Mismanaging SaaS Leads to Serious Costs for FinServ Companies

We’ve seen a massive surge in SaaS adoption over the past few years. More than 80% of businesses use at least one SaaS application in their operations, but most have more than 250. And in industries like banking, financial services, and insurance, SaaS adoption is projected to increase to more than $130 billion by 2027. The nature of SaaS apps makes them easy to implement, which is driving this rapid adoption. 

As SaaS becomes increasingly integral to business operations, key management challenges are revealed. Many organizations lack visibility into software use and spend, struggle with software administration and fail to follow proper offboarding protocols — all of which bring hidden risk and costs to financial services organizations. 

A closer look at hidden risk

Poor visibility and improper oversight of SaaS use and spending create financial waste and put an organization at risk. When companies do not have a comprehensive picture of the apps being used in their organization, it creates a number of challenges: 

1. The proliferation of duplicate or underutilized apps creates financial burdens. Duplicate tools with overlapping functionalities accumulate in the stack, creating technical debt and overcomplicating the tech environment and administration.

2. Redundancy wastes resources and creates inefficiencies within the organization, limiting productivity. Different teams may end up using various applications for similar tasks, leading to operational silos and fragmented workflows. This disorganization causes confusion among employees and hinders effective collaboration, ultimately impacting the organization’s overall productivity and ability to achieve strategic goals.

3. Companies with poor visibility into SaaS use may not even realize the applications implemented throughout the organization. Unknown and unmanaged SaaS apps and the identities using them can become serious security gaps. 

One of the biggest challenges with unchecked SaaS sprawl is improper offboarding. When employees depart from an organization, accounts must be deactivated to prevent unnecessary spending and reduce a company’s attack surface. Improper offboarding can lead to continued financial commitments for unused services, draining resources and diluting ROI. Unused licenses siphon funds that could be better allocated to other uses within the organization. 

Additionally, lingering accessibility to accounts may fail to comply with updated security protocols, exposing the organization to data breaches and potential regulatory penalties. These accounts can be targets for cybercriminals looking to access SaaS systems and their valuable data. They frequently employ techniques such as phishing or credential stuffing, where they leverage credentials stolen from other attacks to attempt to gain unauthorized access.

Effectively Combating SaaS Challenges

While the challenges with SaaS management may seem overwhelming, several best practices can help minimize unnecessary costs and associated risks. Some key strategies include developing clear policies and procedures, centralizing SaaS management, performing regular audits and reviews, cost optimization, and implementing automation.

Develop Clear Policies and Procedures

Companies should begin by developing clear policies and procedures and then implementing structured guidelines for managing SaaS apps. Tasks such as deactivating former employees’ accounts and maintaining secure access controls benefit from a structured, uniform approach. Clear policies can help delineate roles and responsibilities within the company, fostering accountability among team members. Having clear policies and procedures can not only improve operational efficiency, but also minimize oversight and potential errors that could compromise security and compliance.  

Centralize Your Approach to SaaS Management

Centralized SaaS Management, often simplified with a dedicated platform or software, can be a game changer for reducing cost and risk because it helps streamline operations and bolster security protocols. This approach requires visibility across all applications, enabling efficient usage tracking and effective subscription management. By centralizing the control of SaaS tools, companies can ensure consistent application of security measures across their digital landscape. With a broad view of all apps being used across teams, organizations can be sure they are using their software resources in a manner that is more organized, secure, and cost-effective. 

Perform Regular Audits and Reviews

Organizations should conduct regular audits and reviews of their SaaS environments to identify and address inactive accounts, eliminate redundant apps, and optimize the use of licenses. These proactive measures are important to maintaining operational efficiency and minimizing financial waste. They also ensure that each application adheres strictly to the organization’s security and compliance frameworks, significantly reducing the risk of costly data breaches and financial inefficiencies while safeguarding the organization’s assets and reputation.

Take Steps to Optimize Costs

Regular evaluations of the software portfolio can identify redundant applications and areas of inefficiency, which can be used to optimize costs and improve the value derived from SaaS investments. Eliminating redundant applications or applications with duplicate functionality can simplify the tech stack and prevent financial waste. Companies can maximize their SaaS utility by integrating these cost-optimization strategies while maintaining a lean and effective digital infrastructure. Organizations can also use the insights gleaned to negotiate better pricing structures by fostering strong relationships with SaaS providers, achieving improved service levels, and securing more favorable contract terms. These engagements enhance the quality and reliability of the services received and provide leverage in financial negotiations, which can significantly reduce overall costs.

Implement Automation

Using SaaS management platforms can help automate many of these activities. These platforms provide the visibility necessary to understand what SaaS products are in use and how they are used. Most importantly, they can automate critical tasks, such as policy enforcement, user provisioning and deprovisioning, and contract management, while providing detailed usage insights. Automation helps to streamline operations, making it easier for organizations to maintain control over their software assets and ensure adherence to established protocols.

The benefits of automation extend beyond operational efficiency. Automating security protocols using a SaaS management platform provides a fortified defense against unauthorized access and enhances the protection of sensitive data. This holistic approach secures data and aligns with compliance requirements, mitigating risks associated with data breaches and non-compliance penalties.

Conquering Hidden SaaS Costs

SaaS apps are becoming essential to business, but growing adoption requires companies to invest in creating and implementing best practices to ensure they maximize the benefits without being overcome by the inherent challenges. Effective SaaS management is essential for controlling costs, maintaining security, and maximizing operational efficiency. By addressing the hidden costs associated with unmanaged SaaS, organizations can mitigate risks, enhance productivity, and achieve better ROI from their SaaS investments, ensuring that every dollar spent contributes to the organization’s operational efficacy and strategic objectives.