Businesses routinely operate with an average of 300 applications; however, over one-third of all issued licenses go unused each month.
To minimize the amount of wasted money on software licenses, many organizations require their leadership teams to conduct monthly audits of license use using a manual (spreadsheet) process, which becomes unmanageable with each new “expensive” purchase (i.e., expense card charged).
Sustaining discipline in managing these types of expenditures requires replacing passive tracking with automated (electronic) control at the network and payment interfaces using reliable SaaS spend management software.
This comparative analysis exposes the falsehoods regarding the use of software in purchasing transactions and outlines how leading software vendors are developing products to reduce waste in software purchases, eliminate unauthorized renewals, and monitor software acquisitions by enforcing purchasing policies.
Why Software Costs Are Growing So Fast
The purchase of software by way of corporate budgets is an increasingly large portion of an organization's operating expense. The typical organization spends approximately $55.7 million each year, and this figure continues to grow at a rate of 8% annually.
Despite the high level of investment in software products by organizations, there are many organizations whose software portfolios contain a high level of waste. The root cause of the high level of expense on software for organizations is not solely the result of bad decisions; rather, the root cause of these expenses can be traced to four separate and distinct areas of operational failure, which are compounded over time.
Wasting Money on Unused Licenses
The first area of operational failure that causes software-related operating expenses to be so high is the predominant licensing issue of license dormancy. Research has shown throughout multiple studies on enterprise application portfolios that 34% to 36% of the licenses that have been purchased for software applications in enterprise application portfolios are never utilized by the organization.
Collectively, 25% of every dollar spent on the purchase of software results in zero value or operational return on investment. The reason for this lack of value is that there are no automated processes in place within organizations to recover (reclaim, reassign) licenses that have been released back into the pool of available license capacity by employees who have either changed roles, completed a project, or left the organization.
Therefore, organizations have a tendency to continue to purchase new licenses when new team members join the organization, instead of reassigning licenses that are already available but assigned to inactive positions. Every year, standard right-sizing initiatives recover 20-30% of an organization’s total software spending, primarily through the identification and reclamation of inactive software licenses.
Employees Buying Apps on Their Own
Today, business units control approximately 81% of an organization’s software spending. As a result, business units are making purchasing decisions on their own, divorced from central procurement teams.
Unfortunately, as approximately 12% of an organization’s software spend occurs as “shadow IT” transactions—purchasing applications for business purposes using an employee’s corporate expense account without consulting with their organization’s central purchasing function—any legal agreements made in connection with these types of transactions are made without negotiation of pricing, payment terms, and/or for the integration of logical access through single sign-on or any type of security review processes.
Due to the lack of oversight of shadow acquisition and the ability of each business unit to independently procure multiple applications to perform similar tasks, an organization typically experiences multiple versions of software that create significant security risk and redundancy across the enterprise.
The Trap of Automatic Renewals
The third type of leakage is caused by automatic contract renewals without renegotiation of renewals or terms. A staggering 61% of commercial software licenses automatically renew without renegotiation of terms or prices.
As vendor list pricing steadily increases at an average rate of 12.2% annually—greater than double the average increase of the consumer price index (CPI)—organizations that accept automatic renewal of contracts on an annual basis absorb these compounded increases on a continued basis. In contrast, organizations that actively benchmark contracts and renegotiate terms provide up to 18-24% in discounts off of vendor pricing.
Unexpected Costs from AI Tools
The fourth and most recent type of cost leakage is caused by the explosion of consumption-based pricing models for AI technologies. In the past year alone, software spending on AI technology increased at a rate of 108% (or 393% for enterprises employing over 10,000 people) year over year.
As opposed to traditional seat licenses with a defined cost per license for a specific period, AI cost models will depend on consumption-based metrics such as number of API calls, volume of tokens and number of processing hours utilized. IT leaders currently report a significant monthly unexpected budget overage due to tool usage spikes that occur without monitoring by 78%.
Categories of SaaS Spend Management Software
Because the SaaS spend management software market is highly fragmented, vendors commonly promote themselves as having broad cost reduction capabilities; however, the software architectures that underlie their products are intended to address very different business operations.
If buyers select a software architecture that is incompatible with their corporate pain points and technical capabilities, they will create a direct mismatch. Before making a final purchase decision, buyers should categorize the software into four separate functional models.
