SaaS waste is a persuasive issue troubling millions of SaaS users.

According to a report, the average amount a business wastes on SaaS tools they don't use is a whopping $135,000.

Often, a business keeps paying for an application even if they're not using it. Forgetting to terminate SaaS subscriptions forces a business to pay for unused licenses, resulting in SaaS wastage.

But what is SaaS wastage?

SaaS waste refers to applications you're paying for but not using to their full potential.

Interestingly, SaaS wastage not only consumes or exhausts your resources, but you also require more resources to manage these wastages.

Let's understand SaaS wastage using an example.

Understanding SaaS wastage

Your project manager wants to increase workplace productivity, so he signs up for four different project management (PM) tools. Using the free version, he tries all four SaaS applications. After his trial, he selects a business plan for one software.

Now, there could be many scenarios in which this PM tool results in wastage:

1. Some other departments are using the same PM tool.

2. Some other departments are using another PM tool.

3. For the project manager, the less costly premium plan is more appropriate.

The difference between the business and premium plan is hardly some dollars, but the amount becomes monumental when hundreds of your employees do this.

So, there's a dire need to minimize this SaaS wastage.

6 Best ways to minimize SaaS wastage

Using the following ways, focus on minimizing SaaS wastage:

1. Use SaaS management

An excellent way of minimizing SaaS wastage is using SaaS management, which is a practice of monitoring and managing the purchasing, licensing, and renewal of SaaS applications within your business’s technology portfolio. 

Rather than relying on spreadsheet software to manage the licensing and usage of SaaS software, focus on implementing SaaS management platforms. It optimizes SaaS spending, provides app usage visibility, ensures app security, and empowers employees to do their best work.

Using these platforms, companies maintain consistent compliance policies across all apps. 

Regardless of whether your business is using one or five different SaaS apps, the need of the hour is managing these apps to reduce waste and cut costs.

In this regard, Vertice's SaaS management guide is a comprehensive resource designed to help organizations navigate the complexities of managing Software as a Service (SaaS) applications. With insights gleaned from industry experts, the guide covers essential aspects such as application usage monitoring, cost optimization strategies, security, and compliance measures, user provisioning and deprovisioning best practices, integration and workflow automation techniques, vendor management tips, and user training and support recommendations.

Pro-tip: Today, SaaS management is the key to optimizing and managing your application. Companies that use it avoid falling into the trap of losing their hard-earned money on unused resources.

1. Keep an eye on automatic renewals

You and hundreds of other SaaS buyers face the same devil – auto-renewal. It's easy to set your SaaS purchases on auto renewal and forget about it. 

Auto-renewal contracts allow the SaaS provider to extend your original contract and billing without pre-approval. 

With 91% of companies not having a dashboard that tracks the renewal status of upcoming SaaS service expiration, you're not the only one in this club.

Auto-renewal is not a good option as a lot can change in one year. You might be looking at expanding your business or might have modified projects.

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The problem arises when the SaaS tool you use doesn't have provision for your evolving requirements. 

An auto-renewal clause means you lose the opportunity to scale your activities as your SaaS tools cannot meet your changing demands. 

Pro-tip: If you break the auto-renewal contract mid-way, you could face multiple penalties in the form of early termination and cancellation fees. So, being proactive with your auto-renewals is the way forward.

1. Downgrade license to suitable tiers

Let's understand this with an example. You're planning to use a project management tool as you anticipate growth in your business. 

After trying and testing various tools, you finally buy the 'Ultimate Control' plan of ProofHub, which ensures you complete unlimited projects at $89 per month when billed annually.

Whereas in reality, you have only 30 projects in the entire year. Had you forecasted the demand correctly, you would have subscribed to the 'Essential' plan, which is ideal for 40 projects and costs only $45 per month when billed annually.

Perhaps it doesn't sound too much. How much harm could $44 do your business? 

But for the entire year, this amounts to $528.

Now, that's something you save and use for other tasks.

