Modern businesses today increasingly rely on a wide range of software, cloud or licensing-based solutions to help manage business activities. These new technologies can improve operational efficiency, help grow your business and deliver better customer experiences. As an added bonus, most of these technologies are offered as a software-as-a-service (SaaS) which allows businesses to pay as you go and makes the latest and greatest technologies easily accessible from a spend management perspective.
According to Blissfully’s 2020 Annual SaaS trends, overall spend per company on SaaS products is up 50%, and the number of unique apps in usage per company (1-100 employees) is up about 30% year over year with the average total SaaS spend sitting at over $260k per year.
As more and more employees subscribe to various software products, it’s easy for a business to lose sight of who has signed up for what. Particularly when subscriptions offer free trials which automatically start charging at the end of the free period. This unfortunately can quickly become a nightmare for finance teams to get on top of!
It’s imperative to embed some SaaS management best practices as soon as possible to ensure you don’t let your subscriptions take control of your cashflow!
Here’s Cape’s top tips on how to manage your SaaS subscriptions before they sneak up and start eroding your bottom line:
1. Create a master list or register of all your subscriptions
- Start early, otherwise this list can quickly get out of control. I was fortunate to be able to be able to use the Cape SaaS management functionality to quickly and efficiently get across to our own subscription stack from day 1. I am now working closely with the Cape Dev team to ensure all finance teams will have access to what Cape’s been using internally to manage their own cashflow through better SaaS subscription management.
- Capture key information such as:
- SaaS App/Product name
- What the subscription is used for in the business
- Who are the users (individuals names not teams)
- What is the current cost per month
- How is the service priced - ie: per user/per month or by price tier (watch out for tiers that have caps on user numbers or service levels. Make note of when your business growth will tip into the next price tier and what the future cost will be)
- Payment dates (monthly, annual renewal dates)
- Make note of any discounts currently applied to your cost and when that will end
- Free trials are often used to lure subscribers in, then switch to monthly fees without notice – be sure to set reminders to properly assess if the subscription is the right fit for your business and whether the costs can be justified compared to the benefit of the service (ROI analysis).
- Make the SaaS register centrally accessible – share it with staff that are authorised to purchase subscriptions to make sure it stays up to date as new subscriptions are purchased or old ones are cancelled. (Your finance team will love you for this!)
2. Establish a SaaS Management Policy
- Review SaaS subscription usage regularly. Given SaaS wastage has doubled year on year this is essential (according to Blissfully).
- Duplicated Subscriptions - Track all users and license owners to prevent duplicate and similar subscription licenses. Cancel or consolidate where possible.
- Orphaned subscriptions - Identify un-used or rarely used accounts, monitoring licenses through that central master list helps to identify and eliminate wasteful and under-utilised SaaS services, which in turn could potentially save your business thousands over time.
- Incorporate SaaS management into the staff onboarding and offboarding processes. This will not only help track when subscription costs are going to increase with increased users, but also when subscriptions should be cancelled. Many subscriptions become orphaned after the employee who subscribed has left, so make sure the payments stop too!
3. Ask the right questions and do your research
- Before signing up for a service, compare the pricing tiers and make sure the level of service will satisfy your requirements. Some services have a big price jump from one tier to the next, particularly when going from a “starter” to a “Pro/business” tier.
- Compare the cost of paying monthly vs annually for a service. For some SaaS pricing models, a pay as you go plan will cost almost twice as much compared to the same plan if paid annually. Decide if the cost savings of an annual payment outweighs the benefits of flexibility through monthly payments.
- Pay attention to the currency the SaaS fee is in. Many subscriptions while quoted in AUD, will actually be charged in USD. This could lead to additional FX fees charged by your bank and increase the overall cost.
- Consider security of the service and what information is stored/captured. Is multi-factor or single-sign-on offered? The more SaaS subscriptions used across a business the higher the potential risk of compromised user data and cyber-attacks.
- Ensure you don’t pay the listed shelf price of SaaS products by making the most of free trials and discounts. Thankfully Cape’s been working hard to provide all business owners with access to our rewards hub for free which connect you to a range of exclusive special offerings from our preferred partners. If there’s specific SaaS products that you’re looking for that aren’t listed, be sure to get in touch with our team as we’re currently onboarding new partners to the hub every week.
There’s no denying that the adoption of SaaS offerings across end-to-end business processes will continue to grow as new technologies come to market. At Cape, we’re all about helping you save money, spend smarter and better manage your cashflow. We hope some of these tips will do just that!