Traditional Software Platforms
The first functional model would be the traditional SaaS management platforms (commonly referred to as SMPs). SMPs are designed primarily for IT and security leaders; they provide the capability to discover applications thoroughly, manage access, obtain usage telemetry, and provide automated deprovisioning.
To track whether employees actually open and use provisioned applications, SMPs connect to identity providers (e.g., Okta), human resource information systems, and web browser extensions. Their primary objective is to identify dormant seats, recover those seats, and enforce security policies.
Buying and Negotiation Platforms
The second functional model is procurement and negotiation platforms. By focusing on commercial transaction terms instead of daily employee usage of applications, these platforms meet the needs of the finance, sourcing, and procurement departments.
The functionality of procurement and negotiation platforms pairs software workflow tools with global pricing data that shows historical contract information across thousands of software vendors. Some platforms provide managed services where expert negotiators conduct vendor discussions on behalf of the client to negotiate market-based pricing.
Payment Control Systems
The third functional model is payment-layer control systems. As the name suggests, payment-layer control systems are designed to function directly at the corporate level on the banking and card layers. Payment control platforms use dedicated virtual credit cards assigned to every approved software subscription, eliminating reliance on IT integration or post-transaction expense audits for approval process validation.
If an unapproved application bills the credit card or a vendor attempts to apply an unexpected price increase during the renewal period, the transaction will automatically block at the bank level. Finance teams can leverage this method to gain immediate control of auto-renewals.
Broad Expense and Renewal Systems
Broad indirect spend and renewal systems is a category resulting from a broad set of indirect spends and renewal systems, including software, cloud infrastructure, telecom, and professional services.
The core functions of these systems include contract repository management, notice alerts, and group purchasing leverage. They appeal to organizations that want to consolidate vendor management within one unified platform.
Top 10 SaaS Spend Management Software Tools
1. Zluri
Zluri is a robust enterprise-grade SaaS management platform that uses top-tier application discovery solutions and automation to improve operational efficiency. There are currently nine different discovery methods available through the Zluri platform, including single sign-on (SSO) integration, financial system connector, browser extension, and desktop agent installation, so you have access to an accurate inventory of all active applications.
What makes Zluri special is the level of detail in how Zluri tracks usage telemetry. Instead of simply tracking the number of times users log into Zoho, Zluri can track how often users engage with different features within the same Zoho application module. By doing so, Zluri can provide IT teams with a clear picture of who utilizes the platform and what they do when there.
For instance, Zluri can show whether an employee is actively building content in Zoho or idling in front of an open browser window while waiting for updates to the module. Zluri is a SaaS platform that provides automated workflow functionality, sending notifications to inactive users and automatically deprovisioning unnecessary licenses without IT staff needing to do anything.
Zluri's overall cost per enterprise-level organization is $38K per year, based on employee headcount and integration modules. In a case study conducted by global customer engagement agency MoEngage, Zluri was able to identify duplicate tool usage and inactive user accounts for MoEngage. Over six months, MoEngage was able to reduce their software expenditures by $250K through Zluri's system.
2. Torii
Torii is a SaaS platform that focuses on rapid deployment and automation for mid-market to enterprise-level IT departments, along with mapping complex corporate software infrastructures via continual data acquisition from single sign-on identity management, HR management, and expense management.
Torii heavily relies on automated triggered actions to aid administrators in managing software licenses during their lifecycle. Administrators can create rules that automatically reclaim licenses when an employee moves to a new position, has not been active for 30 days in a row, or leaves the company.
Torii also provides visibility into shadow software purchases within the organization by analyzing charges on corporate credit cards and flagged browser activity. Torii has a straightforward per-employee pricing structure, averaging $2.50 per month per employee. Torii's predictable pricing structure makes it an attractive option for growing organizations who want excellent IT governance and the ability to continuously reclaim licenses, without the restrictions of an annual enterprise software agreement.
3. Zylo
Zylo is one of the original SaaS spend management software solutions created specifically for enterprise organizations managing large and complex multi-million dollar software portfolios. The primary focus of this platform is on identifying financial transactions associated with software purchases through enterprise resource planning (ERP) systems and accounts payable (AP) systems such as Coupa and SAP Concur.
The unique selling point of Zylo is its AI-powered financial matching engine, which analyzes entries in a company's financial ledger to identify unrecorded software purchases made by different business units. As business units account for more than 80% of total software expenditures, Zylo provides financial directors with a single view of total software expenses, including department, application category, and vendor.
