SaaS License Optimization and Rightsizing Guide

With the move to Software as a Service licensing, IT teams have a completely new challenge in figuring out how to manage and optimize SaaS licenses across their organization.

This guide is designed to help you understand how to not only manage SaaS licenses, but also get the most out of each SaaS application you invest in. We’ll cover three main topics in this article:

• Three methods of license optimization
• State of the art: how enterprises manage licensing today
• Low hanging fruit: SaaS applications most ready for license optimization

Let’s dive in!

SaaS License Optimization: Three Ways

Let’s face it, “license optimization” is a pretty vague term. It could mean a lot of things to your organization. Having worked with hundreds of enterprises on their approach to managing SaaS licenses, we’ve come across three different definitions of licensing optimization. 

1. Finding and reclaiming unused licenses. This is the most common definition, and typically the lowest hanging fruit of the license management process. While finding unused licenses may be simple for contracted applications managed by IT, this can be much more challenging for shadow IT or applications that users purchase on their own.
2. Rightsizing accounts based on license tiers. Many organizations do not spend much time thinking about the tiers within a SaaS application, and how they can rightsize how many licenses they need for each individual tier. By thinking “beyond the license” and into the usage data that defines how your users are consuming the application, you can begin to make sophisticated license optimization decisions that will provide savings on a regular basis.
3. Finding overlapping applications. Once you have detailed usage data of each application, you can perform the most sophisticated move in optimization or rightsizing your SaaS licenses. By leveraging usage data to see what applications your team is using which have overlapping functionality, you can optimize your SaaS application portfolio by finding applications that your team is still using, but you simply do not need anymore.

How do enterprises manage licensing today?

Managing licenses today is undergoing a tectonic shift. The move from traditional software asset management to SaaS management is challenging due to the dramatically different approach and underlying technologies associated with each approach.

While software asset management uses typical approaches like a change management database or software agents installed on physical devices that the company owns, SaaS license optimization focuses on how users are consuming applications that live outside of IT’s direct control. 

In order to rightsize SaaS, we have seen IT teams leverage three key methods to manage licensing today:

1. Surveys. Employees surveys are a great way to see what employees are actually doing, what they need, and where they are focused. Employees don’t spend time actually logging their usage data, so expect results that are valuable but not precise. That means it will be difficult to use the information to rightsize license tiers, but you’ll learn what is in use and where you might be able to optimize some unused licensed applications.
2. Application administration dashboards. Individual applications may provide some amount of usage reporting within their product. For example, here is a usage data report from Zoom:The dashboard can be a useful tool for managing individual SaaS licenses for a particular application.  There are a number of things to consider, however. It’s not really designed for your organization to consume broadly, making rightsizing across applications very difficult. Various vendors also report their data to different levels of depth or in different ways. That means it’s hard to make sense of licensing data across multiple SaaS applications.
3. SaaS Management Platforms: While Software Asset Management had its heyday in on-premises environments, SaaS-forward companies depend on SaaS Management Platforms. SaaS Management Platforms connect directly to SaaS applications you use, as well as through layers like cloud identity management, in order to provide you a complete view to manage your SaaS licenses. This approach gives you complete visibility into your unused SaaS licenses, but also gives you the usage data that you would need to both rightsize your contracts with SaaS providers as well as compare overlap among similar applications.

Most Common SaaS Applications that Need License Optimization

If you are looking for a quick hit in terms of where you can optimize your unused or underused licenses as quickly as possible, we wanted to provide you with the right data that would help you figure that out. 

This detailed SaaS Management Survey of IT executives provides you an interesting roadmap to license optimization. The general thinking is that if a broad survey of IT executives have highlighted a few applications that are right for SaaS license rightsizing, then a couple of these are probably going to be right for your organization. 

Executives have called out Salesforce, Office 365, and ServiceNow as the applications most likely to have optimization opportunities. These large, bundled applications have big price tags and complex bundling strategies that play into their licensing. As a result, there is plenty of opportunity to optimize your licensing while still providing your users with everything they need. 

For a detailed example, take a look at this post to see how you can save 30% on your next SaaS renewal.

Summary

SaaS license optimization is necessary in today’s move towards key applications moving out of the purview of software asset management. While there are methods to manage your licenses with no-cost options, as with most things you will get what you pay for. If you invest in proper license management for SaaS, you’ll find that you have multiple ways to rightsize your licenses and drive more value for the business.