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Keeping control of SaaS costs

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4 months ago

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Keeping control of SaaS costs

Software-as-a-service (SaaS) providers, like other public cloud services, offer easy purchasing options for their products. This convenience can lead to unmanageable subscriptions and unnecessary IT expenditure, resulting in decentralised IT.

Traditionally, the software asset management (SAM) team was responsible for ensuring correct software licences were in place across the organization. Their role was crucial in making informed decisions about purchasing volume licence agreements and preventing unauthorized software use.

According to Flexera, SAM responsibilities now include tracking SaaS usage, supporting security with data analysis, preparing for software contract renewals, and maintaining an accurate inventory of licensed software. Collaboration between IT asset management (ITAM) professionals and FinOps teams is recommended as SaaS and cloud usage surpass on-premise software.

Previously, SAM provided insight into software spending for IT departments. Auditing commercial packaged applications ensured compliance with licence terms and optimized the value of purchased licences. Ideally, software developers had access to approved tools and libraries.

Keeping count of cloud costs

The rise of public cloud services has revolutionized IT cost control, allowing IT engineering teams to build applications faster using cloud-based services and microservices. However, tracking costs in this complex environment can be challenging, especially when allocating costs to different departments and business initiatives.

Forrester’s survey revealed that only a minority of digital and IT professionals believe their organization’s software is well managed by SAM teams. Gartner analyst Linda Leong emphasized the importance of eliminating waste in cloud expenses and optimizing application performance to reduce costs.

Cloud costs are closely tied to infrastructure and platform usage, and uncontrolled SaaS expenses can quickly escalate without proper management. Password sharing, such as in the case of Netflix, can lead to unauthorized access and increased costs, highlighting the need for IT security and governance policies.

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Managing IT assets across the board

Forrester recommends developing an integrated IT asset management strategy to navigate the complex IT environment, including cloud and changing licence structures. The concept of FinOps, which focuses on optimizing software licences and SaaS investments, plays a crucial role in managing SaaS costs.

Collaboration between finance, IT procurement, and legal teams is essential in implementing FinOps practices. Gartner suggests aligning cloud budgets with business planning cycles and negotiating pricing with cloud providers based on forecasts. SaaS management is integral to software asset management, ensuring that IT departments provide necessary applications and tools for effective work.

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