The common theme is the need to track what software is in use in your business. It’s a well-worn adage that you can’t manage what you can’t measure. This is even more extreme for SaaS software, where sometimes you can’t see half of it, let alone measure it!‍

Tracking what sort of software is used by a business is not a new idea. Application Portfolio Management (APM) and Software Asset Management (SAM) tools have been around for years, helping IT manage the software landscape, and ensuring that appropriate license fees are paid. Typically, these tools are oriented around old-school software that is deployed in a controlled corporate environment.Whatever your IT operations objectives are, the starting point for each of these disciplines is the need to manage a software inventory.

What makes SaaS different?

Before we look at what defines these different disciplines, it’s worth considering what makes SaaS different to the old-school, IT-controlled software that used to typify enterprise applications.

Ease of access & sign-up

Anyone in the business can start using, and in some situations even start paying for SaaS apps without involving the IT department at all. In that sense, SaaS has democratized software access. This is partly a function of the technology itself, which is accessible with an internet connection and a conventional browser and without potentially confusing configuration or installation steps. Additionally, SaaS vendors capitalized on this accessibility advantage by adopting SaaS pricing strategies centred on trials and freemium models that target end users rather than the traditional IT buyer.

The upshot for your IT operations is that users are almost certainly using software that at best you’re aware of but not really ‘managing’, or perhaps not aware of at all. The catch-all term here is ‘Shadow IT’ and if you want to read about some real world examples of how serious an issue that actually is, take a look at this article we wrote (the good news is that it’s not all bad news, and it’s eminently addressable).

We’re deliberately excluding another defining characteristic of SaaS in this article – third party risk. SaaS means third party hosting and management, with the attendant information security & privacy risks. There are a host of issues (and SaaS Management solutions) around access risk and vendor management that are definitively outside the scope of IT Asset Management or Application Portfolio Management tools. We’re going to keep the focus of this article on SaaS inventory and license management.

What’s the value of SaaS Management?

The typical objectives and benefits are:

  • Monitoring SaaS usage – to identify what apps are in use and to what extent. This is often referred to as SaaS discovery, and the aim is to address the visibility issue we just discussed above
  • SaaS license management – to keep on top of your SaaS spend and renewals. Preparing for renewal negotiations and monitoring duplicative spend is the low hanging fruit of SaaS cost management
  • SaaS optimization – to ensure users are getting full benefit from your SaaS licenses. This maximises your users’ productivity and your ROI. For instance, why pay for an Enterprise Zoom license for a user who either doesn’t set up meetings for several months, or only seems to hold short meetings that could easily be supported by a basic license?

We’ll come back to these objectives after we’ve taken a look at some of the tools available to IT teams.

Application Portfolio Management

APM tools help IT teams manage the present, and plan for the future. They’re used by enterprise architects as a system of record for what software is in use within a business, which projects or teams are using it, and how data flows between applications.

Applications are typically mapped to business capabilities, giving APM tool users a strategic edge – the IT team can effectively describe to the business what the software they own allows them to do. The flip-side of this is that they can be used as a way to engage senior business leaders by giving IT a mechanism to say to a CEO “tell us where you want to take the business, and we can tell you what IT will need to do to deliver this”.

This makes them a very important tool for planning the rollout of new applications, understanding integrations between existing systems, and planning phasing out and eventual retirement. Often companies grow by acquisition and having a good APM tool lets IT see what systems are used by the companies that have been acquired, and plan migrations to unified tools where there is functional overlap.

In the era of the cloud, many APM vendors are adding “cloud-native” offerings which bolt on functionality to track applications that are deployed outside the corporate data center in AWS or Azure.

IT Asset Management

If APM tools are focused on strategy, IT Asset Management tools are firmly geared towards the operational practicalities of owning physical and virtual assets. The underlying driver is clear – companies spend large amounts of money on hardware and software so they want to keep track of where those assets are.

Lifecycle management is a key part of IT asset management, just as it is to APM, but more in terms of understanding when laptops might need to be upgraded or replaced, or who is using which version of, say, Microsoft Visio.

Hardware and software are related, in that software gets installed on hardware. If a company is paying per installation of a piece of software, then they want to know what is installed, and where, so that unused software can be deinstalled and the license reused. Large vendors also subject customers to software audits to ensure licensing compliance, so having an accurate record of what software is in use makes life simpler, and reduces the risk of non-compliance and associated penalties.

