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caught off guard by a SaaS renewal, hasty renewal decisions are made — without data to back them up. That means applications are being renewed that shouldn’t be, and teams aren’t negotiating price or terms as much as they could be.” Another upshot of SaaS sprawl is a majority of organizations having multiple applications that compete to serve the same or largely similar functions. A common example is when a company might have one project management tool used by the engineering team, one preferred by the marketing team, and a third widely adopted by the product team. “When business units have SaaS decision-making power, they tend to seek out best in breed solutions for their functional area,” explained the Zylo data report. “For example, the best project management tool for marketing might not be the same as the best tool for product teams. But more tools don’t necessari ly mean more output and greater productivity.” A lack of centralization of and visibility into SaaS applications also could be negatively impacting how they are used. According to Zylo’s data analysis, the average organization is only utilizing 60 percent of their provisioned licenses, leaving 40 percent wasted, unused and ripe for optimization. “In general, we advise aiming for a target utilization rate of 90 percent or higher. This ensures wide adoption and use, with a small buffer built in for reassigning and provisioning licenses,” said Zylo executives. Expense Counts At the average organization monitored by Zylo, about one in five employees expenses SaaS when procuring a solution, and interestingly enough, Zylo data suggests a connection between companies that give employees greater flexibility to expense SaaS and higher utilization rates within a company. Large enterprises (organizations with 5,000+ employees) have a far fewer percentage of employees expensing SaaS applications, between 8 percent and 10 percent, while at smaller enterprises (1 to 500 employees) more than a quarter of employees expense SaaS. All the while, these larger organizations experience much lower utilization rates of 45 percent to 49 percent compared to the smaller companies that see utilizations rate well above the 60 percent average. “Our interpretation of this data is that the more choice employees have in the SaaS tools they use, the more likely they are to use them,” said Zylo. That’s not to suggest organizations allow their employees to expense software at whim. “Rather, we’re seeing the most progressive organizations strike the right balance by instituting freedom within a framework,” the report continued. Whi le there are upsides to empowering employees to obtain their own solution, and a decentral ized approach to SaaS procurement can increase organizational agi l ity and introduce new opportunities for innovation, an unfortunate side effect is a lack of central visibi l ity into al l SaaS in use across the organization. “This is a big problem, as you can’t optimize what you don’t know exists,” warned Zylo researchers. And a lack of proper SaaS management often leads to inefficient spend, unnecessary costs and steep security and compliance risks. In turn, several SaaS management providers offer channel programs whereby their partners can help their customers strike the right balance between control and innovation. In general, SaaS management platforms proactively identify and manage all of the SaaS applications used in the business, while ogy usiasts ies tists atives s PER YEAR PER MONTH Average Renewals SaaS Renewals Happen Frequently Source: Zylo Source: Per Geoffrey A. Moore’s “Crossing the Chasm” 36.3 77 153.5 204.4 134.8 341.3 234 3 6.4 12.8 17 11.2 28.4 19.5 Balancing Employ e Choice and Compliance As the percentage of employees expensing SaaS grows, so does the average utilization rate. 26.2 31.3 20 16.4 9.4 7.4 18.5 66.5 68.3 66.2 63.5 49.4 44.9 59.8 Percentage of Employee Expensing SaaS Average Utilization Rate Company Size 0-100 501-2,500 5,001-10,000 Total Average 101-500 2,501-5,000 10,000+ 0-100 101-500 5,001-10,000 10,000+ Total Average 501-2,500 2,501-5,000 THE CHANNEL MANAGER’S PLAYBOOK 10

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