Challenges That Organizations With Poor SaaS Management Are Facing

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SaaS has become indispensable for organizations today. According to Radix, over 80% of companies rely on at least one SaaS application for their operations. This widespread adoption means effective SaaS management is necessary.

SaaS management is a strategic move to oversee, optimize, and control an organization's SaaS stack. The main components are license tracking, usage monitoring, cost optimization, and security compliance.

Robust SaaS management improves operational efficiency, reduces costs, and enhances security. However, many organizations struggle with poor SaaS management, leading to many challenges.

These challenges can impact the financial health, security posture, and overall productivity of your organization.

As SaaS continues to dominate the business software sector, understanding and addressing these challenges has become crucial. With this, you can maintain a competitive edge and ensure long-term success.

To help you, we will show you some of the challenges organizations with poor SaaS management face and what needs to be done.

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TL;DR

• Poor SaaS management leads to IT, finance, procurement, and security challenges, impacting efficiency, costs, and security.
• IT challenges include lack of visibility, shadow IT, improper provisioning/deprovisioning, integration issues, and difficulty tracking app usage.
• Finance challenges involve poor spend visibility, cost optimization issues, missed renewals, and decentralized contract management.
• Procurement challenges include vendor selection, inadequate contract negotiations, delayed procurement, and lack of price benchmarking.
• Security challenges include data breaches, poor user access management, and compliance issues.
• CloudEagle.ai is a comprehensive SaaS management platform that addresses these challenges with features for discovery, optimization, governance, and renewals.

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1. IT Challenges

Poor SaaS management creates many challenges for IT departments. It hinders their ability to maintain a secure and efficient digital environment.

These challenges stem from a lack of oversight and control over the organization's SaaS stack. Below are some of the main IT challenges:

1.1: Lack of Application Visibility

This challenge arises when IT departments cannot see all the SaaS applications used within the organization.

IT teams struggle to manage and secure the company's digital assets without a comprehensive view. This lack of visibility often results from decentralized purchasing, where departments acquire SaaS tools without IT's knowledge or approval.

1.2: Shadow IT

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Shadow IT is the use of unauthorized SaaS applications by employees. This practice bypasses IT protocols and creates security vulnerabilities.

Employees often turn to shadow IT when they feel official tools don't meet their needs or when procurement processes are too slow. As a result, sensitive data may reside in unsecured applications, putting your organization at risk.

1.3: Improper Provisioning and Deprovisioning

This challenge occurs when IT fails to effectively manage user access to SaaS applications. Improper provisioning can lead to employees lacking access to necessary tools, hampering productivity.

Inadequate deprovisioning leaves former employees with active accounts, creating security risks and unnecessary costs. This issue often stems from manual processes and poor communication between HR and IT departments.

1.4: Integration Issues

Many organizations struggle to integrate their SaaS applications effectively. When applications don't communicate seamlessly, data becomes siloed, and workflows become fragmented.

This challenge often arises from a lack of strategic planning in SaaS adoption and insufficient attention to integration capabilities during the procurement process.

1.5: Tracking Accurate App Usage

IT departments find monitoring how employees use SaaS applications difficult without proper tools and processes. This lack of insight leads to efficient license allocation, with some applications underutilized while others need more support.

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Accurate usage tracking is crucial for optimizing SaaS investments and ensuring employees have the tools they need to perform their jobs effectively.

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2. Finance Challenges

Poor SaaS management significantly impacts an organization's financial health. Finance teams need help managing and optimizing SaaS-related expenses. These challenges often lead to increased costs and reduced financial efficiency.

2.1: Poor Spend Visibility

This challenge occurs when finance teams need a clearer view of SaaS-related expenditures across the organization.

Without complete visibility, you struggle to track and manage expenses effectively. This issue often stems from decentralized purchasing practices, where different departments acquire SaaS apps independently.

Consequently, finance teams find it difficult to consolidate and analyze spending data, leading to inaccurate budgeting and financial forecasting.

