SaaS spend management: 10 strategies to keep your budget in check

In 2025, Gartner forecasts worldwide public cloud end-user spending to reach a staggering $723 billion. A significant portion of that spending is allocated to SaaS applications, making effective SaaS spend management more critical than ever. 

Understanding where your SaaS dollars are going, optimizing costs, and maximizing ROI are key for any organization looking to thrive in today's cloud-driven landscape. This article explores key tools to help you master SaaS spend management and gain control of your budget.

In this article, you'll learn:

• What SaaS spend management and its importance for your company’s financial health
• The telltale signs that indicate you need a better approach to SaaS spend management
• The risks you face by ignoring SaaS spend management best practices
• Actionable strategies to effectively manage and optimize your SaaS budget
• How Orb can support your SaaS spend management efforts

Let’s get started by explaining what SaaS spend management actually means. 

What is SaaS spend management? 

SaaS spend management is gaining visibility into, controlling, and maximizing your organization's investments in SaaS solutions. It means tracking, thoroughly analyzing, and strategically adjusting SaaS expenses so you are getting the best value for your money. 

This process includes understanding what SaaS tools are being used, how much they cost, who is using them, and how effectively they support business goals. 

Effective SaaS cost management also looks at contract terms, license usage, and potential overlaps in functionality. Ultimately, SaaS expense management aims to eliminate waste, improve purchasing decisions, and maximize the return on your SaaS investments.

Why is SaaS cost management so important? 

While keeping within budget is a primary concern, the importance of SaaS cost management extends far beyond simply balancing the books. Here's a closer look at why it's so vital.

Eliminating waste 

It's surprisingly easy for SaaS costs to spiral out of control. Duplicate subscriptions, unused licenses, and applications that don't quite fit the need can drain resources. SaaS spend management spots these areas of waste, letting you reallocate funds to more productive areas. 

For example, you might find that several teams are using different project management tools when one could serve everyone. Consolidating to a single platform can lead to notable savings.  

Improving visibility and control

Without a clear picture of your SaaS landscape, you're essentially operating in the dark. SaaS spend management provides the transparency you need to understand where your money is going. 

This improved visibility allows for better control over purchasing decisions and helps prevent "shadow IT" — the use of unapproved applications that can pose security and compliance risks. 

Remember: Knowing which departments are using which tools, and how much they're spending, allows for data-driven decisions about renewals and future purchases.  

Strengthening security and compliance

Unauthorized SaaS applications can introduce vulnerabilities to your network and compromise sensitive data. 

A robust SaaS spend management strategy helps identify these rogue applications, allowing you to enforce security policies and maintain compliance with industry regulations. This is particularly important in industries with strict data protection requirements.  

Getting more negotiation power

You're in a much stronger position to negotiate with vendors when you have a clear understanding of your SaaS usage and spending. 

Knowing how many licenses you need, how often they're used, and what features are essential gives you leverage to secure better pricing and contract terms. Vendors are often more willing to offer discounts or incentives to large or long-term customers.

Supporting strategic decision-making

SaaS applications are meant to support business objectives. By understanding how your teams are using SaaS tools, you can gain valuable insights into their workflows and identify areas for improvement. 

This information can inform strategic decisions about future software investments and help ensure that your technology aligns with your overall business goals. 

For instance, if you find that a particular application is being underused, you might decide to invest in training to improve adoption or explore alternative solutions.

Freeing up IT resources

Managing a sprawling SaaS landscape can be a major burden on IT teams. SaaS spend management tools can automate many of the tedious tasks associated with tracking licenses, managing renewals, and onboarding/offboarding users. 

Effective SaaS expense management frees up IT resources to focus on more strategic initiatives that drive innovation and support business growth.  

Boosting employee productivity

Providing employees with the right tools can greatly improve their productivity. SaaS spend management helps make sure that employees have access to the apps they need to do their jobs effectively, while also preventing them from using unapproved software. 

This balance is key to maximizing both productivity and security. By focusing on these broader benefits, you can demonstrate the true value of SaaS cost management to your organization and gain buy-in for implementing a solid strategy.

Signs you need SaaS spend management 

Recognizing the warning signs of uncontrolled SaaS spending is the first step toward regaining control of your budget. Here are key indicators that your organization needs a focused approach to SaaS spend management:

• Duplicate applications: Different departments or teams independently purchasing SaaS tools to solve the same problem leads to costly duplication, with multiple subscriptions for essentially the same functionality. 
  
  Example: Your marketing team uses one project management platform, while your product team uses another. Both platforms offer similar features, resulting in redundant expenses.

• Unrevoked licenses/applications for former employees: Failing to revoke licenses or deactivate accounts for employees who have left the company is a common source of SaaS waste, essentially paying for seats that are no longer being used. 
  
  Example: An employee leaves the marketing team, but their account on the project management platform remains active, incurring ongoing costs.

