How to Track SaaS Subscriptions Effectively

Did you know businesses waste nearly 30% of their SaaS spend on unused or redundant tools? With SaaS now making up 77% of IT budgets, this inefficiency can cost companies millions each year.

Here’s how you can cut SaaS costs by 20-30% and improve security with better tracking:

• Audit your tools: Most companies underestimate their SaaS usage - think you have 100 apps? It could be 275 or more.
• Assign ownership: Clearly define roles (IT, App, and Business Owners) to avoid "orphaned" subscriptions.
• Use tracking software: Spreadsheets are error-prone; dedicated tools save time, reduce mistakes, and provide real-time insights.
• Monitor renewals: Follow a 90-60-30 day framework to avoid surprise charges and negotiate better terms.
• Secure access: Implement multi-factor authentication, role-based controls, and regular license audits to minimize risks.
• Optimize costs: Eliminate unused licenses, consolidate subscriptions, and negotiate discounts.

Taking Stock of Your SaaS Tools

Building a Comprehensive Tool Inventory

The first step in managing your SaaS tools effectively is knowing exactly what you're working with. It’s common for companies to underestimate their SaaS usage - many believe they’re using around 100 apps, only to find the real number exceeds 275. This disconnect can lead to an average of $21 million in wasted spending each year.

"I once believed our app count was 100; with a SaaS management tool, we now track over 600." – Samantha Griffin, former Senior Software Asset Manager at Genesys

Here’s how to get started:

• Conduct a detailed audit: Dive into financial records and credit card statements to uncover recurring SaaS charges.
• Use automated discovery tools: These tools can help you detect shadow IT and subscriptions flying under the radar, which not only inflate costs but can also pose security risks.
• Integrate key systems: Connect platforms like Single Sign-On (SSO), finance, and IT systems to create a unified view of SaaS usage and spending across the organization.

Once your inventory is complete, assign ownership to each tool. This step ensures accountability and prevents tools from being overlooked or mismanaged.

Defining Clear Tool Ownership

To manage SaaS tools effectively, clarity around ownership is essential. Research indicates that organizations with decentralized ownership models tend to handle their SaaS tools more efficiently.

A solid ownership structure includes three key roles:

Assigning all three roles to each application ensures that no tool is left without oversight. This approach also prevents "orphaned" subscriptions - those that continue running without anyone actively managing them.

Categorizing Tools by Business Function

With an inventory in place and ownership assigned, the next step is to organize tools by their purpose. Many companies discover they’re paying for multiple apps that serve the same function, leading to unnecessary costs and fragmented data.

Group your tools based on:

• Primary use case: Examples include collaboration, finance, or HR.
• Team ownership: Assign tools to the teams that primarily use them.
• Cost tier: Organize by pricing levels to track expenses more easily.
• Security needs: Ensure tools meet the right security standards for their use.

For example, if developers primarily use a project management app, categorize it under Development rather than Operations. This alignment helps streamline tracking and avoid duplication.

Keeping this structure updated is crucial, as companies add an average of six new apps every month. Regular reviews of your inventory will help you spot redundant tools, track spending by department, and optimize license usage. Over time, this approach sharpens your ability to manage costs and plan for future software investments effectively.

SaaS Renewal Management: Everything You Need To Know

Selecting SaaS Tracking Software

After confirming your SaaS inventory, the next step is choosing the right tracking software to manage it effectively.

Spreadsheets vs. Software: What Works Better

In just 3 to 6 years, young companies can see their SaaS app usage grow from 29 to 103 apps. While spreadsheets might seem like a budget-friendly solution initially, they often come with hidden costs and inefficiencies that can bog down your operations.

"My team no longer needs to answer questions about the contracted scope of SaaS constantly. The stakeholders now have direct access to the details themselves." - Head of legal and procurement in the tech industry

Here’s a side-by-side comparison of spreadsheets and dedicated SaaS tracking software:

Research shows that organizations using SaaS tracking software can save 5% to 10% of their total SaaS spend by optimizing contracts and usage. This is particularly important, as 43% of organizations have reported significant financial losses due to contract-related issues in the past two years.

These insights make it clear why dedicated software is a better choice. Now, let’s explore the features you should look for in a tracking solution.

Must-Have Tracking Features

With the average organization now using 130 SaaS apps - a number that’s risen 18% from last year - it’s essential to choose software that can handle complex subscription management.