IT Asset Management is a broad discipline. The subset we’re addressing in this article is Software Asset Management (SAM) and more specifically, Software License Management (SLM).

What makes a SaaS Management platform different?

Application Portfolio Management is deep but not broad when it comes to SaaS

An APM tool addresses the software that you’re aware of and want to manage from a strategic perspective. As far as SaaS usage is concerned, an APM tool is deep but not broad. It will account for detailed functional capabilities of an app and how that applies to your unique organizational context. It won’t help you discover the apps your users are adopting without your knowledge as they identify their own requirements and select the tools they need (that’s not to say users are making the right decisions, of course!)

Similarly, whilst APM tools are concerned with SaaS spend in a strategic sense i.e. what apps do I want to be using over the next 5-10 years, they’re not looking at more immediate, operational concerns of SaaS optimization and spend management.

In short, APM tools and SaaS Management platforms can be complementary, but the two solutions are addressing very different problems. A SaaS Management platform should help identify new apps that you weren’t aware of and indeed help spot SaaS usage trends that point to the strategic apps of tomorrow. It’s these SaaS apps that belong in your APM tool after they’ve been discovered and managed in a SaaS Management platform.

IT Asset Management hasn’t kept pace with SaaS licensing

The differences here are more subtle, as ITAM and SaaS Management platforms are specifically geared towards software license management, there is a lot of overlap. Both tools address the fundamentals of maintaining a software inventory and making sure license details are kept up to date and renewals are managed proactively.

SaaS software discovery needs specialist tools

A key ITAM vs SaaS Management difference is support for software discovery i.e. identifying Shadow IT. As traditional IT Asset Management focuses on installed or on-premise software, the discovery requirements are more contained. Centrally managed devices and networks can be scanned to identify installed applications. However, we’ve already discussed the major challenge for IT leaders being the discovery of unmanaged SaaS usage. That requires a different set of techniques, such as integrating with your Identity Provider (IdP), scanning spend data from expense systems or monitoring logs. SaaS Management platforms arrived a few years ago precisely because traditional ITAM tools weren’t meeting these SaaS discovery needs.

SaaS optimization is about more than license recycling

Effective IT Asset Management will help reduce software costs, but that’s often within the context of old-school perpetual licenses for installed applications. Typically that means software license recycling i.e. making sure unused licenses, or licenses assigned to company leavers / hardware you’re decommissioning are being reassigned.

Perpetual licensing means you’ve already paid for the software, perhaps with an option to pay a small maintenance or support fee on an ongoing basis. SaaS licensing is inherently different as you don’t own the software, you’re essentially renting access to it. The fees for this ‘rental’ are recurring and changeable. This has implications for license management and software cost control.

There are so many ways to structure SaaS pricing that reviewing them all is beyond the scope of this article. What we can safely say is that a per user rate is very common. This rate is likely to vary by licensing tiers.

Let’s take Zoom licensing as an example:

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Zoom licensing tiers

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There are five Zoom licensing tiers, one free with the remaining three charged on a per user basis. Each tier offers different functionality.

Let’s imagine you are actively managing Zoom and have a company-wide subscription. Given that you will be paying for each user, we want to drop subscriptions for people that aren’t actually using it. But there is a nuance to this: if your users are setting up meetings but typically only shorter meetings, their needs could be met by the Basic (free) tier, meaning we can bump their subscription down and save money in the process. This is SaaS optimization. In simple terms, we want to rightsize our SaaS licenses to make sure we’re paying only for active users, plus we want to understand user behaviour to ensure we have people on the right subscription tiers.

At a minimum, SaaS optimization requires insight to the user list of a given application, their subscription tier and their access history. Roughly a quarter of the apps we see being actively managed will have an API that provides this insight. Just knowing if someone is logging into an app might not be enough though. In our Zoom example we want to know if someone is logging in and setting up meetings and what the average meeting length is. That requires a much broader API that is far less common (though Zoom offers an example of one such API). These app-specific engagement metrics take us well beyond the traditional ITAM use/unused license review, which is why more specialist tools are required. To achieve the objective of SaaS optimization, SaaS Management Platforms include out of the box API connections for apps and the tools to analyze and respond to the usage insights available.