Signs you need SaaS spend management: Stop the budget leak and gain control

Struggling with SaaS budget leaks and constant overruns? You’re not alone. Like most, you started with a handful of essential SaaS tools that morphed into a maze of overlapping subscriptions, hidden costs, and underutilized licenses. If you’re grappling with escalating software bills, frustrated employees, or a general sense of mystery around tool adoption, you’re showing some clear signs that you need SaaS spend management.

SaaS spend management is more than cutting costs. In the rapidly changing SaaS industry, it’s an essential and strategic discipline encompassing discovery, governance, optimization, and continual oversight. By deploying a platform, organizations can achieve SaaS rightsizing, ensure accurate SaaS cost allocation, execute unused software license reclamation, and drive SaaS procurement optimization. 

Together, let’s dive deep into the warning signs, where you’ll learn:

• Root causes
• Organizational impacts
• Actionable solutions

Finally, we’ll touch on how to transform SaaS from a budget drain into a high-value efficiency engine for IT and the entire organization.

What is SaaS spend management?

Before exploring signs that indicate your need, let’s holistically describe SaaS spend management. At a high level, it’s the practice of optimizing SaaS stack costs. 

SaaS spend management activity	What it does
Discovery and app inventory	Surface every SaaS tool, known or unknown
Usage monitoring and insights	Track actual engagement
Policy creation and enforcement	Establish procurement, renewal, and offboarding policies
Vendor management and contract optimization	Manage contracts, vendors, and renewals to negotiate better contract terms
License reclamation	Reclaim unused licenses and redeploy them
Cost allocation and reporting	Distribute expenses accurately across departments or projects from a cost accounting perspective

When executed well, SaaS spend management delivers significant benefits. By SaaS rightsizing, organizations match subscriptions to actual needs. 

Accrual-based SaaS cost allocation reflects costs over time and by department. Proactive unused software license reclamation reduces orphaned seats, and SaaS procurement optimization centralizes all software purchasing to cut Shadow IT spending.

The average enterprise now uses over 100 SaaS applications, with many reporting 200+ in larger organizations. Without structured spend management, according to a recent 2025 Gartner report, you stand to waste up to 25% of your SaaS budget. 

But when is your organization ready to adopt a more formal program and a real SaaS spend strategy? 

It can be hard to know when the time is right. But in our BetterCloud experience, there are some red flags that signal when your organization is due for a SaaS spend management overhaul.

6 signs that you need SaaS spend management

Even if you recognize half of these indicators in your company, it’s time. In this section, we explore the problem behind each sign, including the root cause, impact, and solutions you can consider.

1. SaaS sprawl with too many apps

One of the most prominent signs you need SaaS spend management is the unchecked proliferation of applications.

What begins with marketing adopting one CRM and sales choosing another soon snowballs into dozens—or hundreds—of overlapping tools. A 2025 BetterCloud industry report revealed that mid-sized companies average 106 SaaS apps, down slightly from 112 in 2023 but still indicative of persistent sprawl. 

Meanwhile, large enterprises often exceed 300, making it hard to track, let alone optimize.

Duplicate accounts and overlapping functionality are the silent killer here. Your organization might have twelve Zoom accounts, Asana and Monday.com for project management, or multiple analytics platforms displaying all-too-similar dashboards. Each subscription compounds costs, but the real damage is fragmented workflows, confused employees, and the resulting IT management and security nightmare. 

Root causes

• Decentralized procurement: Users subscribe without IT involvement
• Shadow IT: Employees sign up for free trials or freemium tiers that become paid subscriptions, as 21% of organizations discovered unauthorized SaaS apps added by users in 2025
• Mergers and acquisitions: Inherited tech stacks introduce redundancy

Impact

• Financial: 20–30% of SaaS spend is typically wasted on unused or redundant tools, with waste potentially go far higher when including IT inefficiencies
• Employee productivity: Context-switching reduces productivity by up to 40%, as U.S.-based employees hop between apps 30 times a day on average 
• User access management: Inefficient and error-prone provisioning and deprovisioning, increasing risk that a departed employee retains access
• Security: Multiple tools expand the attack surface, with many SaaS users holding excessive privileges that amplify risks

Solution: SaaS rightsizing and procurement optimization

A powerful spend management platform automates app discovery across identity providers, accounting apps, expense apps, and sometimes, browser extensions. It flags duplicates by mapping application functionality, like project management and recommends consolidation. Although contract consolidation usually happens over time, such tools can save 25–35% of SaaS costs through targeted rightsizing.