Key Features to Look For:

• License Management
  Keep track of active licenses and eliminate unused subscriptions to cut unnecessary costs.
• Cost Optimization Tools
  Advanced analytics can help you uncover savings by:
  • Identifying duplicate subscriptions
  • Analyzing usage patterns
  • Sending alerts for spending anomalies
• Security and Compliance
  A robust platform should include:
  • Role-based access controls
  • Data encryption
  • Compliance monitoring tools
  • Shadow IT detection to identify unauthorized app usage
• Integration Capabilities
  Ensure the software connects seamlessly with:
  • Finance systems
  • HR platforms
  • Identity management tools
  • Procurement systems

Poor SaaS management can lead to costly downtime, with businesses losing an average of $14,056 per minute - and for large enterprises, this figure can climb to $23,750. Choosing the right tracking software is not just about saving money; it’s about maintaining operational stability and maximizing the value of your SaaS investments.

Building a Single Source of Truth

Once you've chosen your tracking software and compiled a thorough inventory, the next step is creating a single source of truth. A centralized management system not only simplifies financial reporting but also minimizes data inconsistencies.

Setting Up Your Main Dashboard

A well-designed dashboard is crucial for effective SaaS tracking and smarter decision-making.

Key Elements for Your Dashboard:

• Application Directory
  Build a detailed directory that includes:
  • Active subscriptions with associated costs
  • Renewal dates and contract details
  • Usage statistics and deployment status
  • Ratings based on business importance
• Integration Setup
  Link your dashboard to systems like accounting tools, HR platforms, identity management solutions, and CRMs. This ensures all SaaS-related data is consolidated in one place.
• Automated Alerts
  Enable notifications for:
  • Upcoming subscription renewals
  • Unusual usage patterns
  • New purchases
  • License thresholds

This central hub becomes your go-to for tracking the metrics that matter most, helping you optimize costs and usage.

"Effective SaaS Management begins with a foundational step: creating a single source of truth. Organizations can achieve comprehensive visibility and insights into their software ecosystem by using a SaaS Management Platform (SMP) as their SaaS system of record." - Zylo

Tracking the Right Numbers

With your dashboard in place, shift focus to the metrics that directly influence your financial and operational performance:

Performance Goals to Hit:

• Maintain churn rates between 5% and 7%.
• Strive for at least 30% of revenue from subscription expansions.
• Aim for a 3:1 ratio of Customer Lifetime Value to Customer Acquisition Cost (LTV-to-CAC).

Tips for Data Accuracy:
To keep your dashboard reliable:

• Validate data during onboarding.
• Conduct regular audits.
• Integrate systems to reduce manual errors.

Managing Renewals and Costs

Keeping track of renewals and managing costs effectively is a must, especially with Gartner projecting end-user SaaS spending to reach $295.08 billion by 2025.

Creating a Renewal System

To avoid surprise charges and secure favorable contract terms, it’s essential to have a structured renewal process in place.

90-60-30 Day Framework

This tiered approach helps you stay ahead of renewals:

• 90 days out: Start analyzing usage and researching vendor options.
• 60 days out: Review your budget and evaluate your subscription’s value.
• 30 days out: Begin negotiating with vendors or initiate cancellation if needed.

"Always plan, and don't wait until the last moment. In this planning process, your team can set reminders and initiate discussions with your other team members well before the renewal date. Doing so gives you ample time to review your usage and decide if any changes to your subscription are needed."

• Sethu Meenakshisundaram, Co-Founder, Zluri

Best Practices for Contract Management

• Keep all contracts in a centralized digital repository.
• Document critical terms, including cancellation deadlines.
• Disable auto-renewal whenever possible.
• Maintain vendor contact details for easy communication during negotiations.

Once renewal dates are organized, shift focus to evaluating how your subscriptions are being used to uncover potential savings.

Optimize Subscription Plans

Unused or underutilized licenses are a major drain, accounting for about 30% of cloud expenses. Regular usage analysis can help you cut unnecessary costs.

Usage Analysis Framework

Strategies for Cost Optimization

• Consolidate Subscriptions: Combine multiple accounts under a single contract to secure better rates.
• Negotiate Discounts: Vendors often offer 20-30% off for annual commitments.
• Right-size Licenses: Remove unused seats as soon as they’re identified.

Leverage your usage data and market insights during negotiations. Vendors’ initial quotes are often inflated - up to 85% above fair market value - so negotiating is key to keeping costs in check.

A well-organized renewal process doesn’t just save money; it strengthens your overall SaaS management approach.

Keeping Subscriptions Secure

In 2022, Shields Health Care Group experienced a breach that exposed the records of 2 million patients due to inadequate security measures. This serves as a stark reminder of why strong SaaS security practices are non-negotiable.

Setting Up Access Controls

A Zero Trust approach - "never trust, always verify" - is key to modern security. This method ensures that every access request is verified, no matter its source.

