Nov 20, 2019

3 Ways SAM Managers Can Identify Application Ownership in the SaaS Era

As more organizations embrace the benefits of cloud-based software and software-as-a-service (SaaS), traditional Software Asset Management (SAM) strategies must be updated to include a focus on cloud software asset management.

Key to SaaS optimization in the cloud

While both SAM and SaaS strategies focus on optimizing software license management and creating maximum value for software investments, the distributed acquisition of ownership of SaaS represents a departure from the centralized ownership that most SAM professionals recognize.

SaaS Optimization Represents a New World for Software Asset Management

To effectively utilize cloud-first deployments, SAM managers must recognize that SaaS ownership now varies throughout an organization - and each type must be optimized accordingly.

These changes in ownership underscore that SaaS is a fully distributed category in nearly every enterprise. For better or worse, IT no longer makes every software decision.

However, when and where distributed ownership exists, a central team must be enabled to drive visibility into the category and the organizational strategy. The goal is to create maximum value from cloud-based tools using SaaS optimization. With their unique experience and skillset, Software Asset Management professionals are positioned perfectly to add SaaS to their software license management portfolio.

Here are the three most common forms of ownership - and what software asset managers need to focus on in order to drive SaaS optimization across each type:

1. Centrally owned SaaS applications

Central ownership generally covers most cloud-based deployments of enterprise-wide software such as CRM, ERP, HCM, or other major systems that the entire business relies on to execute mission-critical functions.

Among all SaaS deployments, this ownership type is most akin to traditional on-premises software deployment in that the tool is selected using a vetted procurement process that includes contract negotiations and direct engagement with the vendor or supplier. Once implemented and active within the organization, these enterprise tools are typically owned, managed, and supported by an ITAM or SAM team.

The critical differences in the modern SaaS era are that deployment no longer requires physical assets or hardware (beyond an Internet connection), licensing is now subscription-based rather than perpetual, and pricing can include user consumption metrics such as thresholds on data, transactions, or other activities.

With this in mind, software asset managers focused on SaaS optimization should take note of the following factors for a centrally owned SaaS application:

  • Negotiate maximum value upfront - Since SaaS costs are created by the number of licenses purchased, it’s more important than ever to get maximum value from the outset of the contract. It’s critical to not only right-size license quantity for the current number of users, but to also create buffers for future users.
  • Pay attention to utilization - Once purchased, software licenses must be fully utilized to provide optimal value. Unused software licenses can be also be deprovisioned or reassigned to recoup any potentially lost value.
  • Proactively monitor consumption metrics - Along with monitoring utilization, IT and software asset managers who manage a centrally owned SaaS application instance must also actively monitor consumption metrics if present to reduce unplanned extra costs.

Examples of consumption metrics that can lead to added cost include overall record quantity in a CRM, number of email addresses available in an email platform, or overall storage capacity in a file-sharing system.

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2. Team-based SaaS ownership

SaaS applications and other cloud-based subscription software owned by distinct business units, departments, or teams represent a delineation from the centrally focused IT and software asset management model.

As SaaS as a software category continues to grow. Gartner estimates the SaaS market will be worth more than $110 billion in 2020. One factor fueling this growth is hyper-specialization by business function. For example, technology devoted to marketing functions has grown from about 150 available solutions in 2011 to more than 7,000 tools in 2019.

Applications devoted to departmental functions such as Human Resources, Finance, and Legal have followed a similar trajectory as specialization has become a more lucrative software opportunity as business unit leaders have replaced IT as the primary software buyer. With increased specialization and extremely low barriers to deployment, almost any team can now select, acquire, and implement an application specialized to their vertical.

When business units become software buyers, SAM professionals can use SaaS optimization to increase SaaS application value by considering the following:

  • Create a collaborative review process for software acquisition - One avenue towards re-establishing visibility into software acquisition involves creating a documented request-and-approval process that vets proposed software purchases against respective stakeholders such as IT, Legal, and Finance. A centralized review process can also aid in identifying departments’ different requirements and identifying new tools that may solve multiple teams needs.
  • Build a company-wide renewal tracking calendar - The hallmark of cloud-based subscription software, automatic renewals have a tendency to catch application owners unaware, leading to unplanned spending and tools that may no longer be necessary. On average, an enterprise business experiences at least one application renewal every business day, according to a recent study of Zylo customer data. For Software Asset Management professionals, proactively documenting and monitoring a SaaS renewal calendar provides the opportunity to drive collaborative decision-making with business unit leaders and create cost savings.
  • Reduce application redundancy and functional overlaps - For more general business needs, multiple SaaS applications that fulfill the same function creates redundancy and overlap that only squanders value and introduces friction into the business environment. For example, if teams use separate file storage and sharing applications, business data will exist in distinct siloes. In the age of SaaS, consolidating redundant applications and selecting a designated go-to tool for these functions leads to greater value in the form of increased buying power (i.e., more users reduces per-user costs) and increased productivity. If a SAM professional can empower multiple teams to collaborate and select a single file-sharing tool, they can help leverage increased buying power and reduce friction from siloed data.

3. Employee-sourced ownership (aka shadow IT)

For many companies, employee-owned tools represent the fastest-growing category of SaaS ownership due to extremely low-cost and easy-to-implement options. On average, one in three employees now purchases SaaS applications via expense reimbursement, according to Zylo data. And this acquisition contributes to overall application quantity: As much as half of the typical SaaS application inventory is comprised of applications acquired via employee expense.

This category also represents one of the most significant risks for an enterprise business, as you cannot mitigate risks for what you cannot identify. This risk underscores the need for Software Asset Management professionals to gain full visibility into their environments and identify, then mitigate risks accordingly.

To optimize employee-owned SaaS, consider executing the following actions:

  • Gain visibility into application acquisition and ownership - This is a critical undertaking when purchases occur outside of the IT department. Equally crucial for employee-led application acquisition is identifying the employees responsible and addressing the behavior (if problematic).  Expense and vendor transaction records often prove to be a reliable source of truth for identifying new software entering active use.
  • Establish a conduit for employee feedback - A common reason for rogue application acquisition on the part of employees is a lack of available tools (or the perception of lack of availability) within approved company channels. IT and software managers who actively solicit employee feedback regarding needed tools and applications can stay ahead of this by regularly asking for employee feedback regarding tools or apps.
  • Create a resource for pre-approved tools - To prevent shadow IT, the tools and applications that have been vetted and approved for use should be easy to request and access. This can take several forms, from a list or spreadsheet featuring pre-approved applications to focused use of single sign-on solutions to an employee-accessible application catalog or library.

No matter the ownership type, SaaS represents a new world compared to the well-known practices associated with Software Asset Management. SAM professionals who use SaaS optimization to create new processes and workflows in recognition of the unique characteristics of SaaS can reduce risk, preserve value, and improve employee productivity.

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About Zylo:

The largest independent enterprise SaaS management platform, Zylo transforms how businesses manage their SaaS application portfolios. By creating transparency around SaaS spend, license utilization, and user feedback, Zylo provides a centralized system of record that empowers business leaders to discover, manage, measure, and optimize their SaaS investments. Zylo was noted as a Rising Star in Forbes’ 2018 Cloud 100 list, the definitive list for private cloud companies, and was recognized as a Cool Vendor by Gartner.

Topics: Cloud, SaaS