Additionally, Zylo's pricing database contains price benchmarks obtained from billions of dollars' worth of software transactions. Procurement professionals can utilize this database to compare their customized renewal quotes against the actual market price for equivalent-sized enterprise contracts. Pricing is determined by the total amount of software expenditures managed by the vendor.
4. Productiv
Productiv uses deep analysis of the usage of specific features and activity of team members to monitor software spending. While basic software management tools only track whether or not an employee logged onto software using SSO, Productiv tracks what they do when they log into the software.
Productiv provides detailed operational insights into how users of licensed software are utilizing their licenses. The platform can tell whether licensed users are just viewing or if they are creating content in the software at the same time.
This insight helps procurement teams adjust their licensing tiers prior to renewal by downgrading inactive licensed users to lower tiers of licenses while keeping active licensed users on higher licensing tiers. Productiv also has an intake and request process that is used to collect all requests for new applications.
The pre-purchase approval process built into this platform helps eliminate duplicate software purchases before any contracts are signed. Productiv's pricing is based on the number of employees and volume of applications that have been integrated into the Productiv platform.
5. Vendr
Vendr is a technology-based procurement platform that changes how finance teams purchase and renew software.
Vendr not only gives you an internal management tool, but it also gives you access to a dedicated negotiation process, which includes direct access to a proprietary dataset that lays out transaction activity.
Vendr analyzes the vendor's quoted rate on a software renewal against historical rates from thousands of actual software agreements using a vast set of transaction histories. Vendr's team of negotiators will negotiate the renewal contract directly with the vendor so that internal business teams are not participating in high-pressure sales pitches and the vendor can provide guaranteed discounts for the customer in the market.
Vendr's pricing model typically ranges from $36,000-$120,000 annually based on the volume of software spend. They also routinely offer a contract model called a "savings guarantee," where they guarantee to match or beat the customer’s total cost of their platform during the negotiation period.
6. Vertice
Vertice offers a software and cost management solution designed to provide finance executives with total control over software contracts and cloud infrastructure expenditures.
The software platform combines an invoice workflow process engine with negotiated commercial negotiation services.
The platform displays current contract renewal dates for every customer, and provides automated countdowns for 90, 60, and 30-day decisions for finance teams to execute timely. Vertice's negotiation experts use their experience with market-based pricing data in their vendor discussions to maximize cost savings for their customers.
Many customers save 18%-24% off their stated list prices when using Vertice's services. Vertice has annual membership fees that currently range from $30,000-$80,000 depending on the level of service required. As with other procurement services, Vertice connects its financial values to a measurable base of cost savings, making it very useful for growing companies with significant software expenditures.
7. Tropic
Tropic is a procurement platform that streamlines the way companies approve new software applications.
With a centralized location for managing all contracts and transactions related to purchasing software, Tropic eliminates confusion caused by emails and chats about software purchases.
The way Tropic works is that when a user needs access to a new software application, it automatically routes that request through the appropriate departments for review. This ensures that shadow IT (unauthorized technology) does not enter the organization, and every purchase has a permanent audit trail.
Pricing for Tropic is priced transparently and has two tiers, with the total cost being between $14,500 and $22,000, plus an extra fee for managed negotiation services. This module-based pricing model is affordable for growth-stage businesses who want to begin developing good purchasing practices.
8. Varisource
Varisource is focused on reducing corporate expenses through a comprehensive indirect spending optimization process that also includes managing software as part of its overall indirect spend strategy.
Rather than being limited solely to software applications, Varisource evaluates over 300 categories of indirect spending, which can include things like telecom, cloud services, and hardware.
Varisource uses automated AI negotiation agents and comprehensive market benchmark data to evaluate vendor contract agreements. Once a company has a contract with a vendor, Varisource looks for price increases and overlapping service levels associated with a complex vendor relationship.
A major advantage of Varisource is that they offer a risk-free pricing model that allows organizations to use Varisource without incurring platform deployment costs. Instead, Varisource only charges a percentage of the validated savings that result from their platform's use.
9. Cledara
Cledara is a company that manages spend across software payments, providing immediate financial oversight to startups and other similarly growing businesses.
The operational model of Cledara is built around dedicated virtual payment cards that have been specifically issued for individual software subscriptions.
