7 Ways to Extend Your Runway by Optimizing Saas Spend

Maintaining financial stability and resilience in the face of economic uncertainties is imperative for startups and businesses. An impactful approach to attaining this objective involves optimizing your expenditures on Software as a Service (SaaS). While SaaS tools play a pivotal role in the operations of many companies, they can exert a substantial strain on resources when not managed with precision. This blog will explore seven actionable steps designed to help you extend your financial runway by effectively managing your SaaS expenditures.

1. Examine your entire SaaS stack.

The first step to optimizing SaaS spending is to gain a clear understanding of your SaaS ecosystem. Create a comprehensive inventory of all the SaaS tools your organization uses. This includes subscription costs, usage data, and contract terms. Mapping out your SaaS stack will provide you with a holistic view of where your money is going and help identify potential areas for optimization.

2. Get rid of unused licenses.

It's common for organizations to accumulate unused licenses for various SaaS tools over time. Regularly review your SaaS subscriptions and identify claims no longer in use. Cancel or reassign these licenses to employees who need them. You can immediately reduce your SaaS spending by eliminating unused permits without sacrificing functionality.

3. Audit for shadow IT and set up policies to avoid it.

Shadow IT refers to the use of unauthorized SaaS tools within your organization. These tools are often purchased and used by employees without the knowledge or approval of IT or procurement teams. Conduct regular audits to identify instances of shadow IT and ensure that employees use approved SaaS tools. Establish clear policies and guidelines for SaaS procurement to prevent unauthorized spending and control your budget.

4. Optimize spending for the most expensive tools first.

Not all SaaS tools are created equal when it comes to cost. Identify the most expensive tools in your stack and focus your optimization efforts on them first. This might involve negotiating for better pricing with the vendor, exploring alternative solutions, or reevaluating whether the tool is still necessary for your business needs.

5. Know which savings opportunities come from which types of tools.

Different types of SaaS tools offer various opportunities for cost savings. For example, cloud infrastructure services can often be optimized by resizing or adopting reserved instances. On the other hand, collaboration tools may offer cost savings through user management and license optimization. Understanding where your savings opportunities lie within your SaaS stack will allow you to prioritize your efforts effectively.

6. Consider early renewals

Many SaaS vendors offer discounts for early renewals. If you're confident you'll continue using a particular tool, consider negotiating an early renewal to secure cost savings. Be sure to weigh the potential savings against any risks associated with early renewals, such as changes in your business needs or vendor lock-in.

7. Boost your negotiation capabilities.

Effective negotiation with SaaS vendors can lead to significant cost reductions. Prepare for negotiations by researching the market, understanding your usage patterns, and identifying potential leverage points. Consider seeking the assistance of a procurement or negotiation expert to help you secure the best possible terms and pricing.

Conclusion

Extending your financial runway necessitates transparency, optimization, and reestablishing control over your SaaS expenditures. Adhering to these seven steps can uncover opportunities to reduce costs and align your SaaS tools with your business objectives. Remember that SaaS optimization is a continual endeavor, so make it a habit to periodically review and fine-tune your approach to maximize savings and secure a longer runway for sustained growth and success.