Since 2020, ‘software’ has rapidly evolved from something people used in the workplace to actually becoming the workplace itself.
But many companies are now considering a SaaS Spring clean – particularly in today’s turbulent economy where every penny counts.
Humans have a natural tendency to accumulate things over time, and SaaS is no exception – research shows that while younger companies typically start out with just a few dozen apps, it doesn’t take long for a growing company to end up with 100 or more SaaS solutions in place. This trend shows no signs of slowing down; by the end of 2023, global software spend is expected to reach nearly $600 billion.
So what’s really behind SaaS sprawl – and how can leaders address it?
Post-pandemic, SaaS became ‘retail therapy’
The pandemic forced nearly every business to fast-track digital transformation and find ways to decentralise operations overnight – there simply wasn’t the time to perform the usual diligent cost/benefit analysis before every decision, and a sense of urgency gripped senior leaders.
Meanwhile, over the past decade, a huge proliferation of single point solutions hit the market performing one function exclusively, rather than enabling a range of business processes. The prospect of convenient solutions to urgent problems proved too hard to resist for many leaders, and single point SaaS rapidly earned coveted space in the ever-expanding tech stack.
Software spend had already been on the rise pre-Covid, but from 2020 onwards it exploded. Short-term survival trumped strategy, resulting in bloated budgets and unmanageable portfolios – the dreaded SaaS sprawl.
Chronic overspending has consequences
SaaS sprawl hurts businesses in a number of ways. For one thing, there’s the tremendous waste of money to consider: according to Boston Consulting Group, most (70%) of today’s IT investment is failing to deliver the desired outcome. With companies of all sizes now positioning cost-cutting and efficiency at the heart of their overall strategy, the reality is that all that spend on SaaS software has undelivered, which has become a huge issue for company leaders.
Then there’s productivity – or more accurately, the lack of it. The UK’s productivity puzzle has confounded economists and pundits for over a decade, but the recession has made it a matter of immediate concern. If a company has multiple apps being used for the same basic process, there’s a strong chance employees are using them all in different ways, causing a lack of visibility or understanding of what others are working on. This impacts collaboration, along with striking a blow to employee experience.
Organisations are now using on average between 6-8 apps to run a single process such as invoicing or onboarding a new team member. Employees are spending a quarter of their time simply trying to find the information they need, which leads to frustration from switching so often between apps – this ‘toggle tax’ adds up to around 4 hours a week, and a shocking 9% of workers’ total time at work each year.
Being strategic is tough, but essential
Businesses without a strategic approach to SaaS can face serious problems down the line. ‘Strategic Portfolio Management’ – taking stock of every system, process and tool within an organisation, examining how they are working together to get things done, and making decisions around which of them stay or go depending on whether or not they actively support business objectives – is a challenging process.
It’s a lot like spring cleaning a cluttered house, but instead of chaotic piles of clothes, toys, magazines and dirty dishes, there are complex webs of apps and tools being used in disparate ways across departments, with shadow IT spend and usage data going largely under-the-radar. Tidying up this sort of mess can undoubtedly be a pain in the neck for the C-suite, but it is absolutely essential.
Slow down, take stock, streamline the stack.
Business leaders must turn to real-world evidence of how various tools are being used in order to identify which are providing genuine value – and which to jettison. Adoption and employee usage data is an invaluable resource for ensuring that software purchases are actually delivering ROI and should inform future IT spend.
What’s more, with the workforce facing ongoing pressure amid the cost-of-living crisis, employee experience and retaining talented staff is a major priority, and spending money on expensive products that never get used is no longer an option.
It is of course imperative to have software tools that support individual ways of working and be adaptable to a variety of functions within a business. When examined through this lens, single-point solutions are likely to lose out in favour of all-in-one platforms that enable collaboration and transparency across a whole organisation.
It’s never easy to tidy up a mess that’s been accumulating for a long time, especially as businesses are already battling a host of unfamiliar pressures. But sunsetting products that aren’t being used is a vital step towards creating an environment where software works for us – not the other way round.
About the Author
Richard McGuinness is VP EMEA Sales at ClickUp. ClickUp is one app to replace them all. It’s the future of work. More than just task management – ClickUp offers docs, reminders, goals, calendars, and even an inbox. Fully customizable, ClickUp works for every type of team, so all teams can use the same app to plan, organize, and collaborate. ClickUp is trusted by millions of users and over 100,000 teams at the world’s best companies like Google, Airbnb, Uber, and Nike.
Featured image: ©thodonal