April 21, 2021
When we hear “cloud cost optimization,” we often think about optimizing costs at the IaaS level, whether it be rightsizing instances or removing other idle resources in a cloud environment.
Almost all organizations use cloud-based services and software, typically in the form of Software as a Service (SaaS). SaaS makes up the largest market segment among cloud services spending, which is why there should be focus on SaaS cost optimization too.
Cost optimization for SaaS starts with managing software assets. As with IaaS-based cloud cost optimization, cloud-based solutions are scalable, which can lead to uncontrolled or unwanted expenses, making cloud costs go up.
Uncontrolled SaaS adoption leads to an increased number of software licenses and third-party vendors. Shadow IT, which refers to the installation and utilization of hardware and software by individuals without the knowledge of the IT department, not only contributes to the rise of unapproved software in an organization but also presents a security challenge. Uncontrolled costs mostly stem from licenses and subscriptions simply being forgotten.
Idle resources in the cloud are a typical concern for organizations, so managing these resources is critical to controlling cloud costs.
SaaS cloud pricing can be complex. While SaaS applications are simple to deploy, third-party vendors offer various pricing structures with prices depending on a multitude of factors such as number of users, region, utilization times, and more.
As a result, software expenses can be less predictable than traditional licensing models. In the traditional vendor-client model, businesses purchase a software license for each user that needs access to the software. It typically involves fixed access, meaning licenses are assigned to a named user, which makes it easy to manage costs too.
Software purchasing has evidently changed with the rise of multi-user shared licenses and the SaaS model. And yet, the average SaaS startup spends “just six hours on their pricing strategy… to define, test and optimize.”
There are many ways to avoid cloud overspend and lower SaaS costs but most importantly, it’s crucial to have the right analytics with a software management tool. Having deep insight into a business SaaS environment is necessary to control costs.
With analytics and insights available, businesses can monitor usage history, identify unused accounts, and set up automated notifications.
Having a software management tool helps manage various SaaS vendors on a single platform, gain real-time user data to make the right purchasing decisions, and ultimately lower costs for licenses and other subscriptions.
In summary, businesses should implement the following steps into their SaaS optimization strategy:
As mentioned, monitoring usage on a software management platform ensures that businesses are not overspending on software subscriptions and services that are not in use. Analyzing inactivity and detecting overrun costs allow businesses to deactivate unused or forgotten accounts.
One way to avoid overspending on subscriptions that will go forgotten is to automatically reassign licenses. It’s possible that an employee’s role will change within an organization or the employee will leave the organization entirely, meaning existing software may no longer be needed.
If the software is not reassigned or goes forgotten, then payments will continue and costs will go up. By having a comprehensive overview through a software management tool, businesses can keep track of all their subscriptions and licenses.
In line with shadow IT, unauthorized access to cloud applications can lead to uncontrolled SaaS costs. Hence, securing the cloud environment is necessary to eliminate unauthorized access.
Managing software assets is great for monitoring usage and unused subscriptions, but it requires a lot of manual work to make informed decisions about optimizing costs.
For example, businesses who want to reduce subscriptions costs will need to reallocate unused licenses and find cheaper subscriptions to replace expensive ones.
SaaS products may also require businesses to consider many factors, including storage space and authorized access. In the case of the former, a cloud cost optimization tool can make sure you are not under or overpaying for storage. (Learn how Grumatic ‘s CostClipper can help businesses manage and optimize storage costs).
Businesses can also benefit from managing all SaaS products in a single platform to keep efficiency up and keep track of cloud spend.