SaaS rightsizing goes further by analyzing usage patterns. With these insights, you can downgrade licenses or tiers, and perhaps merge identical app subscriptions. 

For instance, if 60% of your Zoom licenses are unused, the system can auto-downgrade to a smaller plan. Another example, say you uncover multiple paid Zoom pro accounts, and merging them into a single account. 

SaaS procurement optimization centralizes approvals, enforces preferred vendors, and blocks unauthorized sign-ups to prevent sprawl before it starts.

2. No visibility into actual usage

As we said earlier, Gartner says that 25% of provisioned SaaS licenses go unused, contributing to widespread waste. This means you’re likely paying for 100 licenses of a tool while only 75 users log in monthly.

Not knowing logins and the amount of tool engagement is a glaring sign you need SaaS spend management. Without granular usage data, you’re flying blind, allocating budget dollars based on mere conjecture. 

Root causes

• Self-service app procurement: Department leaders or users provision seats without tracking why they need it or who gets permissions
• No integration with HRIS and apps: Departed users retain SaaS access, sometimes even at super admin levels, and IT can’t access them
• No engagement metrics: No idea of logins, feature adoption or session duration

Impact

• Wasted money: Too many SaaS licenses go unused
• Poor decision-making: Renewals take the path of least resistance and happen automatically
• Compliance risks: Ghost accounts become security risks, as 92% of the attack surface is caused by over-privileged accounts

Solution: Usage monitoring and unused software license reclamation

Modern SaaS spend management tools integrate with SSO, accounting apps, and expense management to deliver real-time usage dashboards. 

Key metrics for tying usage to automated SaaS reclamation could include the following:

SaaS license usage metric	Definition	Optimization trigger
Active users for high-value tools	Logins in last 30 days	<60% then reclaim
Active users for less costly apps	Logins in last 90 days	<30% then reclaim
Feature utilization	% of premium features used	<50% then downgrade
Session duration	Average time per login	<5 min then re-evaluate

Unused software license reclamation automates identification and deprovisioning. According to your rules, like 30 or 60 days, if an employee hasn’t logged in, a SaaS spend management tool can:

1. Notify the user and manager of the lack of usage
2. Suspend the license
3. Reclaim and reallocate, or cancel, the license

You can also set reclamation thresholds by app. For instance, IT can automate unused software license reclamation after 30 days for high-cost tools like Salesforce. For lower-cost apps, automated workflows can reclaim dormant licenses after 90 days without login.

Usage monitoring directly fuels SaaS cost allocation accuracy. Instead of charging business departments based on headcount for tools like marketing automation, finance teams can now charge departments based on actual tool usage. 

3. Inaccurate or manual SaaS cost allocation

Finance sends a $50,000 quarterly Zoom bill to IT with no breakdown. IT, in turn, charges departments, causing business function leaders to then dispute the charges. This disconnect is a textbook sign you need SaaS spend management. Manual spreadsheets and gut-based allocations breed resentment and budget fights. 

Root causes

• No invoice metadata: Subscriptions lack cost center codes
• Per-seat pricing complexity: Hard to split shared licenses
• Decentralized payments: Credit card charges bypass procurement

Impact

• Interdepartmental tension: Teams feel overcharged
• Budget opacity: Finance leaders can’t forecast accurately
• Tax and compliance errors: Misallocated costs skew financial reporting

Solution: automated SaaS cost allocation

A spend management platform ingests invoice data, maps users to cost centers via HRIS integration, and applies the allocation rules finance sets. 

Here are some examples of cost allocation rules you could apply by app: 

1. Salesforce: Allocate by CRM-active users in Sales/Marketing

2. Figma: Allocate by Design team headcount + cross-functional usage %

3. Zoom: Prorate by meeting hours per department

The result? You’ll be able to allocate the total budget more accurately and have full spending transparency by each department.

Department	Total SaaS Spend	% of Budget	Top 3 Apps
Sales	$195,000	41%	Salesforce, SalesLoft, and Zoom
Engineering	$94,500	24%	GitHub, Datadog
Marketing	$86,025	19%	Hubspot, Figma, Ahrefs

This transparency enables SaaS rightsizing at the department level, justifies unused SaaS license reclamation with hard data, and improves forecasting for years to come.

