When it comes to workplace productivity, it’s SaaS’s world — we’re just living in it.
Worldwide spending on business software subscriptions has doubled in the past five years alone, from approximately $60 billion in 2014 to $120 billion in 2019. According to Cisco’s Global Cloud Index, almost 60% of companies say their software is completely subscription-based. By 2023, that number is projected to exceed 80%.
But as SaaS use goes up, so does SaaS spending. The average company today spends $10,000 per employee per year on subscription services. As one business journal points out, that’s almost as much as they spend on employee healthcare. And as great as it would be to believe that every dollar of that spending is being put to good use, that’s not what the data tells us. According to a 2016 report, U.S. companies waste $28 billion per year on software that is downloaded but never actually used.
At Teampay, we have a name for these unused subscriptions. We call them “zombie subscriptions.” And we’ve seen firsthand how they’re eating businesses’ budgets alive.
Fortunately, there’s a solution. By auditing their subscription software use and putting systems in place to monitor SaaS spending, teams can sniff out software overspending that’s happening at their company — and prevent it from happening again.
Rise of the software subscriptions: How SaaS took over the office
Before we explore the steps companies can take to prevent zombie subscriptions from taking over their organizations, it’s worth understanding how runaway software spending became a problem in the first place.
Because, of course, it’s not as simple as “subscription software is bad and businesses shouldn’t use it” — there’s a reason that businesses buy these tools. Subscription software costs less upfront to adopt than enterprise software packages, it’s less resource-intensive to maintain, and it gets updated more frequently.
SaaS has also done a lot to broaden access to sophisticated software. The fact that subscription tools carry less upfront cost puts them within reach of smaller businesses, which don’t have the resources of larger corporations to invest in pricey software packages.
So the fact that businesses are taking advantage of SaaS tools is not, in itself, the problem. But the shift to the cloud has led to some bad habits when it comes to how software gets bought and used.
From useful tool to zombie subscription: When good SaaS goes bad
It’s not just how business software is sold that has changed over the past decade — how it gets bought, and by whom, has changed as well.
In 2010, 90% of SMB SaaS product use was in engineering teams. Today, it’s 20%, with the rest being distributed across other departments, including Sales, Marketing, Business Ops, HR, Finance, and Customer Support. All told, 60% of U.S. technology spending occurs outside of IT departments.
Increasingly, spending decisions are being made by the end user — the individual employee who will use the software day-to-day. In fact, one in seven employees now acts as the managing/billing owner for at least one SaaS subscription at their organization.
And this is where problems with overspending start to come into play: when you have dozens, or potentially hundreds, of employees all making individual decisions about the software tools they need to do their jobs effectively, you get a recipe for what’s known as “subscription creep.”
Here’s how it tends to happen: One person on the team is working on a new project and buys a subscription to a tool they need to complete it, but then they forget to cancel the subscription after they’re done. Or an employee downloads software that they think they will use, only to realize that they can do their work without it. In both cases, the recurring payment just keeps going through. The cost is then magnified when another person on the team buys the same tool a few months later because they don’t know that there’s already an existing subscription.
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The zombie subscription audit: How to stop zombie subscriptions in their tracks
So how do you know if your organization is a victim of zombie subscriptions? And what do you do if you are? And how do you stop zombie subscriptions from becoming a problem again?
By following the steps outlined below, you can identify the zombie subscriptions currently draining your organization and make it more difficult for this problem to rear its head in the future.
Step #1: Evaluate current team subscription use
According to the 1E report, 38% of enterprise software is used rarely or not at all. So, the first step for any team looking to rein in their software spending is to get a clear picture of what SaaS tools have been bought across the company — and how much those tools are actually being used.
Start with a self-assessment (a Google form survey would be a good format for this). Ask team members to list:
- What software subscriptions they have
- How much each subscription costs
- How frequently they use each tool on a daily, weekly, and monthly basis
- How essential each tool is to their ability to do their job
There are a number of “repeat offenders” that are worth looking out for when it comes to software that is susceptible to under-use and, therefore, waste. According to the 1E survey, the top culprits are:
- TechSmith Camtasia Studio (waste: 67%)
- SAP Crystal Reports (63%)
- Adobe InDesign (55%)
- Adobe Dreamweaver (55%)
- Microsoft Visio (47%)
- Adobe Illustrator (47%)
- Microsoft Project Professional (46%)
- Adobe Photoshop (42%)
- Helios TextPad (40%)
- Corel WinZip (34%)
Once you have the assessments, you can go through the answers and quickly eliminate tools that the team is not using.
Step #2: Cross-check software subscriptions to compare capabilities and prices—and then consolidate
Spotting a zombie subscription is not always as simple as targeting the software that team members never use. Sometimes a team member can be using a tool every single day — and it could still qualify as a zombie subscription.
One of the most common ways that this happens is when different departments are using different tools for similar tasks. For example: sales could be using Salesforce for lead management, while customer success uses Zoho for customer support. But either tool could perform both tasks for both teams.
Once you have a complete inventory of your team’s subscriptions, group the tools by category and then cross-check them for capabilities. If you find a spot where features overlap, consolidate to one service wherever possible.
In addition to the features and capabilities of the tools, teams should also look at how the cost of the tool has changed over time. With SaaS products commonly being charged on a monthly basis, occasional price increases are easy to miss, which can result in a subscription costing significantly more months later than it did when it was originally purchased.
Lastly, for this step, you want to look at the number of users you are paying for in each tool. Many SaaS products have a tiered pricing structure where the price increases the more users you register on the tool. You may be paying for access for 10 employees when, in reality, only three use the tool on a regular basis. Scaling back a pricing tier may be a way to keep a valuable tool in your stack and reduce costs at the same time.
Step #3: Invest in systems to prevent future zombie subscriptions and software creep
So you’ve reviewed your team’s subscription use. You’ve cut unused tools out, consolidated in places where there was redundancy, and cut back. Now that you’ve rooted zombie subscriptions out of your team’s system, the final step is to put tools and processes in place to stop overspending from creeping back into your budget—and to eliminate the need to ever conduct another software audit again.
There are four key capabilities to focus on here:
Upfront coding. Coding transactions in the request phase allows finance to see purchases categorized as subscriptions as funds are requested.This enables them to catch requests for duplicate subscriptions before any money is spent.
Proactive policy controls. Proactive controls and request routing prevent employees from making purchases without the appropriate approvals from individuals who are more knowledgable about the subscriptions that already exist in the department and across the company.
Intelligent payments. Implementing controls that govern all types of spending, no matter the payment method, will prevent employees from going over budget or spending out-of-bounds on subscription services.
Visibility. Real-time visibility into company spend allows finance to catch unnecessary spending as it happens, so that they can quickly investigate and rectify the matter rather than let zombie subscriptions go unnoticed.
Show zombie subscriptions who’s boss
Anyone who’s ever watched an episode of The Walking Dead knows that there are three secrets to keeping zombies at bay: tools, vigilance, and teamwork.
It’s the same with fighting zombie subscriptions: with communication, regular audits, and tools that help you keep on top of spending activity that’s happening across the company, teams can get rid of current zombie subscriptions and keep them from coming back.