SaaS costs turning into sticker shock – sounds familiar?
Research shows that on average, one in three employees will purchase a SaaS application using a company credit card or request an expense reimbursement.
This often result in larger companies having numerous different, overlapping or duplicate SaaS solutions in various areas, all eventually adding up in costs such as integration with core systems to mention one example.
Many companies caught up to this trend and implemented processes and policies to prevent it. The majority of people find a way around it e.g. in my previous life as a consultant, I had a number of customers request such purchases on my credit card and simply invoice them monthly.
Airdocs Global, is a SaaS solution provider that embraces everything cloud and we can speak from personal experience about the importance of managing the cost of SaaS. Today, our marketing team needs a video composition tool to create demo videos. These come at a dozen a dime and “just swipe your credit card here” convenience. Tomorrow, we have a requirement to do a different type of video such as an animation marketing video. Ah, we need another tool for that and it’s back to swiping a credit card here. For various legitimate reasons we then need more than the initial included users licenses and so the costs start adding up.
In many cases some of these tools are completely abandoned simply because “a better tool” was found or recommended by a friend or colleague, or inevitably we need all of them simply because people have a preference for the tool they prefer to use over the other.
The SaaS solution market became one where tools are developed for very specific business units, in many cases with very specific and limited functionality to make it affordable and easy to procure.
Enterprise companies often end up with literally thousands of “hidden” SaaS subscriptions, appearing in financial systems as “expenses” making it hard to detect and track IT costs.
Fortunately, as SaaS solutions developed, so did the tools to manage the costs. Ironically, a simple Google search reveals the magnitude of SaaS Cost Management tools available on the market today, which on its own won’t solve the problem. It needs to be implemented along with the appropriate level of processes and policies to manage the procurement, renewals, ongoing subscriptions, prevention of duplicate solutions and integration required with other core business systems and data.
Back to the “cheap and cheerful” limited functionality for the immediate requirement. Often we pick the cheapest option that meets our needs at the time. It’s not going to break the bank I hear you say. On the other hand, in most cases we really do not need the other end of that scale where the solution is the answer to whatever the question is. We need to look at the direction of our business, anticipate the evolving requirements and find that fine balance between functionality versus price, that allows us to extract better value for money over a period, without it becoming sticker shock or breaking the bank.
Written by Frik Botha
Frik is responsible for overseeing Airdocs’ day-to-day business, financial and budgetary activities. He looks after the growth of business goals and strategic product development. He also enjoys establishing healthy business relationships with partners and clients.
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