Key Security Measures

Automated Access Management

Streamlining processes like onboarding, offboarding, and periodic access reviews through automation is essential. Monitoring for suspicious activity is equally important. Statistics reveal that 61% of breaches stem from compromised credentials, emphasizing the importance of automated controls. Additionally, removing inactive licenses can further tighten your security.

Finding and Removing Unused Licenses

Unused licenses present a hidden risk to your data. A study by Grip found that 16% of managed apps in 2023 were unused but still had access to sensitive information.

License Audit Framework

• Analyze Usage Regularly: Research shows that 73% of users never utilize their assigned licenses. Frequent audits are crucial for identifying these gaps.
• Automate Cleanup: Automatically flag and remove accounts inactive for over 30 days, duplicate licenses, and orphaned accounts. Document all changes for compliance.

"Each unused license and each duplicative tool aren't just wasted spend - they're an opportunity lost to streamline, secure, and optimize your SaaS landscape, too." - Grip

Steps for Effective License Management

• Perform monthly reviews to identify dormant accounts.
• Use automated workflows to deprovision inactive users.
• Eliminate duplicate applications to reduce exposure.
• Keep detailed records of license removals for compliance.
• Maintain an up-to-date inventory of active licenses.

With insider threats costing businesses an average of $11.45 million per incident, strict license management is about more than saving money. It’s a critical step in safeguarding your organization’s digital assets while improving efficiency and reducing unnecessary expenses.

Conclusion: Taking Control of SaaS Spending

On average, companies spend $49 million annually on SaaS, and global spending is expected to climb 19.2% to $299 billion by 2025. This makes it clear: keeping tabs on these expenses isn’t optional - it’s a necessity. The numbers paint a stark picture, especially when only 47% of SaaS licenses are actively used each month, and shadow IT accounts for 45% of all apps, creating security and compliance headaches.

"Visibility is essential for action. And when you can't take action, you can't control your software spend, the usage of unapproved applications, application redundancy, or legal and security risks." - Julie Day, Staff IT Asset Manager at BlackLine

Real-world examples show the power of better tracking. Here’s how some companies turned things around:

The subscription economy has grown a staggering 435% over the past decade, and Gartner warns that without centralized SaaS visibility, businesses by 2027 could overspend by at least 25% while exposing themselves to five times the cybersecurity risk.

"The better you are at SaaS management, the more you can direct your resources to things that matter the most to the customers and the company you work for." - Keith Sarbaugh, CIO at Zoetis

To stay ahead, organizations need to embrace automated tracking, conduct regular audits, and prioritize strategic optimization. These steps transform SaaS management from a cost center into a growth driver, allowing businesses to focus on what truly matters - delivering value to customers and fueling innovation.

FAQs

How can businesses effectively track and manage their SaaS subscriptions to avoid hidden costs?

To keep SaaS subscriptions in check, businesses should begin with regular audits to map out all active tools and services. Pair this with automated tracking tools to monitor usage, flag underused apps, and catch any duplicates. It's also smart to loop in employees - ask for their input on the tools they actually use to make sure everything aligns with the company’s needs.

Taking these steps can reveal unnecessary expenses, streamline spending, and give you tighter control over your SaaS budget, ensuring every tool earns its place in your workflow.

What are the main advantages of using SaaS tracking software instead of spreadsheets?

Using specialized SaaS tracking software brings clear advantages compared to relying on traditional spreadsheets:

• Up-to-Date Visibility: With centralized dashboards, these tools keep you informed about your software subscriptions in real time - everything from usage stats to renewal dates - eliminating the need for constant manual updates.
• Streamlined Automation: Tasks like tracking renewals, managing licenses, and spotting unused subscriptions become automated, cutting down on errors and freeing up your time for more important work.
• Smarter Spending: By highlighting underused or overlapping subscriptions, these platforms help you trim unnecessary expenses and make better financial decisions.

Unlike spreadsheets, SaaS tracking software grows with your business, keeping things organized and efficient as your subscription needs expand.

What is the 90-60-30 day framework, and how does it help manage SaaS subscription renewals?

The 90-60-30 day framework is a practical way to handle SaaS subscription renewals by dividing the process into three clear stages:

• 90 days before renewal: Begin by analyzing how well the subscription has performed and what value it has brought to your business.
• 60 days before renewal: Dive into usage data, pinpoint any issues, and collaborate with your team to discuss possible changes or improvements.
• 30 days before renewal: Make your final decision - whether to renew, renegotiate terms, or cancel altogether.

This structured timeline gives you the breathing room to evaluate the subscription's return on investment, tackle any concerns, and avoid scrambling at the last minute. By staying ahead of the game, you can better manage your budget, cut unnecessary expenses, and ensure your subscriptions align with your business goals.

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• SaaS Cost Management vs Manual Tracking: Key Differences