Technology Spend Management: Optimizing Your Software Stack

Software spend has exploded. What used to be a few big purchases (Office, ERP, maybe a CRM) is now dozens or hundreds of subscriptions—some on corporate credit cards, some expensed individually, many forgotten but still billing.

Getting control of technology spend typically yields 10-30% savings while improving security (fewer unknown tools), productivity (fewer overlapping tools), and compliance (better license management).

Understanding SaaS Sprawl

How Sprawl Happens

• Easy adoption: Anyone with a credit card can sign up
• Free tiers: Start free, then paid accounts grow
• Departmental purchases: Marketing, Sales, Engineering each choose their own tools
• Project-based: Tools adopted for specific needs, never retired
• M&A: Acquisitions bring their own tech stacks

Signs of SaaS Sprawl

• You don't know how many applications you use
• Multiple tools for similar purposes (3 project management tools, 4 survey tools)
• Subscriptions appearing on expense reports or credit card statements
• Former employees still licensed on tools
• Licenses significantly exceed active users
• Unexpected renewal charges

Conducting a Software Audit

Step 1: Discover All Applications

• Review AP records for software/SaaS payments
• Check corporate credit card statements
• Review expense reports for software purchases
• Survey department heads about tools they use
• Check SSO/identity provider for connected applications
• Consider SaaS management platforms for automated discovery

Step 2: Catalog and Categorize

Build an inventory including:

• Application name and vendor
• Category (productivity, marketing, sales, engineering, etc.)
• Contract owner and users
• Annual cost and renewal date
• License count and type
• Contract terms (auto-renewal, notice period)

Step 3: Analyze Utilization

• License vs. usage: How many licenses vs. active users?
• Login frequency: When did users last access?
• Feature usage: Using premium features or just basics?
• Value delivery: Is the tool actually solving the problem it was bought for?

Typical Audit Findings

Optimization Strategies

License Right-Sizing

• Reduce licenses to match actual active users
• Remove departed employees promptly
• Downgrade infrequent users to lower tiers
• Use license pooling where available

Consolidation

• Eliminate redundant tools (pick one, migrate users)
• Use platform features vs. point solutions (does your CRM include the feature?)
• Standardize on organization-wide tools vs. departmental

Contract Optimization

• Annual vs. monthly: Annual typically saves 15-20%
• Multi-year: 2-3 year commits often unlock discounts
• Bundling: Multiple products from same vendor for discount
• Volume tiers: Aggregate users to hit next pricing tier

Timing Negotiations

• Vendor quarter/year end (quota pressure)
• Before auto-renewal deadline (leverage cancellation threat)
• When competitor introduces compelling alternative
• At contract renewal (your best leverage point)

Managing Shadow IT

Shadow IT—technology purchased outside IT oversight—isn't inherently bad. Sometimes the best tools come from user-driven adoption. But it needs management.

Balance Control and Innovation

• Establish clear policies on software procurement
• Create easy approval process for new tools (don't make it so hard people circumvent)
• Provide approved alternatives for common needs
• Implement SSO to gain visibility into what's being used
• Review expense reports for software purchases

When to Formalize Shadow IT

• Tool has grown beyond initial adopters
• Contains sensitive or business-critical data
• Integration with other systems is needed
• Cost has grown significant
• Security review is needed

Ongoing Technology Spend Management

Governance Structure

• Centralize contract ownership (IT, Finance, or dedicated role)
• Maintain software inventory with renewal calendar
• Establish approval thresholds for new software
• Regular utilization reviews (quarterly for major tools)

Renewal Management

• Track renewal dates 90+ days in advance
• Review utilization before each renewal
• Negotiate proactively (don't auto-renew passively)
• Consider alternatives even if staying with incumbent

Consider SaaS Management Platforms

For companies with significant SaaS spend (50+ applications), dedicated platforms can help:

• Automated discovery of all SaaS applications
• Usage tracking and utilization insights
• Renewal calendar and alerts
• Spend analytics and optimization recommendations
• Vendor benchmarking and negotiation support