Software-as-a-service (SaaS) subscriptions can sometimes be as sneaky as they are useful. Like a financial amoeba, they grow and accumulate in deadly silence—and eventually eat up your bottom line. With tempting free trial periods and freemium payment models, it’s easy to get caught in the SaaS machine (and its pricey habit of auto-renewing).
With so many products and features to choose from, and such a low barrier of entry, you might not realize just how much your subscription plans are costing you. Managing SaaS tools has become such a pressing matter that SaaS tools designed to manage SaaS tools have begun to proliferate.
For businesses that want to control their SaaS (instead of letting their SaaS control them), here are the top 3 best SaaS subscription management practices for growing your software stack on your own terms:
- Consolidate licenses and accounts
- Automate the procurement process
- Ask yourself the right questions
But first, let’s quickly establish what we mean by subscription management.
What is subscription management?
Subscription management is a business process that ensures companies get the most out of their SaaS and subscription products. It typically involves improving visibility into a company’s full subscription/SaaS stack, regularly analyzing how these tools are being used, and creating an organizational policy for acquiring, using, or eliminating subscription licenses.
Key subscription management best practices
Subscription management all starts with knowing exactly what tools you currently have in your repertoire and how they’re being used.
1. Keep track of all subscriptions from one place.
While SaaS subscription services typically require lower overhead than traditional software purchases, their costs stack up quickly when you turn a blind eye to how many licenses you really own. Many companies now have separate SaaS products for:
- Recurring billing and payment processing
- Revenue recognition
- Churn and cancellation management
- Customer experience & relationship management
- And many more
The best SaaS management software keeps all account and license-holder information updated and available in one place. Visibility in SaaS subscription management systems is the key to efficient spending and optimized workflow. Having all of your subscription information in one place helps you:
- Identify feature overlap and reduce unnecessary SaaS business spending
- Check for dual subscriptions across departments
- Reduce subscriptions on (or cancel) SaaS applications that are being underutilized
- View pertinent information about your software stack from a central location
2. Monitor subscription payments and renewals
Don’t stop your subscription tracking at licensing and functionality—make sure you’re also tracking when you pay for SaaS and how much. Tracking these metrics allows you to:
- Monitor how much you pay per month and how much you’ve paid to date for each subscription. That way, you can assess the value of your solution stack in real-time.
- Predict future spending to avoid surprise automatic renewals.
- Keep track of each payment to ensure you aren’t paying weekly what you thought you were paying per month.
3. Consolidate licenses and accounts
What matters more than data on your subscription products is what you do with that information. Once you have the valuable information centralized and at your disposal, you can start to eliminate all redundant or overpriced SaaS business products, tightening your spend and refining your software stack.
Your top priorities for license consolidation should be:
- Track all users and license owners to prevent over-licensing. As your company grows, personnel changes can result in unused licenses that auto-renew month after month. Make sure you don’t have any existing subscriptions for former employees.
- Move all administrative accounts to one primary account. Depending on the size of your company, you could be paying more for existing subscriptions purchased independently across multiple departments. By consolidating these accounts into one central log, you can save money by licensing company-wide software.
- Identify under-used accounts. Monitoring license holders allows you to identify and eliminate any SaaS that is being underutilized, so you can avoid overpaying vendors.
Strip down your software suite to only the most valuable products that fully support your core operations. From there, you can perform cost-benefit analyses of ancillary products to ensure you’re only paying for a SaaS subscription plan that boosts company performance.
This step is not only important when scrutinizing individual products but also when looking at your stack as a whole. It’s crucial that you consider each purchase before adding tools upon tools to your IT toolset. That way, you can avoid “tech debt” that accumulates the more you integrate various applications together.
4. Automate the procurement process
SaaS subscriptions are all too easy to sign up for. By automating the procurement planning and execution process, you can instantly approve or deny SaaS purchases.
The main benefit? Eliminating “Shadow IT.”
Shadow IT is when employees use SaaS (and other) products independently and then expense it to the company without the knowledge of the IT department or company administrators. As a company grows, so do instances of Shadow IT—unless, of course, they have a proper subscription management solution in place.
But why is nipping this phenomenon in the bud with automation so important?
Two words: security and compliance.
Shadow IT threatens both company-wide cybersecurity and regulatory compliance, making it easier for companies to inadvertently violate important regulations including but not limited to:
- Sarbane-Oxley Act (SOX)
- Health Insurance Portability and Accountability Act (HIPAA)
- General Data Protection Regulation (GDPR)
- Gramm-Leach-Bliley Act (GLBA)
How? As CEO of CoreView, Michael Morrison, explains: “...a majority of these regulations (if not all) touch on data flows and/or storage. When employees employ shadow IT, they are often storing data in unknown and unvetted locations. This lack of security often leads to compliance violations, data breaches, and ultimately, fines.”
That’s why you need a system in place that allows for automatic detection of new SaaS purchases.
However, reducing Shadow IT isn’t necessarily about chopping away at your SaaS subscriptions—it’s simply about shedding light on the ones being used by your employees. In fact, studies have shown that Shadow IT is simply a sign from your workforce that they need more from your software stack.
That’s why the ideal subscription management software will also allow for faster SaaS procurement and instant approvals, thereby improving productivity and employee morale.
Don’t be one of the many companies that fail to listen to their employees when they ask for more IT functionality. The key isn’t purchasing fewer subscriptions, it’s purchasing the right ones—and being in control of the process throughout.
5. Ask the right questions when managing your subscriptions
An effective subscription management solution is about discernment. With so many SaaS applications out there, it’s easy to get lost in the mix and forget what you were seeking in the first place. While managing your subscription stack and making new purchases, ask specific teams:
- What problem are we trying to solve?
- Do we have access to another product that solves our problem better?
- How many people in our organization use this product? How often?
- Are we paying for functionality or licenses we don’t use?
- Will this product integrate easily with our current software stack?
- Is there another pricing method or tiering structure that would be better for your company's usage (i.e., per use/per user/per month)?
If you don’t have an established protocol for vetting new SaaS purchases, make it your priority to do so. That way, your IT team is always approaching subscription management systems with confidence.
Let Ramp manage your subscriptions
Improperly managed SaaS subscriptions leads to a growth in Shadow IT, shakier security, and less satisfied employees. Worst of all, it can lead to unnecessary or duplicated spend.
Stop overpaying SaaS vendors and under-serving your team due to a lack of awareness of your software stack. While tracking these growing elements manually is nearly impossible, a robust SaaS management software offers the solutions you need to pull your head out of the subscription weeds and take control.
Ramp’s corporate charge card comes with an automated vendor management platform built-in. This consolidates your licenses and accounts into one centralized hub, allowing you to streamline SaaS subscription management. With it, you’ll be able to identify overspending and automate your procurement process. You’ll be able to ask the right questions and properly identify the best business decisions for your situation.
All this in addition to an automated expense management platform? Almost sounds too good to be true. See how you can elevate your business with Ramp today.
Check out our e-book for more strategies on controlling your subscription costs: