Blog Tackling Spiralling Cloud Costs: A CFO's Guide to SaaS Governance

In today's digital age, SaaS (Software as a Service) adoption is at an all-time high. While this brings numerous benefits, it also introduces significant challenges, particularly in cost management. For Chief Financial Officers, Heads of Internal Audit, and other finance roles, controlling spiralling cloud costs, risks and creating visibility into IT expenses is paramount.

The Growing Concern

Recent reports, like Flexera’s ‘State of the Cloud’, highlight that SaaS governance challenges, especially cost management, are becoming more pronounced. IT spending continues to rise, often outpacing organizational growth. Flexera reveals that approximately 24% of software spend in the cloud is wasted. For small companies, this can mean hundreds of thousands of dollars, and for larger enterprises, it can amount to millions.

The Efficiency Myth

Just because something can be efficient and looks to be efficient, doesn't mean it will be. This is particularly true for SaaS. Many CFOs might be assured that their cloud subscriptions are being managed, but the reality often tells a different story. The evidence points to significant inefficiencies in SaaS management.

Steps to Address the Issue

1. Eliminate Wastage: Just because it's SaaS doesn't mean it will take care of itself. It's crucial to improve visibility and management practices around SaaS. For instance, if a new employee joins the business, why pay for a new subscription if there are already unused subscriptions available?
2. Manage Subscriptions Effectively: It's not just about turning off subscriptions; it's about knowing which ones to turn off and when. Additionally, preventing unnecessary subscriptions from being purchased in the first place is essential to avoid being locked into long-term commitments.
3. Address Hidden Costs: Employees can easily subscribe to services with a credit card, which might not always be flagged as IT spend. This hides the true cost of IT and can lead to sensitive information being uploaded to unknown third parties, posing significant risks.

The Role of IT Asset Management

These challenges can be addressed through IT Asset Management fundamentals. It's about understanding what's out there, where it is, how much is being paid for it, and whether it's being used. With the right tools and expertise, tracking SaaS has become more manageable. Partners like Flexera offer advanced technology to help with this1.

Conclusion

For finance leaders, tackling spiralling cloud costs and creating visibility into IT expenses is not just a challenge but an opportunity. By leveraging the right tools, practices and expertise, significant savings can be achieved.

Chief Financial Officers and finance leaders need to address spiralling cloud costs by improving visibility and management of SaaS (Software as a Service) expenditures, which are often inefficiently handled. By leveraging IT Asset Management fundamentals and tools from partners like Flexera, significant savings and risk mitigation can be achieved.

Address spiralling cloud costs by improving visibility and management of SaaS expenditures