So, the next time you renew your contract, ensure to downgrade your license depending on your requirement. Interestingly, when downgrading, you might realize that you don't require many features.

Pro-tip: Unused enterprise software is costing a loss of over £1.7 billion in the UK alone, making it essential to downgrade license based on business requirements. 

1. Eliminate overlapping functions and duplicate applications

Department-specific SaaS tools emerge constantly. A tool that might work for the project management team might be unsuitable for the marketing team, but there might be many overlapping features.

Overlapping functionality occurs for project management, sales intelligence, team collaboration, and file-sharing tools. 

To eliminate overlapping functions, compare and contract features across all your SaaS applications and ensure you don't have duplication of features.

Pro-tip: Document all your SaaS application purchases with your IT team so that they keep a record of all the applications and their features.

1. Have a growth assumption

It's common for start-ups and developing companies to believe that they're likely to grow rapidly in a short time. 

As a result, such companies buy more software licenses than they currently require.

While there's nothing wrong with having an inspirational growth assumption for your business, making the wrong assumption can make you spend a fortune. 

Source

So, instead of relying on assumptions, forecast your business's potential growth. 

You choose a SaaS tool to scale up and add licenses as your business grows. 

Pro-tip: Always purchase a SaaS tool depending upon your business requirement, not because your competitor is using those tools. Start with just one tool and slowly scale up as your business grows.

1. Eliminate SaaS subscriptions that don't serve your needs

Beyond identifying redundancies, drop every subscription you don't require or no longer serves your business's purpose.

These may contain tools you thought were staples to your business and would revolutionize your business, but they went underutilized. 

When you assess your time on each SaaS application, you quickly identify apps you no longer use. 

Pro-tip: Eliminating unused subscriptions helps focus on ones that actually make a difference to your business. 

Importance of managing SaaS wastage

After understanding the best way to minimize SaaS wastage, let's look at why managing SaaS wastage is essential:

Increases gross margin

Regardless of the industry in which you're working, you always hope to make profits when you make investments in SaaS tools. Spending money mindfully brings a significant difference in how your business manages its overall budget.

While subscriptions to multiple applications may soon run out of hand, ensuring you end up spending far more than required. These errors seem small, but they add to a larger issue.

This affects your bottom line, making managing and tracking SaaS wastage essential.

Rectifying such oversights makes a difference in your bottom line and increases your gross margin. It even helps in curbing unnecessary expenses and makes your business profitable.

Prevents unnecessary spends

Did you know that a business spends an average of $2,623 per year per employee on SaaS subscription expenses? 

But out of these $2,623, a business might spend less if it monitors and keeps track of SaaS wastage.

When you know which tools you require, it significantly reduces the SaaS cost and brings everything under control.

Helps in compliance maintenance

Once you successfully track and manage all tools your business uses, it becomes easy to comply with different software license agreement rules. 

This ensures your business avoids hefty fines and legal troubles that result from non-compliance.

It's time to get started with monitoring SaaS wastage

Unseen SaaS spending eats away at your business’s budget, increasing costs even for the most modern and digital enterprise.

With more and more SaaS solutions entering the market, you might be tempted to go on the SaaS shopping spree, leading to wastage.

This wastage exceeds your budget and reduces your profits.

That's why it's important to properly plan and manage SaaS tools to reduce waste, identify tools you no longer require, and find tools that positively impact your bottom line. 

While spreadsheet software is there to help you, it's a challenging and cumbersome task. As a result, modern companies use SaaS management platforms that automatically discover the tools you're using and those you don’t require.

Fitting these wastage-reducing tactics in your hectic schedule is challenging, but it's necessary to ensure you reduce unnecessary spending. 

Author’s bio:

Priya Jain has been copywriting professionally for over eight years. She has attained an engineering degree and an MBA. She teaches math, spends her time running behind her toddler, and tries new recipes when she isn't writing. You can find her on LinkedIn.