Three Challenges Created by the Rise of SaaS

In the last two decades, software-as-a-service (SaaS) has overtaken on-premise software deployment, making it all but ubiquitous in business IT environments. IT industry analyst Gartner projects the SaaS software market will be worth more than $110 billion in 2020, a 16-percent year-over-year increase, underscoring the category’s explosive growth.

The popularity of SaaS in business can be attributed to a number of factors, including its low barrier to entry in terms of cost; its ease of accessibility and usability for the end-user; and its near-constant evolution fostered by best-of-breed competition.

However, there are several notable challenges to this increasing dependence on SaaS, including the growth of shadow IT; a lack of established best practices for governance and security; and its propensity to reduce visibility in overall spending.

One answer to the exploding growth of SaaS is the deployment of a SaaS management strategy that enables enterprise businesses to discover and define their IT environments and create actionable processes for software governance.

Challenge: Moving from SAM to SaaS

Businesses that have previously relied on software asset management (SAM) strategy may be challenged by the transition to SaaS-based tools .

SAM has been long established as a core business competency for legacy enterprises to avoid license audit inaccuracies, uncover potential cost savings, and increase utilization. But the now widespread ability to purchase and implement SaaS often extends beyond SAM capabilities. The growing use of SaaS has created a software ecosystem that’s less visible and more difficult to optimize relative to SAM.

The foundational first step towards SaaS management is the process of discovering and identifying all SaaS applications within the environment. Where software under a SAM program is typically a known quantity – it is purchased, installed, and provisioned by the IT team – SaaS applications are frequently purchased and deployed by business units themselves, or even individual employees.

Recent Zylo data shows that as many as one in three employees in the typical organization purchase SaaS applications via expense reimbursement. When as many as a third employees purchase SaaS, discovering its presence is paramount to overall security and governance, as any one of these purchased applications can expose the organization to risk.

Once discovered, a sound SaaS management program introduces each application to standardization and categorization of the software in a central system of record. Documenting all SaaS applications in this fashion creates the ability to evaluate the relative value provided by each application.

Lastly, whereas a SAM program tracks license provisioning to avoid the costly impact of an audit, SaaS management requires a different tack. With SaaS, you only pay to provision the licenses you need. The cost is more flexible than on-prem software because of this, but value is tied to effective utilization.

A key component of SaaS management is tracking utilization and deprovisioning users who do not effectively use licenses.

Zylo & BeyondID Partnership

As SaaS spending grows, wrangling financial accountability for SaaS transactions now represents the most immediate need for many businesses. Zylo data shows that the average enterprise business’ total investment in SaaS now represents spending of $10,000 or more per employee.

How has relatively affordable SaaS gotten so expensive? Cumulatively, unmanaged SaaS purchases and unplanned acquisition can lead to sizable impacts on the bottom line, including multiple fold increases to software budgets. Frequently, this cost is obscured by lack of clear attribution of ownership and undefined acquisition policies. And, as mentioned above, the value of SaaS tools becomes diminished when users don’t fully utilize the applications.

Once the current “known universe” of SaaS is identified using a discovery process, multiple avenues to proactively improve SaaS application value and cost containment are made possible, including:

  • Identification of wasted spend from unused, duplicate, or overlapping applications
  • Attributing application ownership to business units, teams, or employees
  • Proactively planning for upcoming renewals as contract renegotiation opportunities
  • Consolidation of widely used applications under enterprise license agreements
  • Benchmarking spending to enable more accurate forecasts and budgets

Challenge: Growth & Shadow IT

For any organization, rapid additions to employee headcount due to rapid growth or mergers and acquisition activity leads to the correlating rapid growth of shadow IT.

Gartner projects that shadow IT can account for 30 to 40 percent of all IT spending at large enterprise organizations. When viewed in the light of M&As or rapid acquisition of headcount (converting a large network of contractors into full-time employee status, for example), shadow IT creates security risks, cost containment challenges, and barriers to proper integration.

The average enterprise underestimates the number of applications present throughout its environment by up to three times. While a company may anticipate finding 200 to 300 applications, the actual inventory is more likely to be closer to 600 applications on average. In the case of M&As or rapid headcount growth, this high volume of shadow IT presents challenges, especially concerning security.

An effective SaaS management strategy enables a number of checks and balances against shadow IT, including :

  • The ability to create a continual discovery process Deploying a SaaS management platform hold major advantages over the “one and done” audits that are typically enacted in a SAM program. With a SaaS management platform in place, any new SaaS applications added to the tech stack are quickly identified and processed.
  • Improved security through visibility SaaS applications frequently contain customer, financial, and business data. A SaaS management strategy that focuses on identifying these vulnerabilities and prioritizing risk mitigation efforts can improve the organization’s overall security posture.
  • Data for forecasting for growth A key outcome from identifying SaaS applications, discovering actual cost, and tracking utilization is the ability to forecast for future software needs.

Today, the modern IT environment undoubtedly includes an increasing dependence of SaaS. While this newest form of business software carries benefits – and challenges – like all IT programs, adhering to best practices and governance can empower businesses to optimize their environments. These best practices are available through a SaaS management approach.

Zylo & BeyondID Partnership

Zylo discovers all SaaS applications to create a comprehensive SaaS Management platform. BeyondID helps businesses acquire, deploy and manage SaaS applications. Combining Zylo’s SaaS Management platform with BeyondID’s SaaS and cybersecurity service management expertise, businesses are able to accelerate SaaS acquisition and deployment, manage SaaS spend and usage, meet compliance requirements, and increase security and workforce productivity. This also includes managing the user lifecycle and access to each application, integrations and providing ongoing service administration and monitoring.

About Zylo

The largest independent enterprise SaaS management platform, Zylo transforms how businesses manage their SaaS application portfolios. By creating transparency around SaaS spend, license utilization, and user feedback, Zylo provides a centralized system of record that empowers business leaders to discover, manage, measure, and optimize their SaaS investments. Zylo was noted as a Rising Star in Forbes’ 2018 Cloud 100 list, the definitive list for private cloud companies, and was recognized as a Cool Vendor by Gartner.

For more information on Zylo, request a demo, visit or follow @getzylo.

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Arun Shrestha

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