Software-as-a-service (SaaS) has witnessed explosive growth over the past few years, as vendors, thought leaders, and CIOs have hailed the enhanced efficiency, lower costs, and reduced time to benefit the model can deliver. However, in their zeal to make good on the promise of SaaS, IT leaders often lose full visibility into the technology stack across their enterprises, leading to underutilized or even unutilized applications.\n\nAccording to analyst firm Gartner, organizations will overspend $750 million dollars on unused features of IT software this year alone.\n\nBloated SaaS and add-ons adoption is an inevitability borne of organizations\u2019 greater focus on technology rather than digital business capabilities, says Dr. Pankaj Setia, professor of information systems and strategy at the Indian Institute of Management \u2014 Ahmedabad.\n\n\u201cAny IT leader has to think about developing advanced digital capabilities that make the organization better off. A business is interested in performance. And, enhanced performance manifests through these capabilities. So, CIOs need to rethink how they are going to build valuable business capabilities, and not just acquire technologies with more features,\u201d Dr. Setia says, referring to a central challenge that is redefining the CIO role today. \n\nEnterprise software vendors often emphasize the sharp reduction in marginal cost of additional features and the compounding impact of these modules on outcomes, to convince the buying office and procurement teams on the ROI of buying a bundled offering versus adding features on a need basis later. \n\n\u201cEnterprises typically attempt to ensure adoption by democratizing access and mandating or encouraging use of self-learning modules to ensure that the software is adopted,\u201d says Sudhir Kesavan, Partner at PwC India. \u201cSometimes they also \u2018govern\u2019 usage through dashboards around frequency of use within the target employee base. While these steps ensure that the target employee base uses the software, they do not ensure that the full feature set for which the enterprise is paying for is being leveraged.\u201d \n\nWhatever may be the reasons for SaaS bloat, addressing the challenge is crucial for optimizing costs and improving overall efficiency within the organization. Here are the most important strategies to avoid SaaS bloat.\n\nRigid governance, regular audits, and usage analysis\n\nIT leaders must conduct regular software audits to identify and assess the usage of all SaaS applications across the organization.\n\nKamal Goel, senior VP of IT at Hitachi Systems India, says, \u201cGather data on software adoption, utilization, and user feedback to determine which tools are genuinely adding value to the organization and which ones are underutilized or redundant. This analysis will help you make informed decisions about which subscriptions to keep, downgrade, or terminate.\u201d\n\nAt a previous employer, Goel\u2019s IT department conducted a comprehensive audit of all SaaS applications and found that multiple teams were subscribed to a project management tool but most only used a fraction of its features. \u201cBy switching to a more focused and cost-effective project management tool and discontinuing the old one, the organization saved significant expenses without compromising productivity,\u201d he says.\n\nOftentimes, teams continue to rely on existing systems and processes while the quality of data and intelligence in the new system suffers resulting in its more advanced features becoming superfluous.\n\nKesavan says, \u201cGovernance needs to take a stubborn stance on relying exclusively on the information and intelligence provided by the new system even if it results in a poor decision or delays. Such stubbornness triggers compliance as the team's realize that their KPIs are going to suffer.\u201d \n\nMap features to user cohorts and understand real ROI \n\nDoing the homework of mapping features tocohorts of employees along with frequency of need within the target employee base helps enterprises negotiate better. \n\n\u201cInvariably base features will be used by a majority on a high frequency basis while at the other end of the spectrum some features will invariably be used only by power users or a specialized cohort, on an ad-hoc basis.\u00a0Mapping of features and user cohorts will help the buying organization and procurement to negotiate not just the right volume but also the right licensing model \u2014 per user, by compute, or floating licenses,\u201d Kesavan says. \n\nCentralized approval process and systematic decommissioning\n\nAccording to R Anand Laxshmivarahan, group chief digital and information officer at Indian conglomerate Jubilant Bhartia Group, it is fine if an enterprise is clear on what business capabilities it needs and how to enable those capabilities with market leading market standard SaaS applications. \u201cThe problem occurs when instead of the IT department, other business stakeholders start doing so themselves. Therefore, IT must be proactive in partnering with the business addressing digitization of business capabilities,\u201d he says.\u00a0\n\nKesavan agrees, adding, \u201cDigital operating models encourage empowered federation resulting in a sprawl of use case specific software or even Excel macros that inhibit the use of new systems, which inevitably results in undermining not just the ROI but also the security and single pane benefits. To ensure adoption of the new SaaS software and its features alongside user training, etc., CIOs need to understand the day in the life of their user base and then put a formal program in place to decommission use of nonstandard software.\u201d \n\nTo preempt such instances of shadow IT, Goel proposes that enterprise technology leaders implement a centralized approval process for any new SaaS tool adoption. \u201cIT leaders should require teams to justify the need for the new tool, demonstrate its value, and explain how it complements the existing tech stack. This approach ensures that every SaaS subscription aligns with the organization\u2019s overall strategy and prevents impulsive adoptions that may lead to SaaS bloat,\u201d he says.At one of Goel\u2019s previous employers, the IT department introduced a formal SaaS request form. Any team wanting to adopt a new SaaS tool had to fill out the form, including details about the tool's intended purpose, anticipated benefits, and estimated costs. The request then underwent a review process involving key stakeholders, IT, and finance.\n\n\u201cThis process led to a significant reduction in unnecessary subscriptions as teams became more mindful of their software choices,\u201d says Goel.\n\nLaxshmivarahan adds that CIOs can also adopt technologies aimed at providing visibility into the sprawl, which can then be arrested. \u201cWe are in the process of implementing cloud access security broker (CASB) that will give us a view into shadow IT, which we didn\u2019t have earlier.\u201d\n\nPeriodic vendor and contract review\n\nIt is also critical for enterprise IT decision makers to regularly review existing SaaS vendors and contracts to ensure they still meet the organization's needs and align with its objectives.\n\n\u201cAs business requirements evolve, certain applications may become obsolete or less relevant. Negotiate with vendors for better terms or consider alternative solutions that offer similar functionalities at a lower cost. One organization discovered that over time, the features offered by their email marketing software were not being fully utilized. Instead of continuing with the current vendor, they opted for a different platform with a more tailored feature set, resulting in substantial cost savings,\u201d says Goel.\n\nThere are technologies available today that can provide an IT leader with complete visibility into the organization\u2019s SaaS environment. However, whether technology leaders are leveraging such technologies or not depends on their scope of work. Old-styled IT leaders, who just define the hardware and software environments and focus on only managing the IT environment, seldom use such technology to cut SaaS bloat. \n\n\u201cIn the current bloat, there is a possibility that smart leaders will find ways to create valuable opportunities for businesses to differentiate themselves, by leveraging the unused features. That is, CIOs should be singularly thinking about ways to develop digital business capabilities, and employees may be encouraged to think about creative ways as well, in case they find something valuable,\u201d adds Dr Setia.