SaaS Spend Optimization - The Complete Guide
Tags: saas, optomization, payproglobal
Published: 2021-12-09 09:34:48

According to Gartner, an estimated 30% of the $102 billion spent on SaaS in 2020 is not even being utilized! One company researched this so-called “SaaS sprawl” and found that businesses have, on average, 600 SaaS subscriptions — much more than most of them actually end up using.

Managing how much money you’re spending on SaaS forms part of what’s referred to as Technology Value Optimization (TVO). This process aims to avoid waste, mitigate security threats, and cut costs. So what exactly is Spend optimization, why does it matter, and how can you use it for the benefit of your SaaS business?

## What is SaaS Spend Optimization?

Spend optimization is when businesses focus on reducing the number of SaaS apps and services they use. They do this to ensure the products they pay to use are the best fit for their organizations and encourage canceling any product subscriptions that are over-licensed or under-utilized to save money. The TVO helps with SaaS cost optimization,  offering businesses an opportunity to cut unnecessary expenses while retaining the value their most relevant SaaS products bring them.

![SaaS Spend Optimization](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/oy7evl45ow7w6m4vw5d8.png)

## 4 Reasons Why Optimizing Your SaaS Spend is Important

There are 4  key reasons why it’s worth focusing your attention on SaaS optimization and figuring out exactly what you’re spending on your SaaS usage.

###1. Improve Productivity Levels
By eliminating duplicate software, you can help your employees use the most appropriate tools when it’s relevant to them. All companies should identify the SaaS products that best suit their business needs. Monitoring adoption and encouraging collaboration on software across various teams are key in this process. Obviously, removing duplicate software improves efficiency and reduces costs.

###2. Set Priorities
To be truly successful at spend optimization, you need to understand the importance of each piece of software you subscribe to.  To do this, view reports and track spending and usage data regularly for the apps and services you subscribe to. This feedback can help you prioritize the benefits of the tools you use to buy and renew software subscriptions.

###3. Reduce Security Risks
With complete visibility into your SaaS licenses and spending, it should also become easier to track when employees are using apps they shouldn’t be using. You’ll be able to add and remove software users as required, significantly reducing security risks and unwanted user access, as well as reducing costs.

###4. Cut Costs
Ultimately, SaaS spend optimization is about reducing costs. With the right processes in place, you’ll be managing and controlling your software spend, identifying waste from unused software, and dealing with unused or underutilized SaaS apps. If done correctly, the optimization of accounts and licenses can lead to a significant reduction in your overall SaaS spending costs.

![SaaS Spend Optimization Cut Costs](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/hq3zkyzndh24p85x2rln.png)

## How To Optimize Your SaaS Spend

### Make Your SaaS Stack Visible
The first step in optimizing your SaaS spending is taking stock and creating an inventory of your expenditure. Visibility is key. 

The inventory should include the number of user licenses, contracts, and all expenses incurred. It’s important to know what your business is using and why. 

This first step will help you make informed decisions on optimizations in the future.

Read on to learn next [15 steps for your SaaS spend optimization](https://blog.payproglobal.com/saas-spend-optimization) in our [PayPro Global Blog](https://blog.payproglobal.com/).