The IT leader’s mega-guide to SaaS savings

Reducing high SaaS costs is becoming a priority for many organizations, and according to BetterCloud’s 2025 State of SaaS report, 21% have already cut SaaS spending from the previous year. To reduce your SaaS bill, understanding what drives up SaaS costs is key, and so are strategies for finding SaaS savings. SaaS asset management software that eliminates poor SaaS visibility can be a big boost to your cost saving efforts.

At the same time, IT needs to balance SaaS budget needs with employee opinions. Some have strong views on the tools they use. According to Dell Technology’s research in 2020, 80% of Gen Z aspire to work with cutting-edge technology and a whopping 91% say technology in use influences job choice among similar employment offers.

With that, let’s explore:

• Causes of your expensive SaaS budget overruns
• What you and your IT team can do to reduce high SaaS costs
• Important software for efficiently managing your SaaS apps, users, user experience, files, vendors, contracts, licenses, and dollars.

6 reasons why your SaaS costs so high

This is probably a question your executive management is asking right now. And the truth is complex. What is driving your SaaS expenses sky high is multi-faceted, with lots of underlying reasons.

1. Shadow IT and unauthorized SaaS buying

The great thing about SaaS is that it empowers employees to find and use the tools they need to productively do their jobs.

The downside, though? Shadow IT is risky. It’s all too easy for employees to add another redundant app, use case, or account. All it takes is a credit card and some employee added your organization’s third calendaring app or project management tool. In some cases, they’ve created a new account for an app that’s already used somewhere else in the organization.

2. Unused or abandoned apps

Employees can come and go, but the tools they buy can stick around forgotten and forever.

3. Idle SaaS licenses

Employees might still work at your company, but they never touch the licenses assigned to them. Their preferences contribute more to this problem than you think.

4.  Unintended auto-renewals

The SaaS sprawl brings a sprawl of contracts. Buried in them is a maze of different terms and conditions, key renewal dates, or cancellation dates. Some SaaS apps might require 30 days prior to automatic renewals, some 60 days.

Keeping track of it all requires superhuman abilities and when there’s an inadvertent missed cancellation date? The accidental renewal. SaaS accounts renew automatically and you’re contractually stuck paying for another contract term.

5. Overprovisioning apps

When you’re not sure of license usage, falling for vendor upsells and assuming everyone needs a higher license tier is the safe and fast default. For reducing high SaaS costs, cut this kind of needless spending.

Let’s take a common example: Zoom.

It’s not enough to know who uses Zoom. Most everyone does. To make good buying decisions, it’s important to know how much a department and user uses their licenses for each type of Zoom product like Zoom Rooms, Zoom Webinars, or Zoom Meetings.

6. Inaccurate planning leads to higher-than-necessary license tiers

Without the right reporting, it is impossible to accurately forecast and plan software budgets for the whole organization, much less for a department or employee.

Without the total understanding of license usage, planning is like a shot in the dark. Not knowing license use at a granular level like vendor and product, smart budgeting decisions by employee or department are not achievable.

Reporting limitations also make it difficult to accurately predict software costs.

The many, many annual transactions tend to show up in accounting reports as expenses within the months and years that they were made. This is called cash-basis accounting and reporting. But to accurately view costs, create budgets, and properly forecast software spend – particularly over multi-year contracts – IT, along with their counterparts in accounting, needs accrual-based reporting.

Of course, cash basis is common for smaller businesses. But regardless of an organization’s size, the accrual approach enables organizations to accurately understand the true software spending picture.

By examining each of these, nearly any IT team in any organization is certain to uncover some large SaaS savings.

Reducing high costs starts with eliminating poor SaaS visibility

Underlying all these issues is one single problem: you can’t manage what you can’t see. Organizations need data from finance and accounting combined with single sign-on data to truly view the whole picture.

Be cautioned about manual processes. Digging into data will be time-consuming, capturing your SaaS at a single point in time. If that’s your only option, spend the time and don’t delay. Eliminating poor SaaS visibility any way possible is an important and necessary task.

On the other hand, continuous, automated discovery provides complete, real-time spending visibility into your SaaS environment. Like any other problem to solve, the right tool for the right job makes it easier to manage as well as predict or budget software costs.

The bottom line, though: without great visibility of all your SaaS apps, it’ll be difficult to identify SaaS savings and lower your SaaS costs.

14 Strategies for cutting SaaS costs

Regardless of whether you use some kind of SaaS asset management software now or not, here are some strategies for saving on the SaaS budget.

1. Audit your SaaS Stack

Together with finance, IT can manually review employee expense reports or credit card statements. To a limited degree, if your company integrates an app with a single sign-on vendor, you can manually review logins to uncover usage patterns and find SaaS savings.

Make sure you uncover all of them. Describe each SaaS app by app owner in the business, the department, costs, contract renewal dates, core functionality it provides, and how often it’s used.

Alternatively, you can use some kind of SaaS asset management software like an all-in-one SaaS management platform. This tool automates discovery and continuously monitors for Shadow IT, often identifying new SaaS apps as soon as a user authenticates using your domain’s email.

2. Track SaaS app key contract dates with automated alerting

Set up 30/60/90-day alerts and never miss another cancellation or renewal again. This way, you have plenty of time to re-negotiate contracts with vendors, consolidate accounts, migrate data, or integrate a new app.

3. Analyze usage data

Use data, metrics, and dashboards to identify trends in SaaS app and usage patterns. Some tools show recommendations better than others, though.

