The COVID-19 pandemic prompted years of digital transformation in just a few months. But the breakneck pace of change isn’t going to stop now that vaccination rates are up and workspaces have reopened.
Businesses that continue to experiment, innovate, and adopt leading-edge technology solutions will benefit from first-mover advantage, partnerships with the biggest companies and greater market share. The widespread adoption of Software as a service (SaaS) applications is a significant contributor to accelerated transformation. From sales automation tools to lead handling and prospecting applications, these solutions can improve employee productivity, business agility, and customer satisfaction.
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But too often business leaders simply drift through digital transformation and fail to take a strategic, holistic approach to managing their tools and empowering employees — which can pose security risks and cost overruns. By leveraging a SaaS Management strategy, businesses can take charge of digital transformation to gain greater cost and operational efficiencies.
The growing pains of SaaS digital transformation
In the case of SaaS solutions, experimentation and adoption are often driven from the bottom up. Employees and individual business units are the largest sources of SaaS acquisition, ahead of IT and procurement. While trial-and-error is essential to discover what works best for a given organization and its workforce, experimentation without safeguards also carries risks.
More SaaS solutions are available on the market every day and they’re easy to access (all you need is a name and a credit card). In 2014, there were fewer than 1,000 marketing technology solutions. But in 2020 there were over 8,000, with about 1,300 falling in the sales category.
With employees and departments continually experimenting with solutions in the expanding software category, an organization’s application inventory growth can grow unwieldy. For example, most executives estimate their organization has between 200-300 SaaS applications, but the average company has two to three times that amount. It’s estimated that every 30 days, 10 new applications enter a business’s technology environment.
Most organizations lack a comprehensive method to track and manage their SaaS purchases, often manually cobbling together information from various sources. This lack of oversight means many SaaS solutions exist unbeknownst to IT, posing several consequences for organizations:
- Intra-organizational friction: When organizations have multiple applications that fulfill the same function it can actually hinder employee productivity and make collaboration more difficult, requiring employees to duplicate work across multiple tools.
- Security and compliance: Unknown SaaS applications aren’t going through proper security and compliance vetting, which could lead to a cybersecurity incident or a hefty non-compliance fine.
- Wasted spend: The likelihood of surprise automatic renewals has increased by 70%, with the average company now undergoing three SaaS renewals per business day. Given that many SaaS applications run on a subscription model, companies often accidentally auto-renew applications or license subscriptions that don’t provide an optimal return on investment (ROI).
While it may seem like the answer is to restrict employee access to SaaS purchasing, it’s not a realistic strategy. Not only is it difficult to restrict employee access to applications while using a public network, it’s also bad for business. McKinsey & Company found that during the initial months of the pandemic, organizations that significantly experimented and invested in new digital technologies were twice as likely to report outsize revenue growth compared to tech-laggards.
Rather than stopping employee SaaS experimentation — and slowing down digital transformation — business leaders should consider adopting a SaaS Management strategy. A comprehensive SaaS strategy, along with the right technology, can enable freedom with a framework, helping to capture the benefits SaaS has to offer while circumventing its growing pains.
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How a SaaS Management strategy helps you lead the transformation
By strategically managing your SaaS application inventory and growth, you can drive transformation in your department and organization. A successful SaaS Management strategy takes ongoing commitment, but the cost savings and improved operational efficiency will be well worth it in the end. Here are a few tips to help you develop your SaaS Management strategy:
- Discover all applications: A SaaS strategy can only be successful if you have a complete picture of your organization’s SaaS inventory. While manual discovery is possible, it’s burdensome, highly inaccurate, and doesn’t provide real-time insights.
Instead, you can invest in a SaaS Management or SaaS discovery tool that helps track SaaS purchases and as they enter your technology environment. With insight into visibility, you can determine what new SaaS categories employees are purchasing to augment their roles and if any of these solutions perform redundant functions. Real-time insight also ensures IT can vett new applications for security and compliance.
- Plan investment: Your SaaS Management or discovery tool can also provide visibility into application function and usage. With these insights, you can drive strategic digital transformation, investing in the applications your employees need and eliminating those they don’t.
With insight into unused features or licenses, you can strategize vendor negotiations, plan renewals, and identify rightsizing opportunities. You can also forecast total application spending to help estimate what SaaS costs your department or organization year-over-year.
- Determine goals and measure progress: Be intentional about the benefits you want from SaaS applications to ensure they contribute to business goals. For each application type, create goals and measure ongoing progress.
For example, your goal for a customer relationship management (CRM) tool may be to shorten the sales cycle. As you test applications, measure the total sales cycle length. This dedicated measurement will help you identify which solution delivers the maximum ROI.
- Encourage and educate employees: Accelerate digital transformation initiatives by encouraging employees to use the SaaS solutions you’ve invested in. It’s helpful to create an onboarding plan for new solutions and share user tips and tricks.
Additionally, offering a centralized SaaS portal or inventory list can help employees find solutions the organization already has, rather than spending time and budget finding new tools.
Lead the SaaS charge
Digital transformation will only accelerate as businesses experiment with and embrace cutting-edge SaaS solutions that augment employee workflows and responsibilities. Considering the rapid pace and immense scale this change is occurring at, manual, ad-hoc SaaS Management won’t cut it anymore. Having an organized, data-driven strategy that connects technology goals to business goals will increasingly separate leaders from the laggards.
Establishing a SaaS Management strategy can help your business increase collaboration, application utilization, and innovation. When used in conjunction with a SaaS Management or optimization tool, you can unlock SaaS’s full value while also reducing risk, unnecessary spending, and intra-organizational friction.
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