2.2: Cost Optimization Issues

Cost optimization becomes a big issue when organizations lack visibility into their SaaS portfolio. Finance teams face difficulty in identifying unused, duplicate, and redundant applications.

This challenge arises from the absence of centralized monitoring systems and poor communication between departments. As a result, you continue to pay for licenses that provide little to no value to the organization.

Furthermore, the inability to reclaim unused licenses and reallocate them to new users compounds the problem.

This inefficiency occurs due to inadequate tracking mechanisms and a lack of coordination between IT and finance departments. Consequently, your organization may purchase new licenses unnecessarily, leading to inflated SaaS expenses.

2.3: Missed Renewals

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Finance teams often struggle with tracking and managing SaaS contract renewals. This challenge arises from the sheer volume of SaaS applications in use and the varied renewal dates associated with each. It could also be the long renewal process.

You risk missing renewal deadlines without a robust system to monitor contract timelines. Missed renewals can result in service disruptions, unexpected costs, or automatic renewals at unfavorable terms.

This issue frequently stems from poor communication between finance, procurement, and IT departments.

2.4: Decentralized Contract Management

The lack of a centralized system for managing SaaS contracts creates significant challenges for finance teams.

When contracts are scattered across different departments or stored in various formats, it becomes difficult to maintain an accurate overview of your SaaS commitments.

This decentralization often leads to inconsistencies in contract terms, missed opportunities for bulk discounts, and difficulties in enforcing standardized procurement policies.

As a result, your organization may fail to leverage its full buying power and struggle to maintain financial control over SaaS expenses.

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3. Procurement Challenges

Effective SaaS management requires a streamlined procurement process. However, organizations with poor SaaS management often face several procurement-related challenges that hinder efficiency and cost-effectiveness.

3.1: Vendor Selection and Management

Selecting and managing SaaS vendors becomes increasingly complex as your SaaS portfolio grows. You may need a systematic approach to evaluate vendors consistently and objectively.

This challenge often arises from a lack of standardized criteria for vendor assessment and insufficient data on vendor performance. Consequently, you may choose suboptimal solutions or fail to leverage your organization's bargaining power effectively.

3.2: Inadequate Contract Negotiations

Poor SaaS management often leads to ineffective contract negotiations. This challenge stems from a lack of comprehensive data on your organization's SaaS usage and spending patterns.

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With this information, procurement teams can identify areas for potential savings or negotiate favorable terms.

Additionally, the absence of a centralized contract repository makes it difficult to compare terms across vendors and leverage past agreements for better deals.

3.3: Delayed Procurement Process

Organizations with poor SaaS management often experience delays in their procurement processes. This issue arises from inefficient approval workflows, lack of clear procurement policies, and poor communication between departments.

As a result, employees may resort to shadow IT to circumvent lengthy procurement procedures, further complicating SaaS management efforts.

3.4: Lack of Price Benchmarking Data

Without access to reliable price benchmarking data, procurement teams struggle to determine if they're getting competitive rates for SaaS solutions.

This challenge often stems from inadequate market research and the absence of tools to track industry pricing trends. As a result, your organization may overpay for SaaS applications, missing opportunities for cost savings.

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4. Security Challenges

Poor SaaS management exposes organizations to many security risks. These challenges can have severe consequences, including data breaches, compliance violations, and reputational damage.

4.1: Data Security Risks

One of the primary security challenges in poor SaaS management is the increased risk of data breaches. This issue arises from a lack of visibility into all SaaS applications in use within your organization.

When IT teams can't monitor and secure all applications effectively, sensitive data may reside in unsanctioned or poorly configured SaaS tools.

Additionally, the proliferation of shadow IT further exacerbates this risk, as employees may use applications that don't meet your organization's security standards.

4.2: Poor User Access Management

Effective SaaS management requires robust user access controls. However, organizations often struggle with managing user permissions across multiple SaaS applications.

