License recycling will reduce software spending as well as support and maintenance costs.
- Recycling requires metering to spot unused, underused or misused software
Take Advantage of Volume Discounts
Many cloud subscriptions also have price breaks based on the number of users. It is often more expensive to pay for a handful of employees to use the app than it is for a large number. In essence, you pay less per month with more users.
If employees are spread across multiple, yet using duplicate apps, you lose the volume discount advantage. You’re paying more than you have to simply because your organization lacks transparency and governance.
By The Numbers
If you’re like me, you like to see numbers to really get the whole picture. This is only a basic example, of course. I pulled the pricing directly from the company websites and they may have changed by the time you read this blog, but you’ll get the idea.
SaaS app costs range in price and the number of employees who can join the plan before you must bump up your investment to cover more people. Let’s use the example of a couple of popular project management and collaboration apps. Asana advertises a plan costs $10 per user per month. ProjectManager.com’s “best value” plan costs $20 per user (for 20 or more users).
Now, let’s say your organization has 100 employees with one department of 50 employees who prefer ProjectManagement.com over Asana and another department of 50 employees who choose a to use the duplicate Asana app. Your organization is paying $6,000 for 50 employees who use ProjectManager and $12,000 per year for those who use Asana. That’s $18,000 per year for 100 people to use their preferred collaboration software.
Do the ProjectManager capabilities justify double its cost compared to Asana? Do you know if all of that functionality is even being used?
If you had visibility into which product features are actually being utilized, you could determine whether or not it made sense to consolidate your collaboration software to one platform. You could set governance standards whereby every employee must use Asana, for instance, because it costs less than ProjectManager.com and has enough similarly used features. Even better, you would pay only $12,000 per year, saving $6,000 per year.
It’s Not That Simple
Now, let’s complicate this basic scenario with real-world issues. What happens when an employee leaves the company and you’re still paying for their subscription because you didn’t cancel or transfer their membership? What happens when they move to another department that doesn’t use the same app? Dollars are wasted on unused subscriptions.
This is an example of only one SaaS app. If you’re like other companies, you likely have many more SaaS apps across your enterprise. You have employees who shift around, leave or come on board. With every new app that is introduced into the IT ecosystem, there are more costs. Are they all absolutely necessary to conduct or improve business?
De-Dupe Your SaaS Environment
Companies need technology to constantly scan and audit their SaaS environment for replication. They need the technology to provide easy-to-read dashboards and reports that reveal duplicate, underutilized and unsanctioned applications. This transparency is the only way organizations can take control of their SaaS spending and their entire SaaS ecosystem.
Duplicate purchases add up quickly. They can’t be ignored and you must have a system and tool in place to ensure everyone has the information they need to make better decisions.