Why do we need a strategy and process for enterprise SaaS Management? Because we live in a world of SaaS (Software-as-a-Service) and the availability of tools in every possible niche is causing proliferation among the enterprise IT landscapes. Unfortunately, too many software-as-a-service tools are overwhelming the procurement, and IT teams tasked with purchasing, onboarding, managing licensing, and securing the slew of SaaS solutions.
From the time SalesForce.com has emerged as a force to reckon with offering a cloud-based CRM software, it has been a tidal wave of SaaS everywhere. The fragmentation and the proliferation of solutions across the enterprise have led to chaos, confusion, and a need for a more streamlined approach to managing the SaaS solution portfolio and the lifecycle.
Enterprise SaaS Management is a critical capability for enterprises to ensure efficiency and effectiveness and reduce redundancy, replication, non-use, and abuse of the range of SaaS platforms. The need is clear and present as SaaS spending exceeds $100 billion and continues to witness double-digit growth.
Of course, this is not to diminish the value of software-as-a-service tools. On the contrary, the SaaS revolution has been an incredible boon for technology-enabling and digitalizing enterprise functions over the last decade.
- Software-as-a-Service is the killer app for the “Cloud.”
- SAAS software is typically easy to deploy and costs less than the previous era client-server solutions.
- SAAS solutions typically do not need manual updates from a central IT department.
- Considering SaaS software’s better ease of use and functional navigation, the onboarding and training needs are lower.
- A critical value prop of software-as-service is no long-term contracts and vendor lock-in.
- As a cloud-based solution, SAAS platforms are easily scalable.
- As most SAAS solutions are API-enabled, integration is relatively easy compared to the point-to-point integrations of the past.
Despite the strategic imperative to embrace SAASification of the enterprise software and the value they bring, there are also inherent risks and problems. The Enterprise SaaS Management teams are addressing the following challenges facing companies:
SaaS Management Challenges and Objectives:
- Get a grip on the SaaS application portfolio.
- Understand cost implications.
- Manage licenses, contracts, and renewals.
- Gain visibility into usage patterns.
- Manage costs and renegotiate if necessary.
- Ensure information security across a variety of platforms and ensure compliance.
- Manage users, including removing users who are no longer a part of the company or team or need the functionality to perform their jobs.
All of these are serious challenges are worthy goals for SaaS management teams.
SaaS Management Strategy and Framework:
Considering the expanding share of wallet of SAAS tools in the overall application landscape, it is vital to create a framework for managing the lifecycle of SaaS solutions.
Here is Transformation.Tech SaaS Management Framework. Please feel free to adapt and modify to your own needs.
SAAS Management Framework:
The following are the steps in the SAAS Management Framework.
- Discovery: The process of managing the SAAS software portfolio starts with uncovering the myriad of SaaS solutions across the enterprise.
- Inventory of SaaS Solutions: This step may seem easy, but the complexity is since individual departments, teams, and users purchase SaaS solutions without centralized IT procurement involvement. There are several instances where different individuals in separate departments purchased the same SaaS solution unbeknownst to each other.
- Cost Details of SaaS Tools: In theory, SAAS costs are easy to tabulate, but they are not that transparent in practice. Some SaaS software charges based on the number of users. Others are based on usage. And others offer core functionality at one cost and bells and whistles are priced separately. And there are price breakpoints that result in lower per-user costs after reaching specific thresholds. Yet some other tools offer an introductory price which escalates after some time.
- SaaS Users and Usage Data: A pre-requisite for efficient SAAS Management is SAAS solutions users and usage data. There may be some users who sign up but never use. And there may be some power users. In addition, there may be instances of users leveraging a fraction of the available features and functions of the SaaS solutions. Tabulating all the users and use data takes time and effort.
- Contractual Terms and Licensing: The SAAS terms of service, privacy policies, data policies are a veritable jungle. Most business users never bother to validate the terms and conditions and click the checkbox while signing up for subscriptions. This leaves behind a jumble of terms and conditions for usage, data ownership, privacy and security, licensing, and renewals. The SaaS management team needs to involve legal and compliance help in completing this essential step.
- Functional Mapping: One of the gravest mistakes is not understanding the functional coverage of SAAS solutions at their elemental level. A category tag is never enough to understand the exact footprint of any application. But mapping SAAS functionality is not the first step – actually, it is the last step in this process step.
- Business Capabilities and IT Capabilities Modeling: If your firm has a business architecture practice, a business capabilities map (and a companion IT capabilities map) may be in place. If so, that would be an excellent springboard. If your company does have an updated capabilities model, that should be your starting point. If not, you may purchase (and customize) or build a capability map from scratch. Compressing capabilities to at least 3 levels and optimally to level four will be essential for effective mapping.