This challenge stems from the complexity of maintaining consistent access policies across a diverse SaaS portfolio. Without proper user access management, you risk unauthorized access to sensitive data and potential insider threats.

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Ineffective identity and access management (IAM) compounds this issue. Many organizations lack centralized IAM solutions that can integrate with different SaaS applications.

As a result, IT teams struggle to enforce strong authentication policies, manage user lifecycles efficiently, and maintain an accurate overview of user access rights across all SaaS tools.

4.3: Compliance Issues

Poor SaaS management often leads to compliance challenges, particularly in industries with strict regulatory requirements. This issue arises from difficulty tracking and controlling data across multiple SaaS applications.

Without proper oversight, you may unknowingly violate data protection regulations like GDPR or HIPAA.

The lack of centralized control makes it challenging to implement and enforce consistent security policies across all SaaS applications.

This inconsistency can lead to gaps in your compliance efforts, exposing your organization to regulatory fines and penalties. Additionally, inadequate SaaS management makes it difficult to produce comprehensive audit trails, further complicating compliance efforts.

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CloudEagle.ai - Your Ultimate SaaS Management Solution

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CloudEagle.ai is a comprehensive SaaS management and procurement platform made to help organizations streamline their SaaS operations.

CloudEagle.ai empowers finance, procurement, and IT teams to manage their SaaS stack by centralizing the discovery, optimization, governance, and renewal processes.

Some of our main features are:

• Discovery features, including:
• Spend and app discovery
• License management.
• Contract management.
• Optimization features, including:
• License harvesting.
• SaaS budgeting.
• Spend optimization.
• Governing features, including:
• Self-service app catalog.
• Employee onboarding and offboarding.
• Access control and compliance.
• Renewal features, including:
• Benchmarking.
• Outsourced procurement.
• Renewal management.
• Intake to procure.
• Vendor research.

CloudEagle.ai has over 8,000 workflows, processed over $2B in transactions, and saved more than $150M in SaaS spend.

Right now, CloudEagle.ai is the only all-in-one SaaS management platform that covers the entire SaaS lifecycle and uses AI & ML capabilities to optimize your spend. We have also been recognized in the 2024 Gartner® Magic Quadrant™ for SaaS management platforms.

To back all these up, here is a story of how RingCentral successfully consolidated its SaaS management processes with CloudEagle.ai.

RingCentral centralized vendor data and implemented automated workflows, which helped them optimize tail spend, improve renewal management, and increase productivity.

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Erik Silver, Head of Procurement at RingCentral, attests: "CloudEagle.ai's custom fields helped us migrate our data from Smartsheet to the platform, and their SaaS buying experts secured a favorable deal."

Book a demo today to experience the transformative power of CloudEagle.ai for your organization. Our team will show you how our platform can optimize your SaaS management, reduce costs, and boost efficiency.

Take control of your SaaS stack and drive your business forward with CloudEagle.ai.

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Frequently Asked Questions

1. What is SaaS management?

SaaS management involves overseeing and optimizing an organization's software as a service application. It includes tracking licenses, monitoring usage, controlling costs, and ensuring security compliance across all SaaS tools.

2. How do you manage SaaS operations?

Effective SaaS operations management requires centralized oversight, regular audits, and automated tools. You should implement clear policies, monitor usage, optimize licenses, and ensure proper integration between applications.

3. What is SaaS user management?

SaaS user management is about controlling access to SaaS applications. This involves provisioning and deprovisioning users, managing permissions, and enforcing security policies across all SaaS tools.

4. How does SaaS help a company?

SaaS helps companies by providing flexible, scalable software solutions without the need for extensive infrastructure. It offers cost-effective access to advanced technologies, enables remote work, and allows for rapid deployment of new tools.

SaaS management helps optimize software usage and costs. See the challenges organizations face with poor SaaS management, their impact on business, and what to do.

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