The risks and consequences of unmanaged SaaS platforms for businesses

In this guest article, Joel Windels, Head of Marketing at Vertice, discusses the risks and repercussions for businesses not managing their SaaS platforms.

It’s a challenging time to be a business leader in the UK. In the midst of an impending recession, rising energy prices, and the announcement of what some are calling a disappointing Spring Budget, many are suffering from a less-than-rosy financial outlook.

But even when purse strings tighten, there’s plenty that can be done to take back control of your finances. At Vertice, we’ve seen firsthand the massive investments that companies have made in the SaaS (Software as a Service) space in the past decade or so. Nowadays, there’s a digital tool to streamline every business function from marketing to HR. These apps can increase your productivity at work, and this could well translate into higher profits — but what happens when you subscribe to too many software solutions?

The average business now deploys 110 different applications — but this could reflect only a fraction of the total software use within your organisation.

If your IT expenses are continuing to rise without providing value back to your business, you might be suffering from unmanaged SaaS. But what does this look like, and what could it mean for your organisation? Let’s unpack.

What is unmanaged SaaS?

The software licences that have been subscribed to but are not centrally governed by your organisation are considered ‘unmanaged’ applications.

Without an accountable body responsible for each app in your portfolio, it can be all too easy for their governance to fall by the wayside, leading to contracts being forgotten about or unapproved software being used to handle company data.

But progressing from the odd application purchase to a sprawled portfolio of unmanaged SaaS doesn’t happen overnight. So, how might your tech stack reach this point?

Decentralised procurement practices

When individuals or teams purchase software without following an established central process, it’s known as decentralised purchasing. This usually occurs when there isn’t a team or structure in place to facilitate new procurement, so employees take it upon themselves to purchase the tools they need to complete their work. This tends to happen without the informed consent of a company decision-maker.

With decentralised purchasing comes an inherent lack of coordination in company purchasing behaviour — and a software stack that proliferates out of control.

The rise of remote working

Hybrid or fully remote working schedules have become commonplace. In recent years, workforces have rapidly grown more distributed, with teams for even small and medium-sized enterprises spanning whole countries and international borders. But with more staff working away from a central premises, businesses may not have prepared for staff independently procuring more non-approved SaaS.

As a result, the individual subscriptions for these tools may go unnoticed and undocumented, even if they’re being expensed through the company.

Poor portfolio visibility

Even when software is approved for purchase by the relevant authority, there may not be a system in place to appropriately document its contract. Poor visibility on the organisation’s software portfolio means that teams might not know when different contracts are scheduled to renew, who uses which tool, or even what’s being paid for.

When these details aren’t logged in an accessible and regularly updated knowledge base, software plans can fall through the cracks and go unused, regardless of whether they’re still being paid for.

What are the consequences of unmanaged SaaS?

So, we now know how the average company’s tech stack can quickly descend into unmanaged chaos.

This is an emergent problem for many businesses that have only recently started to accelerate their digitisation — but it’s already having costly ramifications for finances and security, especially in an uncertain economy.

Wasted spend

Unmanaged SaaS tools can quickly become unused SaaS tools. With such a breadth of applications in use within a company, this is hardly surprising — if a subscription isn’t centrally approved or documented, users that could be

benefiting won’t be using it. Our data shows that at the average organisation, 33% of licensed SaaS tools are hardly used, or not used at all by the intended employees.

When you consider that these are contracts that could be boosting productivity or cancelled altogether, this alarming figure represents a missed opportunity for huge cost savings.

Security risks

As we’ve learned, an unmanaged software stack is associated with independent tool procurement. When this happens without the organisation’s consent, it’s known as shadow IT — which can have severe consequences for your security and compliance standards.

If staff are using their own unvetted software to store or otherwise handle company data, there is an increased risk of data breaches. This is because the organisation’s IT team might not be able to supervise or ensure that tools meet modern standards for security. In turn, leaks or other incidents could incur reputational damage or costly legal fees.

The bottom line

In times of economic uncertainty, business leaders need to do all that they can to minimise unnecessary outgoings. If your IT costs are continuing to rise, SaaS management might be the vital response to make — discovering and documenting the tools in use within your organisation can pay dividends for your business by reducing costs and improving data security.