How Does SaaS Management Fuel Innovation?

Speaker 1: What is going on, everyone? Ben here with another episode of SaaSMe Anything. Before we get to the business of SaaS, I got to share a story. My son is about to get his driver's license, which is both exciting and terrifying all at the same time. However, one of the conversations I've been having with him is about paying for gas. He'll get an allowance, and we'll pay to fill up his tank so he can get around town, but there are going to be times when he needs to cover that cost. It's a new expense he'll need to think about. He's got options to consider. He could go out and get a job. He could potentially tap into his savings. Or he could change some of his behaviors, like maybe buying less V- Bucks for Fortnite on his Xbox. I know that we'll figure it out together, and he'll be enjoying his newfound freedom. I'm sure many of you can relate with these types of decisions in both your personal and professional life. In today's episode, I want to explore how a SaaS management strategy can enable you to buy that fuel to unlock innovation within your own business. Let's go.

Speaker 1: When you first think about SaaS, what comes to mind? Many of our customers sum it up in one word. Chaos. I'm sure you can picture it: hundreds of applications in your environment, rogue software purchases, mis- renewals, increasing software costs, and redundant applications. It's easy to see how SaaS could slow you down. But should it? I would say no. SaaS management: make sure SaaS is benefiting your organization. That's a source of growth and innovation.

Speaker 1: Let's break it down. SaaS is often your second or third- largest operating expense. But it's also the most ripe for optimization. Some of the challenges I mentioned before lead to overspending, duplicate, or wasteful spending. That doesn't leave a ton of room to innovate and test new ideas. Yet, innovation is something that will differentiate your company in the market and help you better serve your customers. Where SaaS management comes in is by enabling you to drive measurable cost savings that unlock the funds that you need and then can use to reinvest in innovation, things that will be transformational for the business.

Speaker 1: There are a few things at odds with this, though. First, SaaS prices are going up. We've seen vendor price increases in the past in the 5% ballpark. Today, we're seeing closer to 15% or higher depending on the vendor.

Speaker 1: Second, there's an interesting paradigm going on at work. IT spending is growing. Gartner has predicted that total IT spend will grow 8% in 2024. Within that 8%, software is projected to grow 14% in 2024. IT budgets, however, are not keeping pace with the growth of spending.

Speaker 1: Morgan Stanley's recent CIO survey suggests that IT budgets will only grow 3. 4% in 2024, up slightly from last year at 2. 7%. Clearly, there's a gap here. It puts you in between a rock and a hard place. Prices and spending are going up, but your budget isn't growing nearly as much. However, you need to still find that money to innovate. How do you make up the gap to make sure you're funding that innovation? The key strategy needs to be driving optimization and efficiency in your software stack. This is what will help you unlock the budget. Here's how you do it.

Speaker 1: Number one, benchmark your prices. Make sure you're paying the right price for the software that you're buying.

Speaker 1: Number two, evaluate whether you're getting the value out of your applications. What is the ROI you're getting from the app or other quantitative metrics? Understand how they're impacting key business objectives.

Speaker 1: Number three, cut what you don't need. Cancel redundant applications or duplicative subscriptions and right- size your licensing at renewal.

Speaker 1: Number four, follow best practices on SaaS contracts, like including price caps to make sure your budgets aren't eaten up by price increases.

Speaker 1: A real- life example here to share is that one of our friends, CIO Brad Pollard, gave a great example on our sister podcast, SaaSMe Unfiltered. One day, he was walking around the office, and he made an observation that there were all of these phones sitting on people's desks that were just not getting used. He dug deeper into his SaaS management platform and found that they were wasting a ton of money on a phone service that only customer success was using. What'd he do? Well, they moved from voice- over IP to Zoom phone and ended up saving a ton of money. They were able to keep their budgets flat and also have money to innovate to do new projects.

Speaker 1: Last but not least, I can't talk about innovation without at least mentioning AI. The savings achieved based on what we've just talked about can then be applied to new tech, like generative AI.

Speaker 1: AI, as a technology, is innovative. But it also enables your team to work more efficiently, giving them more time and allowing them to be more creative and generate new ideas. Innovation. One great stat from Gartner to hit the point home here is that by 2026, more than 80% of SaaS applications will have embedded generative AI capabilities, up from less than 1% in twenty- twenty- three. If you aren't thinking about it now, you definitely need to be.

Speaker 1: To sum it all up, costs only continue to rise, and budget constraints are not going away. But you still need to innovate now more than ever. The key strategy to help you unlock budget, and to do this is to optimize your SaaS applications, one of your highest operating expenses. SaaS management is the fuel to get you there.

Speaker 1: That is all I got today. We will catch you next time.