What is SaaS spend management?
SaaS spend management is keeping track of every software subscription your company pays for, so that you pay only for the seats people use, at the price you agreed, and renew only the tools you still need. In practice it comes down to three habits: a list of every subscription with its owner and renewal date, a regular count of seats used against seats paid for, and a check of every renewal invoice against the order form, the document that sets the price, the seat count and the renewal terms. If you run procurement or operations, this is the same job you do for any supplier: holding them to what was agreed, with the agreement, the invoice and the gap between them in hand.
Why does software spend leak?
Software leaks money because it is bought in small amounts by many people and then renews by itself, so no single invoice looks worth questioning. A team lead puts a new application on a company card, a vendor automatically adds seats when someone invites a colleague, and an order form renews for another year at a higher price unless someone gives notice in time. Employees leave while their seats remain paid for, and two departments subscribe separately to applications that perform the same function. Each of these is small on its own, and together they account for much of the waste in a typical software budget.
Large organizations face the same problem. In its report Federal Software Licenses: Agencies Need to Take Action to Achieve Additional Savings, the GAO found that none of the nine agencies it examined had fully worked out whether their most widely used licenses were over- or under-purchased. It named two habits that prevent both: tracking the licenses actually in use, and regularly comparing that inventory with what was bought.
How do you run a SaaS subscription audit?
You build one list of every subscription, then compare each line of it with what is used and what was agreed. Work through it in this order, because each step needs the one before it.
- Find every subscription. Pull twelve months of supplier invoices from accounts payable and every recurring charge from your card statements and expense reports. Card charges matter most, since tools bought on a card often never reach a purchase order and so skip the request, approval and ordering steps of the procure-to-pay process.
- Give each one an owner. Name the one person who decides whether the tool stays, usually the head of the team that uses it most. A subscription with no owner is the first one to question.
- Find the order form. For each tool, file the order form or the terms you accepted online, with any later change to them. Note the price per seat, the number of seats, the term, the renewal date and the notice period.
- Count seats used. From each tool’s admin page, take the number of people who have logged in recently, and compare it with the seats you pay for.
- Look for overlap. Group the tools by what they do. Two tools for the same job are a choice to make, not a reason to keep both.
- Check the latest invoice. Compare its price per seat and seat count with the order form, as you would any supplier invoice.
The result is a list with one row per tool: its owner, what it costs a year, seats paid for against seats used, the renewal date, the last day to give notice, and anything on the invoice that does not match the order form.
How do you find unused seats?
You compare the seats on the invoice with the people who have actually used the tool lately, using the activity report most tools give an administrator. A seat assigned to someone who has not logged in for 90 days is a candidate to remove, and so is a seat assigned to someone who has left the company. Check with the tool’s owner before you remove anyone, because some people use a tool rarely but need it, such as a contractor who joins for one project a year.
Then read the order form before counting on the saving. Many software agreements let you add seats at any time but remove them only at renewal, so a seat you stop using in March may stay paid for until the term ends. That makes the renewal date the moment that matters, which is why the list needs it.
How do you stay ahead of auto-renewals?
You put each subscription’s notice deadline, not its renewal date, in a calendar with its owner, and start the review well before it. An auto-renewal clause renews the agreement for another term unless you give notice before a set number of days ahead of the end date, often 30, 60 or 90 days. Miss that deadline and you are usually committed to another full term at whatever price the clause allows, with the seat count you had.
- 90 days before renewalThe owner reviews seats used, overlap and whether the tool stays.
- Before the notice deadlineGive notice to cancel or cut seats, in writing, as the order form requires.
- Renewal dateThe new term starts at the agreed seat count and price.
- First renewal invoiceCheck its price and seat count against the order form.
Ninety days before renewal leaves time to count seats, ask the owner, and negotiate if you want a lower price or fewer seats. Give notice the way the order form says, which is often in writing to a named address, and keep the vendor’s reply with the order form.
How do you check a renewal invoice against the order form?
You compare the price per seat, the number of seats and every extra line with what the order form allows on the invoice date. The renewal invoice is where errors cluster: a price rise larger than the renewal terms allow, seats billed above the number you agreed to keep, a discount from the first year that quietly falls away, or a new platform or support fee that no document mentions. Some order forms cap how much the price may rise at renewal, and a rise above the cap is billing more than you agreed. For the full line-by-line method, see how to check supplier invoices against agreed prices.
Worked example: Quillfield’s software review
Quillfield Scheduling is an invented company, one of the Demo companies Ressura uses to show its checks, and every figure below is made up for the example. It is an Austin software company of about eighty people, and its operations lead reviews the company’s software subscriptions once a quarter.
The design tool has 30 seats at $45 a seat a month, billed yearly, which is $16,200 a year. Its administration page shows that only 19 people have logged in during the last 90 days, so 11 seats are unused, and at $45 a month each those 11 seats cost $5,940 a year. The order form allows seats to be removed only at renewal, so the operations lead gives notice to cut to 20 seats before the deadline, keeping one spare.
The support desk renewed automatically on 1 September for another year, because nobody gave notice inside the 60 days its order form requires. The order form allows a renewal rise of at most 7%. The renewal invoice bills 25 seats at $55 a seat a month, up from $50, which is a 10% rise. At most the price could reach $53.50, so the invoice is $1.50 a seat a month over, and $1.50 multiplied by 25 seats and 12 months is $450.00 for the year. The operations lead raises it with the vendor and asks for a credit note.
The card statements show a second video call tool, bought by the sales team: 8 seats at $15 a month, or $1,440 a year, alongside the company plan everyone already has. The sales lead agrees to move the team onto the existing company subscription and cancel the duplicate at the end of the month.
In all, the review finds $7,830 a year: $5,940 in unused seats from the next renewal, $450 overbilled on the support desk renewal, and $1,440 in the duplicate tool. The line the operations lead takes to the CEO is the one that matters: three subscriptions changed, $7,830 a year saved, and the support desk held to the order form it signed.
How often should you review software subscriptions?
Check every software invoice when it arrives, and review the whole list once a quarter, with each tool getting a closer look 90 days before it renews. Checking the invoice catches a wrong price or seat count while you can still dispute it, and the quarterly review catches what an invoice cannot show, such as seats nobody uses or two tools doing one job. A subscription that renews once a year gets its main review once a year, but the quarterly pass makes sure no notice deadline arrives unseen. For the signs that a supplier is overcharging more generally, see how to tell if a supplier is overcharging you.
How can Ressura check your software invoices?
Ressura’s Procure-to-Pay Module checks software invoices the way it checks any supplier’s, since an order form is an agreement that sets a price. Add an order form and an invoice billed against it, and it checks the price per seat against the order form on the invoice date, applies any signed change from its start date, checks the seat count against what you ordered, matches each fee to one the agreement allows and adds the invoice up again. It flags a price that moves between invoices with no document behind it, shows how many days you have left to dispute an invoice, and, for a subscription billed a year ahead, shows what you have paid for but not yet used at period end. It does not see who logs in to each tool, so the count of seats in use still comes from each tool’s admin page. Any gap is shown in dollars with the arithmetic beside it, and if every line matches, the result reads All in order and lists exactly what was checked.