When a department submits a request for a new software tool, Cledara generates a unique virtual credit card with restricted monthly spending limits and preset expiration dates. If a vendor unexpectedly increases the renewal price, or an unauthorized auto-renewal takes place, the charge will automatically be blocked by the banking infrastructure that backs Cledara.
All invoices will be collected through Cledara, with all received billing receipts automatically matched against the transactions in the accounts, allowing for simplified accounting reconciliations. Cledara's pricing structure is based on a monthly access fee, allowing finance teams to use this platform for immediate controls over payments.
10. Termedora
Termedora is a contract management and renewal tracking software program designed to support mid-market clients in managing lightweight governance of their contracted software and avoiding costly installation costs associated with full-service software management solutions.
The primary purpose of Termedora is to eliminate the financial losses resulting from missed contract cancellation deadlines.
Termedora maintains a digital contract file, indexes every clause that contains an automatic renewal provision, and alerts the respective contract owner 90, 60, and 30 days prior to the auto-renew date. Termedora's base price starts at $49/month.
This software is only intended for teams seeking clear visibility of their contracts and renewals without having to install complex identity management integrations and significant annual software license fees.
How to Successfully Set Up Your Software
To successfully implement the management of software spend using SaaS spend management software, organizations must first develop a structured operational workflow around the software spend management process. Simply connecting any new software spend management tool to an organization's existing data and systems does not guarantee a reduction in costs.
Many implementations fail due to insufficient incoming transaction data processing and the absence of clear guidelines for how to manage identified waste. Deployments that are successful follow a logical sequence of activities that create visibility, clean data feeds, and enforce continuous governance without disrupting business operations.
Therefore, the following recommended steps should be taken:
Connect core identity and finance systems: Use single sign-on (SSO) tools and link them to core HR databases and expense systems to establish an accurate baseline of all software activity.
Clean and validate telemetry data: Separate automated SSO background ping activity from genuine actively engaged full user sessions for each application.
Automate inactivity reclamation: Automate the reclamation of licenses on inactivity (e.g., create 30-day non-usage notifications).
Lock down payment channels: Use virtual cards per applicable software license approval.
Data validation is essential; identity systems frequently indicate that a user has logged on to an application when in fact the login was simply an automated background authentication ping via a secondary plugin. If IT teams automatically revoke a license based only on raw authentication logs, they risk revoking software that is actively used in day-to-day operations. Before revoking user access, teams need to cross-reference single sign-on pings with feature usage metrics.
Lastly, organizations need to be clear about how they manage charges for artificial intelligence use cases. Consumption-based AI products can grow budgets rapidly; therefore, finance teams should establish strict caps on the amount of usage that they will incur via vendor management dashboards. Setting up automatic notifications when API usage surpasses 75% of budgeted amounts, as determined by the current setting, prevents unpleasant surprises from occurring at the end of each month.
| Software Platform | Focus | Pricing Model | Primary Strength | Target Customer Base |
| Zluri | IT Usage and Discovery | ~$38,000 Yearly Average | It allows detailed monitoring of features utilized and automatic reclamation of unused software. | Mid-market and Enterprise IT |
| Torii | Automated IT Deprovisioning | $2.50 Per Employee/Monthly | Fast implementation process leveraging predetermined workflow automation. | Mid-Market IT Departments |
| Zylo | Financial Matching & Sourcing | Pricing differs according to volume of total expenditure. | It enables large multi-departmental companies to match up complex financial transaction feeds against all departments within their organization. | Large Enterprise Finance and Procurement departments |
| Productiv | Application Engagement Measurement | Pricing differs based on volume of app usage and number of seats available. | - | Enterprise IT Departments and Procurement Leaders |
| Vendr | Procurement and Negotiation | Price is dependent upon the type of service provided and negotiation process used. Generally, it ranges between $36,000-$120,000 Yearly. | This service provides customers with highly qualified negotiators who have access to a vast amount of pricing data. | Fast Growing Finance Departments |
| Vertice | Commercial Sourcing and Contract Management | Pricing generally ranges between $30,000-$80,000 Yearly. | This combination of software and expert negotiation services provides customers with comprehensive control over their software and related contracts. | Mid-Market Procurement Departments |
| Tropic | Contract Approval and Workflow Control | Pricing ranges between $14,500 to $22,000 Yearly. | This service will centralize and systematically vet all purchase requests. | Growth Stage Companies |
| Varisource | Indirect Usage Category Cost Reduction | Shared Savings, no upfront fee. | This product allows customers to optimize the purchase of software as well as 300+ indirect expenditure categories. | Mid-Market and Enterprise Procurement Departments |
| Cledara | Card Control/Payment Card Management | Pricing starts from $49/month but varies depending upon the customer's requirements. | This company prevents customers from making unauthorised renewal payments directly through the virtual card technology platform they build. | Early Stage and Mid-Market Finance Departments |
| Termedora | Contract Renewals & Storage | Pricing starts at only $49/month. | Ability to monitor important contract renewal notices on an ongoing basis without any significant upfront fees. | Mid-Market Teams |
Final Thoughts on Saving Money
Even though software optimisation is not a one-time project, but rather a continuous, ongoing operational process requiring constant coordination of effort by IT, finance, and procurement leadership, if companies want to successfully minimise the costs of their software, they should first adequately control the payment processes associated with software, and establish distinguished intake processes for vendors to solicit business from prospective customers.
