In today’s fast-paced digital landscape, businesses are increasingly relying on Software-as-a-Service (SaaS) solutions to streamline operations, enhance productivity, and drive growth. However, with the proliferation of SaaS tools, managing these subscriptions effectively has become a critical challenge. Enter SaaS management platforms—tools designed to optimize SaaS usage, reduce costs, and improve efficiency. But how do you measure the return on investment (ROI) of SaaS management?
In this blog post, we’ll break down the key metrics, strategies, and best practices to help you calculate the ROI of SaaS management and demonstrate its value to your organization.
Investing in a SaaS management platform or strategy is a significant decision for any organization. Without a clear understanding of its ROI, it’s difficult to justify the expense or evaluate its effectiveness. Measuring ROI allows you to:
To calculate the ROI of SaaS management, you need to track specific metrics that reflect cost savings, efficiency gains, and overall business impact. Here are the most important ones:
One of the primary benefits of SaaS management is identifying and eliminating unused or duplicate licenses. Calculate the total cost of these redundant subscriptions and compare it to the cost of your SaaS management platform.
Formula:
Cost Savings = Total Cost of Eliminated Licenses - SaaS Management Platform Cost
Shadow IT—unauthorized SaaS tools used by employees—can lead to security risks and unnecessary expenses. SaaS management platforms help identify and reduce shadow IT, saving money and improving compliance.
Metric to Track:
Number of unauthorized tools eliminated and their associated costs.
Manually managing SaaS subscriptions, renewals, and usage can be time-consuming. SaaS management platforms automate these tasks, freeing up your IT and procurement teams to focus on higher-value activities.
Formula:
Time Saved = (Hours Spent on SaaS Management Before - Hours Spent After) x Hourly Rate of Employees
SaaS management tools provide insights into how employees are using software. By reallocating underutilized licenses or providing training to boost adoption, you can maximize the value of your SaaS investments.
Metric to Track:
Percentage increase in SaaS utilization rates.
SaaS management platforms help you stay on top of renewal dates, ensuring you don’t accidentally renew tools you no longer need. Calculate the costs avoided by canceling unnecessary renewals.
Metric to Track:
Total cost of avoided renewals.
Now that you know the key metrics, let’s walk through the process of calculating ROI:
Start by collecting data on your current SaaS spending, including the total number of subscriptions, costs, and usage rates. This will serve as your baseline for comparison.
Choose a SaaS management platform that aligns with your organization’s needs. Ensure it provides detailed analytics and reporting capabilities to track the metrics mentioned above.
Monitor the impact of the SaaS management platform over time. Use the metrics outlined earlier to quantify cost savings, time saved, and other benefits.
Use the following formula to calculate ROI:
ROI (%) = [(Total Benefits - Total Costs) / Total Costs] x 100
For example, if your SaaS management platform saves you $50,000 annually and costs $10,000, your ROI would be:
ROI = [($50,000 - $10,000) / $10,000] x 100 = 400%
Compile your data into a clear, concise report that highlights the ROI of SaaS management. Use visuals like charts and graphs to make your case more compelling.
To get the most out of your SaaS management efforts, follow these best practices:
Measuring the ROI of SaaS management is essential for understanding its value and making informed decisions about your software investments. By tracking key metrics like cost savings, time efficiency, and utilization rates, you can demonstrate the tangible benefits of SaaS management to your organization.
Ready to take control of your SaaS ecosystem? Start by implementing a robust SaaS management platform and follow the steps outlined in this guide to maximize your ROI. With the right tools and strategies, you can turn SaaS management into a powerful driver of cost savings and operational efficiency.
Looking for more insights on SaaS management? Subscribe to our blog for expert tips, industry trends, and actionable strategies to optimize your SaaS investments.