The Rise in Corporate SaaS Spending
The widespread adoption of SaaS has changed the way software is purchased. The decision-making process, which used to be centralized within the IT department, has gradually become more decentralized. Today, a simple credit card payment allows any department to subscribe to an online tool to meet an immediate need, without going through internal approval processes.
This decentralization creates a financial blind spot. Subscriptions pile up without a consolidated view, renewals go unnoticed, and functional overlaps multiply across teams. For an organization with 3,000 to 10,000 users, it is not uncommon to discover that three or four tools perform exactly the same function, each subscribed to independently by different departments.
Shadow IT in Finance
These independent purchases fuel shadow IT: applications used without approval or oversight from the IT department. Beyond cybersecurity and compliance risks, shadow IT directly disrupts corporate budget management by making it impossible to negotiate pricing with software vendors. The organization ends up paying multiple times for identical features spread across different tools.
According to Gartner, 25 to 30 percent of SaaS spending is wasted on unused or underutilized licenses. This figure can be attributed to the lack of a centralized process for approving software purchases, as well as a lack of post-subscription monitoring. A license purchased for a one-time need is often forgotten once the project is completed.
The Accumulation of Dormant Licenses
The lack of employee lifecycle management exacerbates the problem. When an employee leaves the organization or changes positions, their software access is rarely revoked in a timely manner. The exit process focuses on hardware, ID cards, and email, but individual SaaS subscriptions fall through the cracks.
Temporary projects generate subscriptions that continue to be billed long after they end. A collaboration tool subscribed to for a six-month project can remain active for two years without anyone noticing. These dormant licenses represent a silent financial drain. A 2023 Zylo study estimates the average SaaS waste at $18 million per year for large companies.
The cost isn't limited to the subscription itself. Every active, unused license also increases the organization's attack surface: an active account without a user is an orphaned account, and an orphaned account is a potential entry point for an attacker.
Audit and Streamline Your Application Portfolio
To curb rising costs, the first step is to take stock of the current situation. Without a clear understanding of the applications in use and their actual costs, any attempt at optimization is a shot in the dark.
Mapping Subscription Software
Reconstructing the application catalog requires a two-pronged analysis—both technical and financial. It is necessary to cross-reference login logs, financial data (expense reports, bank statements), and reports from operational managers. The goal is to measure the discrepancy between the licenses purchased and the solutions actually used in the field.
This mapping exercise often reveals surprises. Tools subscribed to several years ago—which no one remembers—continue to be billed. Premium licenses are assigned to users who only use basic features. Competing applications coexist because two teams never coordinated their choices.
Analyze actual usage
Just because you have a license doesn't mean it adds value. You need to assess how often each tool is used and how extensively it is utilized. Many employees use only a fraction of the capabilities of an expensive software suite, when a more basic version or a license reassignment would suffice.
Usage analysis also helps identify weak signals: a tool whose adoption is gradually declining indicates either a usability issue or a changing need. Rather than continuing to pay for it, it’s better to reassess the need and reallocate the budget.
The three key areas of action to prioritize:
- Expense Consolidation: Group invoices and contracts into a single folder to identify due dates and contractual obligations.
- Eliminating redundancies: Remove applications with overlapping functionality to focus usage on validated internal standards.
- Fee adjustment: Tailor the subscription tier to the actual needs of each user profile, rather than automatically signing up for premium plans.
Establish a sustainable access governance framework
Financial optimization of SaaS cannot be a one-time exercise conducted once a year. Identity and access management (IAM) plays a strategic role here in automating cost control over the long term.
Automate Provisioning and Deprovisioning
Automating the onboarding and offboarding processes is the most direct way to avoid unnecessary expenses. As soon as an employee’s departure is recorded in the HRIS, the associated access rights and subscriptions must be automatically suspended or reassigned. As a result, no licenses remain active without a designated user, and the number of unnecessary subscriptions automatically decreases.
The same principle applies to internal transfers. An employee who changes departments no longer needs the tools associated with their previous position. Without automation, access to those tools remains active by default, and the associated licenses continue to be billed. With provisioning linked to HR events, the adjustment is immediate.
Negotiate and consolidate contracts
Once the software portfolio has been streamlined and governance is in place, the company has greater bargaining power with software vendors. By centralizing purchase volumes and planning for renewals based on consolidated visibility, the IT department can secure price discounts, adjust commitment terms, and opt for billing models aligned with actual usage.
Renegotiation is also an opportunity to reassess licensing tiers. Many organizations pay for a higher tier because they have exceeded the threshold by just a few users, whereas cleaning up inactive accounts would bring them back down to the lower tier.
Turning Constraints into Performance Drivers
Regaining control over software spending involves more than just cutting budgets. This streamlining frees up financial resources, strengthens the organization's overall security, and simplifies employees' digital work environment.
By integrating access governance with software financial management, the IT department shifts from a reactive approach (identifying cost overruns after the fact) to a proactive one (preventing unnecessary expenses at the source). The benefit is twofold: financial, with a measurable reduction in SaaS costs, and security-related, with fewer orphaned accounts and a reduced attack surface.
For organizations that manage several thousand users, this approach is not a luxury. It is essential for maintaining long-term control over their IT environment.