• Unused enterprise pricing: Many SaaS vendors offer discounted pricing for larger organizations or enterprise-level plans. If your company is eligible for these discounts but isn't taking advantage of them, you're likely overspending. 
  
  Example: Your company has enough employees to qualify for a discounted enterprise plan for a video conferencing tool, but you're still paying for individual licenses at a higher rate.

• Lack of central oversight: Without a centralized system for tracking SaaS purchases, it's difficult to get a clear picture of your overall spending, which can lead to uncontrolled growth in SaaS costs. 
  
  Example: Different departments are purchasing SaaS tools without informing IT or finance, making it impossible to track total SaaS expenditure.

• Shadow IT issues: As mentioned before, shadow IT refers to the use of unapproved SaaS applications within an organization. These applications can pose security risks, create compliance issues, and contribute to uncontrolled spending. 
  
  Example: Employees are using free or low-cost SaaS tools for tasks like file sharing or data storage without IT's knowledge, potentially exposing sensitive company information.

• Increasing costs without ROI: If your SaaS spending is increasing but you're not seeing a corresponding increase in productivity or revenue, it's a sign that your SaaS investments may not be paying off. 
  
  Example: Your company's spending on a customer relationship management (CRM) platform has increased significantly, but sales performance hasn't improved, suggesting that the tool may not be effectively used.

• Redundant features for tools: Sometimes, organizations end up paying for features in SaaS tools that they don't actually need. This can happen when employees select tools based on a "nice-to-have" feature without considering the overall cost. 
  
  Example: Your team uses a marketing automation platform with advanced analytics capabilities, but they only use the basic email marketing features. A less expensive tool with fewer features might be a better fit.

• No clear expense tracking: If you're relying on spreadsheets or manual processes to track SaaS expenses, it's easy for things to fall through the cracks. This issue can lead to missed renewals, inaccurate budgeting, and difficulty pinpointing areas of waste. 
  
  Example: Your finance team spends hours each month manually compiling SaaS expense data from various sources, increasing the risk of errors and making it difficult to get a real-time view of spending. This lack of clear expense tracking makes SaaS spend management extremely difficult. 

What are the risks of ignoring SaaS spend management?

Ignoring SaaS spend management can expose your organization to a range of financial, security, and operational risks. Let's explore some of the key dangers.

Financial risks

One of the most immediate consequences is wasted spend. Without proper tracking and analysis, it's easy to accumulate redundant subscriptions, unused licenses, and applications that don't deliver sufficient value. 

This directly impacts your bottom line and diverts resources from more strategic initiatives. Beyond simple waste, a lack of SaaS spend management can also lead to inaccurate budgeting and forecasting. 

Without a clear picture of your SaaS expenses, it becomes difficult to predict future costs and make informed decisions about software investments. Effective SaaS cost management is vital to prevent this.

Security risks

Security risks are another key concern. Unmanaged SaaS applications, particularly those adopted through shadow IT, can create vulnerabilities in your network and expose sensitive data. 

These applications may not meet your organization's security standards, leaving you susceptible to breaches and compliance violations. 

For example, employees might be using file-sharing tools that don't encrypt data properly, or they might be granting access to unauthorized third parties.

Compliance risks

Compliance issues can arise when sensitive data is stored or processed in SaaS apps that don't adhere to industry regulations like General Data Protection Regulation (GDPR) or Health Insurance Portability and Accountability Act (HIPAA). 

Ignoring SaaS spend management makes it difficult to ensure that all your applications meet the necessary compliance requirements. This can lead to hefty fines and reputational damage.

Operational inefficiencies

Operational inefficiencies can also result from neglecting SaaS spend management. When different teams use different tools for similar tasks, it can create silos and hinder collaboration. It also becomes more challenging to standardize processes and ensure data consistency across the organization. 

For example, if one team uses one CRM and another team uses a different one, it becomes difficult to get a unified view of customer data. This can lead to duplicated efforts, data discrepancies, and missed opportunities. 

Furthermore, without centralized control over SaaS applications, managing user access and licenses becomes a cumbersome task. This can lead to delays in onboarding and offboarding employees, as well as difficulties in guaranteeing that everyone has the right tools they need to do their jobs.

Vendor negotiation challenges

Finally, a lack of SaaS spend management can weaken your negotiation position with vendors. When you don't have a clear understanding of your usage patterns and spending, it's difficult to negotiate favorable contract terms or take advantage of volume discounts. 

Remember: Vendors are more likely to offer better deals to organizations that demonstrate a clear understanding of their SaaS needs.

10 SaaS spend management strategies to consider 

Effective SaaS spend management requires a proactive and multi-faceted approach. Here are ten specific strategies to consider.

1. Conduct a detailed SaaS inventory audit

Go beyond simply listing applications. Document the purpose of each application, the department using it, the number of licenses, the renewal date, the contract terms, and the assigned owner. 

This detailed inventory forms the foundation of your SaaS spend management strategy.

