CIOs’ management of enterprise applications has evolved greatly over time. Prior to the SaaS (software as a service) era, IT decision-makers were intimately familiar with the applications deployed in their enterprises, had longstanding relationships with the vendors from whom they purchased, and led the selection, purchase, renewal and upgrade of software personally and at intervals they controlled.
When Salesforce kicked off the SaaS revolution 20 years ago, things changed. New vendors emerged, along with new pricing models that emphasized subscriptions and continuous service delivery. In recent years, a fundamental shift has occurred as enterprises began to seek out best-of-breed applications rather than monolithic software suites, and employees benefited from a constant stream of feature upgrades with the demise of versioned software releases.
Here in mid-2019, the successful sales and marketing efforts of SaaS vendors along with business units purchasing applications outside of traditional procurement channels have combined to massively decentralize application management. Previously unimaginable amounts of applications are in use in the average enterprise, and finding—much less managing—all of them presents a challenge for enterprise CIOs who manage their SaaS investments and drive value from them.
In this eWEEK Data Points article, former head of Google Analytics Jody Shapiro discusses five trends that he sees shaping SaaS application management among top cloud computing companies and shares research findings from a survey of 100+ IT leaders from North American companies with 5,000 or more employees. As CEO at Productiv, Shapiro works closely with enterprise CIOs who are leading the charge to drive business value from SaaS applications in a decentralized era.
Data Point No. 1: Enterprise Application Sprawl Is Significant and Expanding
The number of SaaS applications used in the enterprise is staggering. Research from Okta reveals an average of 129 applications in use per company, and that only takes into account apps that utilize Okta’s single sign-on. Netskope has found the real number to be 1,071 cloud services per company. That’s a massive increase from the past, and likely the reason why Pulse Q&A’s research shows that only 45% of IT executives are confident they know how many SaaS applications are in use at their companies. That kind of sprawl leads to a lot of unknowns.
Data Point No. 2: Application Management Remains Largely Manual
CIOs are doing their best to find and manage all of those applications, but most of them are doing it the hard way. Pulse Q&A’s research reveals that 56% of IT executives still rely on internal tools and manual spreadsheets to discover and manage SaaS applications. The sheer number of applications and employees they have to track means that spreadsheets are massive and can take quarters or even years to compile, and the exercise can’t easily be repeated. Data from contracts, login management systems and other sources is dynamic, so those spreadsheets can also never be accurate in real time. These manual efforts consume valuable and limited people resources to gather, reconcile and analyze data, taking them away from other strategic priorities.
Data Point No. 3: Managing Cost and Usage Are Top Priorities
Enterprises spend substantially on SaaS. Gartner researchers predict that global SaaS revenues will reach $85 billion this year, a figure that rises to $113 billion by 2021. A Fortune 500 company can easily invest hundreds of millions in SaaS licenses annually. At those spending levels, it’s not surprising that Pulse Q&A’s survey found that 97% of IT leaders see managing the cost and usage of SaaS applications as a top business priority.
Data Point No. 4: CIOs Are Embracing Rightsizing Using Application Engagement Data
Application engagement data allows CIOs to deeply understand current SaaS license usage so they can rightsize by reclaiming and reprovisioning their existing licenses mid-contract and enter renewal cycles armed with data. This allows them to ensure they’ve got the appropriate license type purchased and provisioned for every user based on the functionality they actually utilize. Productiv customers such as Entelo, Equinix and FOX have rightsized key applications to eliminate redundancy, reduce SaaS renewal costs and provide insights into how teams are using different apps. However, Pulse Q&A’s research shows that only 19% of IT teams are currently able to address application rightsizing via a technology platform. Fortunately, CIOs are starting to investigate automated tools that can assist them.
Data Point No. 5: Popular SaaS Applications Provide Big Opportunities for Savings
Responses from Pulse Q&A’s survey research of IT leaders indicate that the biggest SaaS names also provide the biggest opportunities for customer savings. Seventy-two percent of respondents said that Microsoft Office 365 provided them with a substantial opportunity to rightsize their SaaS investments, followed by Salesforce (51%) and ServiceNow (48%). Workday, Dropbox, GSuite, Box, DocuSign, Slack, Zoom, Zendesk and other popular SaaS applications were cited by at least 10% of respondents as opportunities to bring license purchase and tiering in line with actual usage levels.
Data Point No. 6: Conclusion
There’s no shortage of applications in use in the modern enterprise, and managing those applications remains largely a manual exercise. Management is vital because CIOs strive to understand application usage in the context of cost containment. They’re embracing rightsizing to eliminate redundancy, reduce renewal costs and gain insights into how teams are using applications. Some of the biggest SaaS applications on the market are also providing CIOs with the biggest opportunities for savings.
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