How CFOs Can Optimize SaaS Spend To Reduce Costs


In these challenging times, businesses are under immense pressure to cut costs and optimize spending. As the current economic downturn and funding crunch continue, CFOs are faced with the task of reducing software-as-a-service (SaaS) spend by 10% to 30%. Software spend has now become the third-largest expense for organizations, behind employee and office costs.

Key Takeaway

CFOs need to collaborate with CIOs and department heads to identify areas of high spending and low utilization in order to reduce SaaS spend without hindering company growth and innovation.

The Importance of a Metric-Driven Strategy

To effectively reduce SaaS spend, CFOs should adopt a data and metric-driven approach. By understanding the return on investment (ROI) for each vendor and evaluating the SaaS spend per employee, CFOs and CIOs can determine the true value of the software and its impact on the company’s financial performance. Conducting spend analysis allows for informed decision-making regarding cost optimization.

Identifying Departments with High Costs

It is crucial for CFOs to identify departments with the highest software costs. While the engineering department may have the highest spend in terms of dollars, it is actually the marketing team that has the highest number of SaaS applications. This insight enables CFOs to prioritize cost-cutting measures and focus on areas where there may be excessive spending.

Focusing on Low-Hanging Fruit

When it comes to reducing SaaS spend, CFOs should target sales and marketing teams as they often have a high count of abandoned and underutilized apps. These teams frequently acquire new tools to meet changing market demands, resulting in low utilization and redundant software. By identifying and addressing these inefficiencies, CFOs can significantly reduce costs without impacting critical business functions.

Benchmarking and Optimizing Buying Process

CFOs can use benchmark data to ensure their organization’s software spend aligns with that of similar-sized companies. It is crucial to collaborate with teams to optimize the buying process and control spending. If the company’s spend deviates from industry benchmarks, further investigation may be required to identify the reasons behind the discrepancy.

In conclusion, CFOs play a vital role in optimizing SaaS spend to reduce costs without compromising company growth and innovation. By adopting a metric-driven strategy, identifying departments with high costs, addressing low utilization, and benchmarking against industry standards, CFOs can achieve significant savings while maintaining organizational efficiency.

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