4. Auto-renewals and misplaced contracts

You just noticed that a $43,000 annual contract renewed for yet another year because no one paid attention to the contract’s key cancellation dates. This “set it and forget it” mentality is a sure sign you need SaaS spend management. 

In recent years, most SaaS contract agreements had automatic annual price hikes between 5% and 10% with renewals. But as we approach 2026, SaaS renewal pricing is far higher for some apps. While the average SaaS contract is 8.7% higher, Snowflake and Datadog are increasing prices by 25%, and Slack Business+ is going up 20%. 

Forgetting SaaS rightsizing and not negotiating new contracts can have devastating financial consequences, particularly when SaaS waste compounds at higher and higher rates.

Root causes

• No centralized contract repository: Terms scattered across email and drives
• No automated renewal alerting: 90-day reminders don’t exist

Impact

• Unpleasant budget surprises: Unexpected bills derail budgets
• Missed negotiations: No leverage at renewal time
• Vendor overreach: Auto-upgrades to higher tiers

Solution: vendor management, contract intelligence and SaaS procurement optimization

This is critical because SaaS spend management solutions contain a contract lifecycle database for vendor management so you can maintain spending with:

• Renewal dates
• Pricing benchmarks
• Usage-versus-entitlement gaps

Using your SaaS spend management tool, what does this look like? 90 days prior, your tool automatically:

1. Flags underutilized licenses
2. Triggers unused software license reclamation
3. Alerts you of key contract expiration dates
4. Arms procurement with essential usage data to renegotiate (e.g., “We’re using 42% of the last contract’s seats. Cut the price or we switch”)

With all these insights, you can build a robust, data-driven negotiation strategy—your custom playbook—or every contract renewal. You can also use such data for ROI vendor evaluations, necessary for standardized SaaS procurement optimization processes.

5. Employee frustration and tool fatigue

Your team toggles between 15 apps daily, forgetting passwords and duplicating work. Productivity, and by extension, morale dips. Recognized as tool fatigue, your users are overwhelmed by the number of technology tools they must navigate to complete work, leading to stress, decreased productivity, and burnout. 

To understand the scale of what seems to some to be a non-issue, Lokalise research found: 

• Per workday, 17% of users switch between tabs, apps, or platforms more than 100 times
• Users lose an average of 51 minutes per week to tool fatigue, which adds up to more than 44 hours of wasted time annually
• 56% say tool fatigue including toggling, alerts, and redundant platforms, negatively affects their work
• A whopping 79% of users say their organization hasn’t taken steps to reduce tool fatigue or consolidate platforms

Often overlooked, tool fatigue is a profound, human-centric sign you need SaaS spend management. 

Root causes

• Tool proliferation without governance: No employee app catalog of IT-sanctioned tools that IT manages and supports
• Poor user onboarding process: New hires overwhelmed by app avalanche
• Redundant workflows: Tools that don’t integrate into orchestrated workflows will force manual work, often performing the same task in multiple places.

Impact

• Productivity loss: Up to 22% of the work week is spent app-switching and 47% struggle to find information needed to be effective
• Innovation stagnation: Employees avoid new tools due to overload
• Lower impact: 66% of employees would have better business outcomes if IT provided universally accepted and supported apps—which is what an IT-sanctioned app catalog provides

Solution: employee-centric SaaS rightsizing

Many SaaS spend platforms now include employee sentiment surveys and app rationalization workflows. Steps:

1. Pulse surveys: Easily ask users “Which tools do you love/hate?” and integrate those surveys into Slack and/or email
2. Journey mapping: Identify friction points in key processes, like “expense reporting takes 3 apps”
3. Consolidation recommendations: Replace multiple point apps with more feature-rich options

The outcome? Happier, more productive employees, and an IT-sanctioned, employee self-service app catalog. Further, that enterprise app marketplace contains the SaaS apps everyone can agree with, complete with:

• Single Sign-On (SSO) enforcement
• Training with in-app prompts
• Feedback loops to product owners

This directly supports SaaS rightsizing and cost allocation by tying employee satisfaction to spend justification, saving around 25% of the total budget, and preventing 44 hours of wasted time per employee every year.

6. Security and Compliance Gaps

Unbeknownst to you and the rest of the IT team, a former employee somehow retains Notion access. A whole year after departure and some sensitive data leaks, your team finally notices. 

