Can I Use Software Asset Management Tools to Manage SaaS?

Ben: Hey, I got a question for you. Does your car still have a CD player? With the emergence of Bluetooth technology and music streaming apps, carmakers began removing CD players from vehicles. To play music you want on demand, you had to find a different way. The same goes for software.

Ben: For decades, the enterprise software lifecycle fell solely under IT control. They sourced, purchased, vetted, and deployed on- premise software, before handing it over to software asset management teams. Then, in the early 2000s, along came SaaS, and purchasing shifted from IT to department heads, who became principal buyers of specialized software for functions like marketing, HR, and finance. Today, suppliers often use an end user model, banking on low cost licenses and freemium subscriptions to attract new customers. That has given rise to individuals across organizations buying their own software.

Ben: Our data shows that in 2022, IT teams controlled just 31% of SaaS spend and 18% of applications. But in 2023, we found that IT had even less control. Our latest report shows that IT now controls just 28% of spend and 17% of apps. Even the market shows that growing shift to SaaS. IDC reported that in 2022, more money was being spent on SaaS than on- premise software for the first time ever. And by 2026, they expect SaaS to make up 60% of all software spending.

Ben: On top of that, Gartner expects a majority of the top 20 software vendors to phase out the sale of on- premise perpetual licensing by the end of 2025. And along the way, increasing their costs by at least 35%. SaaS is clearly here to stay, and if you're not actively managing it today, you're behind.

Ben: But can you use your existing software asset management tools to manage SaaS? The short answer is no. Let's first talk about what software asset management tools do, why they were created in the first place, and how they have evolved with the shifting dynamics of software. With on- premise software, large software vendors would run audits of their perpetual deployments. They'd come in, they'd figure out what you're using. Is what you're using what you purchased or not? Then they'd bill you for any additional services that you'd be accountable for paying. SAM tools helped you track what you bought and then helped you track what you were using in order for you to avoid that situation.

Ben: With SaaS, audits really don't exist. Vendors can see what you're using because it's all in the cloud. That shifts software management from audit defense to planning and optimization. SaaS requires you to answer questions like, " Did we purchase enough licenses or units? Is this license being used or can I pull it back? Are we overusing from a consumption standpoint?"

Ben: Today, SAM tools have evolved to help track your license position and manage licenses with a lot of the major SaaS providers, like Salesforce, Oracle, and IBM. They help you track what you buy and what you're using from varying sources. You're probably saying, " Hey, Ben, that sounds a lot like SaaS management, doesn't it?" Well, yes, part of SaaS management is knowing your license position, but there's definitely more to it.

Ben: Where do SAM tools fall short? We break SaaS management down into three areas. Think about it from a licensed management perspective, but also inventory and renewal management. That's where SAM tools fall short.

Ben: Let's start with inventory management. Inventory management is the continuous and comprehensive discovery and inventory of all of your SaaS applications, your spend, who's buying those tools, what the tools do, redundancies that exist, risks that you may be introducing, and a lot more. SAM tools don't prioritize discovery. They typically run an agent that sits on your desktop to find software.

Ben: We have seen some start to use other discovery methods, like browser extensions, but there are still gaps to traditional SAMtools being able to run comprehensive discovery. One of the things we found is that SaaS likes to hide inside of employee expense reports. And inside those employee expense reports, about 51% of those expenses are miscategorized.

Ben: So multiple discovery methods are really critical to uncover it all. That's why at Zylo, our primary method for finding SaaS is financial discovery. We also can use integrations with SSO providers, as well as our own APIs, to get the big picture of your SaaS estate.

Ben: For example, one of our enterprise customers baked off Zylo with one of the leading SAM providers. And we discovered 1567% more SaaS spend in their enterprise than their traditional SAMtool provider did.

Ben: All right, next up is license management. Generally, this is how SAM tools classify SaaS management. There's a varying spectrum of capabilities. Some of them have the breadth and depth of what a SaaS management platform can do. Others will fall short and only focus on the major SaaS providers. If you're doing an analysis, make sure you look into their integrations, understand how many they have, what they actually do, what data they pull into their platforms, and then what they actually do with that data when it's in their tool.

Ben: All right, last bit here then is renewal management. You have hundreds of renewals, and with SaaS being distributed, you need a central place to know when renewals are coming up, see notification windows, get important contract details, and have usage and benchmarking data to back your negotiations and track your savings. SAM tools are not built to help you with the renewal process. They do not do renewals, plain and simple.

Ben: When it comes to SaaS, you're not managing licenses for just a few apps. You have hundreds. You need a broader approach to track and manage them. Your SAMtool serves their purpose for on- premise and maybe some SaaS licensing. But if you're trying to manage SaaS more holistically, stay on top of your renewals, have ongoing discovery, and optimize licensing, you need a SaaS management tool alongside it.