Systems like Cledara and Tropic will prevent the introduction of misallocated or unauthorised software by controlling the purchasing process through payment enforcement and establishing a structured intake process.
On the other hand, large organisations that have many software products within their portfolio and well-developed identity and access management capabilities are most able to maximise the operational benefits of systems like Zluri, Torii, and Zylo.
These systems offer an ordering mechanism to help organisations eliminate outdated software, align seat number with the actual needs of a business, and apply transaction benchmark data to negotiate lower renewal prices for software. Aligning the capabilities of software systems with the specific internal software deficiencies will continue to be the most reliable way to eliminate software waste and maintain financial accountability.
Q&A: Better SaaS Spend Management Software Strategies
How can we reclaim unused licenses without hurting daily work?
For effective licensing reclamation, organisations should create an automated multi-step notification system instead of terminating access abruptly. License reclamation should begin with a direct message sent through the management platform to the user associated with an account marked inactive for at least 30 days because telemetry data indicates that no activity has taken place on that account.
The platform will send a request for confirmation from the user that they still need access to the account within 5 business days of sending the initial notification. If the user does not respond within 5 business days, the platform will automatically remove the license from that user and add it back into the available pool for use by other users.
Using an automated re-provisioning workflow and engine will allow users who later need access restored to regain that access through a self-service single sign-on portal without the need for submitting a request for manual IT helpdesk support.
Why do standard single sign-on tools miss shadow IT purchases?
The single sign-on dashboard functionality can only capture applications which have been formally vetted and approved by the IT administrators at that organisation. As such, anything purchased or signed up for by an employee using work email and a corporate credit card outside of the formal approval process would not be captured by the single sign-on dashboard.
To capture this activity, organisations require a SaaS spend management software solution which integrates directly into their financial transaction feed, accounts payable ledger, expense platforms, and/or browser extensions, capturing any software usage occurring through unapproved channels.
How can we avoid surprise charges from AI software?
In order to mitigate the variable nature of the costs associated with using consumption-based AI applications, organisations need to transition from using passive annual seat tracking, to continuously monitoring usage levels. By selecting a spend management solution capable of providing real-time data about API call volume, token usage, and remaining credits associated with consumption, organisations can establish hard spending limits at the application or payment levels.
The organisation should establish an alert mechanism, so when consumption levels of the monthly budget allocation have reached 75 per cent to 90 per cent of the allocated budget, the organisation receives notification. Additionally, organisations should negotiate the maximum level of usage for contracts associated with consumption-based AI applications, so that those organisations do not experience any increase in fees for scaling up to paid tiers without the explicit approval of the selected finance personnel at the organisation.
Should we use a self-service platform or a managed negotiation service?
The choice between a self-service software management platform and a managed negotiation service depends on the organisation's internal team bandwidth and the total annual software expenditures. Organisations with dedicated procurement staff usually benefit from using self-service SaaS management solutions (such as Zluri and Torii) as these types of solutions provide the internal usage and price benchmarks for performing effective in-house negotiation efforts.
Conversely, for organisations with a lean finance team managing software expenditures exceeding $1 million annually, and no dedicated sourcing resources, the organisation is likely to get a greater return on investment (ROI) by collaborating with managed services (such as Vendr and Vertice). Managed services completely offload the negotiation responsibility while leveraging their market position, and deal volumes to obtain contract pricing discounts which will compensate for the platform usage fees.