4. Find the easy wins that can significantly lower SaaS costs

Allocate, eliminate, or consolidate apps to optimize usage and savings on SaaS. According to proprietary BetterCloud data, 53% of an organization’s licenses are unused or underused, going without a login for one year. Look for:

• Unused apps from any user with no logins for 30/60/90 days
• Unused apps from individual employees available for reallocation with no logins for 30/60/90 days
• Underutilized apps where users don’t meet required usage threshold

5. Consolidate redundant accounts of the same app into a single account

When multiple employees or departments create accounts for the same app, no single account qualifies for negotiated deals and volume pricing. In addition, your enterprise misses out on higher volume license tiers that often bring preferred features, functionality, and support. 

With new visibility that SaaS asset management software brings, you can consolidate multiple accounts, enjoy some SaaS savings, and likely greater functionality.

6. Consolidate redundant apps that serve the same use case into a single app

Solving the problem of overlapping apps – with an organization-wide standard app – lowers costs like consolidating multiple accounts does. Standardization often comes with volume pricing, and additional benefits associated with higher license tiers. 

You get new management efficiencies, too. IT, procurement, and accounting teams are no longer burdened with supporting so many vendors, thereby lowering organizational costs.

7. Optimize licenses and tiers

Reallocate licenses from inactive users to an active user, as well as elevate or reduce license tiers as usage needs dictate. The easiest way to get some SaaS savings is to stop paying for functionality you never use.

8. Negotiate with vendors for better pricing

Use usage, competitor pricing and employee sentiment to negotiate better SaaS vendor contracts including pricing tier, and terms and conditions. Don’t be shy about asking for discounts for longer contract commitments, and the ability to downgrade plans in the event of large changes.

9. Designate apps as IT-sanctioned based on employee sentiment scores

Creating a corporate-wide SaaS app standard can be difficult, as IT is stuck negotiating with various business functions on choosing the best tool for everyone. Instead of long meeting hours, IT can administer fast 5-minute surveys to employees to understand how much employees like a SaaS app they use.

Failing to consider employees in the app standardization decisions can send the wrong message. First, it can limit the recruiting pool because candidates often choose employers because they can use a certain SaaS tool. Second, not using a key tool can cause employees to leave.

In the event of multiple apps with the same purpose, IT can easily standardize on an IT-sanctioned tool that employees give the highest Net Promoter Score and like best.

10. Balance the SaaS budget and employee experience needs

Efficiently arriving at the tricky balance of organization and business function budget needs with employee experience requirements isn’t possible without the 360-degree view. More than a “one and done” exercise, it should be performed regularly and include:

• App usage
• Pricing
• Contract information
• Employee SaaS app sentiment (e.g., reviews and Net Promoter Scores)

11. Switch to alternative or competing tool

Research competitive offerings, including free open source and down market software options that meet requirements. Don’t forget to consider newer native-AI tools that may lead to lower SaaS costs and better SaaS savings. For example, instead of paying for expensive Marketo and Salesforce licenses, your company can switch to Hubspot for both apps and save on SaaS.

12. Implement SaaS governance

This involves how an organization manages and controls SaaS, and establishes a framework to ensure apps align with business, security, and compliance requirements. This generally includes dedicating all purchasing decisions to IT and finance, as well as creating and using a SaaS purchase approval workflow. Of course, SaaS governance also outlines how often IT monitors license usage per user and department.

13. Train employees on SaaS purchasing policies

Corporate policies should mandate IT involvement in new SaaS app acquisition. Make sure employees know corporate policies regarding SaaS purchasing.

14. Use some kind of SaaS asset management software

Implement an automated tool to help with managing and optimizing SaaS spending. Companies have a choice of tools that can lead to saving and lower SaaS costs, but holistic management of spend – that results in real cost reduction – requires more than just tracking licenses.

For the greatest SaaS savings and productivity gains, IT needs a tool capable of managing and automating all apps, users, files, and dollars. The best tools that provide SaaS asset management functionality also include vendor management, contract management, user lifecycle management, SaaS file security and easy, no-code automation capabilities.

To reduce high SaaS costs and find SaaS savings, IT need SaaS management

Admittedly, SaaS management is a broad term that also includes SaaS asset management.

It encompasses all SaaS processes for efficient user, app, contracts, license, vendor, files, and budget tracking and management – according to business goals. This includes:

• Spending
• Budgeting
• User lifecycle needs
• File sharing security
• Audit logs for compliance
• App access according to least privilege access
• IT management processes

To manage the SaaS environment, organizations of all sizes take advantage of SaaS Management Platforms, or SMPs for short. It’s a big category with lots of tools, but the best ones help IT by eliminating poor SaaS visibility, as well as by managing and automating the entire SaaS user lifecycle. This, of course, includes SaaS asset management.

Comprehensive SaaS system of record

Just like your single sign-on tool is crucial for running IT, so is a type of SaaS asset management software that provides all SaaS spend management functions important to eradicating poor SaaS visibility and controlling runaway costs. To truly find SaaS savings and maintain lower SaaS costs, this software provides the visibility in a SaaS system of record that every organization needs.

As a single source of truth for all your organization’s software resources, an all-in-one SaaS management platform delivers both SaaS savings and operational efficiencies. Within a single pane of glass, you view your organization’s entire SaaS catalog of all apps currently or formerly available to users.

Ability to capture employees’ opinions about the apps they use

Employee sentiment removes the mystery and debate around which apps to make the standard. 

Armed with both usage and employee sentiment information, organizations take quicker action on SaaS app consolidation – saving time and money.

Get started with finding SaaS savings today by downloading the complete guide. To learn more about how all-in-one SaaS management BetterCloud, the only tool available to help IT manage the entire SaaS user lifecycle, including spending and budgets, request a demo.

EDITOR’S NOTE: THIS IS AN UPDATE FROM APRIL 2024