This risk may still be non-financial, but before it escalates, you need to act on this urgent sign you need SaaS spend management. Overprivileged accounts drive many SaaS incidents, confirmed breaches grew 100% from 2024 to 2025, so every organization needs to close all security gaps.

Root causes

• Manual offboarding: IT tickets delayed, or missed, manual checklist steps
• No user access reviews: Annual audits miss SaaS apps
• Shadow IT: Unapproved tools evade data loss prevention, as 55% of employees adopt SaaS without security involvement

Impact

• Data breaches: 30% of breaches caused by human error involve SaaS app misconfigurations
• Costly regulatory fines: GDPR, CCPA, SOX, etc. non-compliance
• Reputational damage: Customer trust erosion and lost revenue

Solution: Zero-Trust SaaS governance

SaaS spend platforms automate contextual access controls:

Workflow Trigger	Action
Employee offboarding	Revoke all SaaS access in <1hr after post-exit, automatically
90-day inactivity	Suspend license and notify manager
High-risk app without MFA activated	Block and require approval

Use of an all-in-one SaaS management tool with IT automation and data loss prevention functionality help enforce SaaS security best practices. It flags anomalies, like large file downloads or high quantities of work email forwarded to personal emails. Using automation capabilities, IT can instantly remediate improper sharing. 

Ultimately, this protects the organization and justifies unused software license reclamation by proving risk reduction, with 80% of organizations prioritizing SaaS security in 2025.

Your business case for SaaS spend management

By now, you’re convinced you should take these signs seriously and that you need SaaS spend management. Now, you need to understand the potential savings and here’s how you can quantify ROI:

Initiative	Typical savings	Time to value
Overlapping accounts and app identification	10-20%	1-2 months
Unused license reclamation	20–35%	1–12 months, depending on app renewal cycles
Contract renegotiations	10–30%	6–12 months
Accurate cost allocation	Better budgeting accuracy	Immediate

Meet BetterCloud: The all-in-one SaaS management platform

BetterCloud is engineered for mid-market and enterprise IT and finance teams ready to operationalize SaaS rightsizing, SaaS cost allocation, unused software license reclamation, SaaS procurement optimization, and much more.

As an all-in-one platform, you also save with new IT operational efficiencies, more productive employees, reduced license costs and lower security and data loss risk.

Key BetterCloud capability	Core function and benefit
Zero-touch user lifecycle automation	Automate end-to-end onboarding, offboarding, and mid-lifecycle changes with no-code workflows
SaaS discovery, inventory, and Shadow IT elimination	Gain full visibility into all SaaS applications (sanctioned and unsanctioned) to mitigate risk and maintain control
License optimization and reclamation	Automatically identify and deprovision unused or underutilized licenses to reduce SaaS spend and waste
Cloud file security and governance	Monitor and enforce sharing policies for sensitive data across critical SaaS applications like Google, Slack, and Dropbox
Security policy enforcement	Automate the detection and remediation of security misconfigurations and access violations across your entire SaaS stack
Automated help desk tasks	Offload time-consuming manual requests like password resets, group additions, and access grants via automation
Approved app marketplace	Operate a self-service app catalog and sentiment feedback loop
Vendor and contract management	Centralize contracts, track renewal dates, usage trends, and benchmark pricing to drive smarter contract negotiations
Integrations and extensibility	Connect with 100+ native integrations and utilize custom webhooks to orchestrate workflows across virtually any application, 1,000+ no-code workflows for offboarding, access reviews, policy enforcement

Out with the budget overruns, in with control

The signs you need SaaS spend management are unmistakable: sprawling app stacks, invisible usage, manual allocations, forgotten renewals, frustrated teams, IT inefficiencies, and security gaps. Left unchecked, these issues erode margins, morale, and agility—especially as SaaS powers 85% of business software in 2025.

With a tool like BetterCloud Spend Optimization, you can truly transform SaaS into a strategic asset. Achieve SaaS rightsizing that matches spend to value. Drive SaaS cost allocation that fosters accountability. Automate unused software license reclamation that recaptures many thousands of dollars. And most importantly, enforce SaaS procurement optimization and governance to prevent future waste.

The average BetterCloud customer saves thousands on SaaS within 12 months. Isn’t it time your organization joined them?

Check out our BetterCloud Guarantee and schedule a personalized demo today to learn how much you can save. 

EDITOR’S NOTE: THIS POST IS UPDATED FROM OCTOBER 2024