- Capabilities to SaaS Solutions Mapping: Mapping SAAS solutions and their features/functionality to business and IT capabilities is a critical step in understanding the scope and extent of each SAAS tool and how they cover the business capabilities. For example, suppose your firm has a full decomposition of CRM business capabilities and assuming your SaaS portfolio includes SalesForce, PipeDrive, Gong, and other tools. In that case, you can map the capability to the available features. This will provide you a heatmap of the application footprint across the capability spectrum. Then, you can use this to begin rationalizing your vast SaaS application portfolio.
- SAAS Usage and Cost Mapping: Now that you understand the functional footprint, the next step is to overlay users, usage, and cost metrics to the map. This provides you with the footprint, use, and cost lenses.
- SAAS Portfolio Management: SaaS Portfolio Management is the lifecycle management of software-as-a-service tools from procuring, onboarding, training, user and usage management, integrations, privacy and security, and renewals. This is the core of the SaaS Management Framework and a critical success factor. Procurement, IT, and Ops teams can squeeze a lot of value from the following process steps.
- Procurement and Licensing: Evaluating alternative SaaS solutions based on the needs of the enterprise and negotiating licensing terms is the first step in the SaaS journey. (For existing SaaS software, this step does not come into play except during renewals.)
- User Onboarding and Training: Most SaaS tools make it easy to onboard users, but still, this is a critical first step. Efficient onboarding and basic training can be the difference between successful usage and tool languishing and littering the application landscape.
- Initial Data Migration: Some tools require initial data uploads (ETL or ELT), often from an existing tool or a data warehouse. Most companies underestimate the initial data upload challenge as it involves mapping the data fields and uploading historical time series data, transactions, profiles, and the like.
- Initial Integrations and Interfaces: No application exists in a vacuum and is not an island. Most SaaS solutions come with an initial set of out-of-the-box integrations or tools like Zapier or APIs to tap into the system and integrate with other tools. Unfortunately, companies often underestimate the integrations burden. Knowing the extent and limits of the SaaS tool and pre-built adapters and integrations should be a critical factor in evaluating alternative solutions.
- User and Usage Analysis: Ongoing users and usage analysis are essential to efficiently managing a SaaS portfolio. Some users quit, others may change departments, and others may not use the solution after the initial enthusiasm. Managing the users and their usage is an ongoing effort, and quarter to quarter changes can be pretty eye-opening.
- Other Portfolio Management Tasks:
- Managing Renewals
- Price Renegotiation
- Information Security and Risk Management
- Performance, quality, reliability, availability, and scalability monitoring
- Comparing feature and function rollouts
- Ongoing comparison of available functionality across multiple SaaS tools to avoid redundancy and duplication
- Creating benchmarks and evaluating against those metrics
- A lightweight governance framework for SAAS portfolio management
- Ongoing market research and vendor scan to identify alternative solutions
- Opportunities for consolidating the vendor list
- Termination: An essential function of SAAS portfolio management is pruning the landscape, allowing successful solutions to flourish.
- The decision to Terminate a SAAS Relationship: The decision to terminate may be due to several reasons.
- The solution is no longer necessary.
- The features and functions of the solutions are already in another SAAS software with a bigger footprint and user base.
- Switching to another solution due to cost, features, ease of use, security, etc.
- Contract Termination: Negotiating the end of licensing and smooth offramp is essential not to risk a solution turn off without notice.
- User Offboarding: Depending on whether there is an alternative solution available, user offboarding and onboarding becomes a vital step.
- Data Migration: Downloading the data and migrating it to another solution is a critical success factor.
- Portfolio Rationalization: Reducing the number of applications via consolidation, retrenchment, and other strategies to reduce proliferation, cost, functionality fragmentation, and duplication.
- The decision to Terminate a SAAS Relationship: The decision to terminate may be due to several reasons.
- Change Management: Ongoing change management, strategic communications, and vendor research also constitute fundamental steps in the SaaS Management lifecycle.
Enterprise SaaS management and portfolio strategy is vital and requires assembling a solid cross-functional team from Procurement, IT, Operations, and Finance.
A strong team with lightweight but robust governance and an agile approach to portfolio management will help companies grasp the SaaS landscape and use it for better enterprise performance and optimal cost management.
In addition, there are SAAS tools that help in automated discovery and management of SaaS software.
We will address the SAAS Tools to manage SaaS tools in another post.