Growth and Optimization
Track and Zap Shadow IT: An SAP Concur Podcast Conversation About SaaS Management with Zylo
Most people today are familiar with software-as-a-service (SaaS) applications such as Salesforce, HubSpot, Zoom, and others. But did you know that the average mid-size organization today is buying and using more than 300 SaaS applications, and at large enterprises, that number can be in the thousands?
Since 37% of SaaS applications are purchased over the internet by employees and paid for through expense reports or P-Cards, many organizations aren’t aware of all the SaaS applications they have and are unknowingly spending more than $65 million on stealth SaaS application purchases annually—with 40% of those purchases going to waste. That $26 million dollar loss doesn’t have to be your organization’s norm.
Jeanne Dion, Vice President of the Value Teams at SAP Concur, spoke with Ben Pippenger, Co-founder of Zylo, a recent SAP Concur Partner Innovation Award winner, about what organizations need to do to gain more visibility into all the SaaS applications they have, understand how those applications are being bought and used across their organization, and optimize the licensing, rationalization, and overall spend management of those applications.
You can listen to this episode on desktop at SAP Concur Conversations or on mobile via Apple | Amazon | Spotify | Listen Notes | Acast | Google or read the transcript.
Uncovering Hidden SaaS Purchases
Unless an organization has a formal procurement department that buys everything it needs, there is usually not a single, centralized owner of SaaS or software (even in IT departments, several different people may make purchases). That means hundreds of employees may buy SaaS applications for their organization and pay for those purchases through a variety of different spend channels. This can result in multiple purchases of the same SaaS applications and shadow IT—the purchasing of IT systems, devices, software, applications, and services without explicit IT department approval—as well as create security and compliance risks.
What’s more, the larger an organization gets, the bigger and more expensive the problem can be. “Our data shows that within the average large organization, 90 SaaS applications are purchased by more than one employee,” Pippenger says. Zylo further reports that on average, eight new SaaS applications enter an organization every month, and that around 55% of the apps have not been expensed as software purchases.
These hidden purchases can be especially problematic for publicly traded companies, which have specific signature authority requirements, typically based on the type of purchase, since software is such a big expense item. For these companies, SaaS applications are not just an IT or procurement team problem—they can become a significant conversation for finance departments during audits, and when doing budgeting and forecasting.
The Smarter Approach to SaaS Management
Fortunately, there is a better way to handle SaaS management. Zylo helps organizations find and gather up all their SaaS applications by running discovery against 20,000 applications. Once all the organization’s SaaS applications are identified, it can then ask questions such as:
- What does each application do? What are its capabilities and functions?
- Who bought it? Why did they buy it? What department is responsible for it?
- How many licenses of this application do we have? How many people in our organization are using this application?
- How much are we spending on it? When does this application renew, and can we negotiate a better price?
From there, the organization can streamline and optimize its SaaS licenses, spend, and renewals; reduce security and compliance risks; and better manage its SaaS applications. The Zylo platform also helps organizations create a catalog of all the SaaS applications that are approved and available to employees. In other words, employees still have the freedom to buy SaaS applications for their organization. The organization just has more control over the process.