2. Analyze SaaS spend by department and application

Break down your SaaS spending by department and individual application. This approach allows you to determine areas of high spending and pinpoint potential redundancies or underutilized tools. Visualizing spend in this way can highlight areas for immediate attention.

3. Implement license management best practices

Reclaim and reassign unused licenses promptly. Automate alerts for upcoming renewals and license expirations. This ensures you're not paying for licenses that are sitting idle.

4. Evaluate feature usage and downgrade when possible

Don't pay for features that aren't being used. Analyze how employees are using each application and identify opportunities to downgrade to less expensive plans with fewer features. 

Remember: Doing so requires understanding the needs of your teams and matching them with the right feature set.

5. Negotiate volume discounts and enterprise agreements

Leverage your organization's size to negotiate volume discounts and enterprise agreements with SaaS vendors. Consolidating subscriptions and standardizing on preferred tools can increase your buying power.

6. Standardize on key SaaS applications

Identify the core SaaS applications that are elementary to your business and standardize their use across the organization. This reduces complexity, improves collaboration, and strengthens your negotiating position with vendors.

7. Establish a formal SaaS procurement process

Create a formal process for requesting, approving, and purchasing SaaS applications. This strategy helps prevent maverick spending, helps make sure that all purchases align with organizational goals, and allows IT to evaluate security and compliance before a tool is adopted.

8. Integrate SaaS spend management with finance systems

Integrate your SaaS spend management platform with your finance systems to automate expense tracking, improve budgeting accuracy, and gain real-time visibility into SaaS costs. Following this strategy allows for more accurate financial reporting and forecasting.

9. Implement user access controls and offboarding processes

Establish clear user access controls to make sure that employees only have access to the applications they need. Implement automated offboarding processes to promptly revoke access to SaaS applications when employees leave the company.

10. Continuously monitor, analyze, and optimize SaaS spend

Continuously monitor your SaaS spending, analyze usage patterns, and identify opportunities for improvement. Regularly review your SaaS portfolio and adapt your strategies as needed. Remember this is an ongoing process of refinement.

5 ways Orb can help your team with SaaS spend management

Orb is a billing platform that offers powerful tools to indirectly support and enhance your SaaS spending management. We work particularly well for SaaS businesses that rely heavily on usage-based pricing models. 

Here are five ways Orb can contribute to better SaaS spend management.

1. Transparency in usage-based costs

Orb provides complete visibility and tracking of usage data, creating a single source of truth for all your teams. With Orb's raw event architecture, you gain accurate, real-time insights into how your customers are using your product. 

This granular view of usage allows you to understand cost drivers and identify trends. This data, while it’s not directly a SaaS metric like sales or marketing spend analysis, is crucial for making informed decisions about pricing and resource allocation. Overall, these are key elements of effective SaaS spend management. 

You can also set up webhook alerts based on usage and reach out to customers in real time to drive better decision-making, which can help with managing costs by preventing overuse or identifying opportunities for upselling.

2. Custom pricing models

Orb's flexible pricing engine allows you to experiment with many pricing models, like volume discounts, dimensional pricing, and prepaid credits. You can change your pricing on the fly, letting you adapt to market conditions, feedback, and changing business goals. 

This agility in pricing is crucial for optimizing revenue and guaranteeing that your pricing aligns with the value you deliver. By trying various pricing strategies, you can find the balance between revenue generation and user satisfaction, contributing to better SaaS spend management. 

Orb allows you to migrate pricing in bulk, schedule price changes in advance, and get granular control of legacy pricing.

3. Accurate chargeback reports

Orb's usage tracking and billing reports can be used to precisely and reliably confirm chargebacks. Orb eliminates billing errors, reduces disputes, and fosters trust with your customers. 

Accurate chargeback reports are key for internal cost allocation and understanding which teams or departments are driving SaaS usage. This data can inform budgeting decisions and help you identify areas where costs can be reduced.

4. Revenue optimization

Orb's focus on usage-based pricing allows you to improve your revenue generation. By accurately tracking usage and experimenting with different pricing strategies, you can find the most effective ways to monetize your product and maximize your revenue. 

This direct link between usage data and revenue is a great tool for driving business growth and confirming that your SaaS spending is generating a strong return. Orb helps you move from static billing to a dynamic, data-driven monetization engine that evolves with your company. 

5. Integrations

Orb integrates with other tools in your financial stack, such as payment gateways (like Stripe) and accounting software. Orb eliminates data silos and guarantees that your billing data flows smoothly into your financial systems. 

These integrations improve operational efficiency, reduce manual effort, and enhance the accuracy of your financial reporting — all of which contribute to better SaaS spend management. 

Orb's API ensures high-volume scalability, and built-in functions (Orb Billing, Invoicing, and Reporting) allow frictionless operations across the full billing lifecycle. Orb also offers a powerful UI that can be used by both engineers and non-technical stakeholders. We handle recurring payments, versatile usage-based billing options, and more. 

Ready to experiment with the difference Orb can have in your SaaS spend management? Check out our flexible pricing options to find a plan that works just for you.