The average organisation is managing 275 SaaS applications in 2025 and wasting 30% of their software spending on unused or underutilised licences. Shadow IT makes it worse—3.8% of total spend is going to unauthorised applications your IT department doesn’t even know exists.
Adobe cut their application count from 2,600 down to 400 and saved $60 million in the process. This guide is part of our comprehensive analysis on why SaaS prices are rising 4x faster than inflation and what you can do about it, where we explore the full scope of the rising software costs crisis and practical strategies to manage it.
In this article we’re going to walk you through discovering every application in your organisation, reclaiming unused licences, and setting up governance to prevent this mess from happening again. Let’s get into it.
How do I identify all SaaS applications in my organisation?
There’s no single source that gives you complete visibility. You need four complementary discovery methods to find everything.
Financial records review is where you dig through credit card statements, expense reports, and procurement records. Check all corporate cards, departmental purchasing accounts, and employee reimbursements for recurring software charges. This finds your paid subscriptions but misses free-tier tools and trial accounts people have spun up.
Network scanning tools monitor traffic patterns to detect applications actually in use, including shadow IT that bypassed your approval processes entirely. SaaS management platforms like Zylo, Productiv, Torii, Vertice, CloudEagle.ai, and Josys automate this discovery for you.
SSO data analysis uses your single sign-on authentication logs to track which applications employees are actually accessing. If you’re using Okta, Azure AD, or Google Workspace, you’ve already got this data—you just need to pull the authentication logs.
Employee surveys capture the free accounts, browser extensions, trial subscriptions, and departmental purchases that technical scanning misses. People are using tools IT doesn’t know about. Ask them.
Most organisations discover 25-40% more applications than they initially estimated. Adobe thought they had 1,800. They found 2,600.
Deploy all four methods. Financial records find your paid subscriptions. Network scanning finds active usage. SSO logs show authentication patterns. Surveys capture tribal knowledge. You need all of it.
What data do I need to gather during a SaaS audit?
Once you’ve identified all your applications, you need to gather six categories of information to determine which to keep, consolidate, or eliminate.
Application inventory: This is your complete list with vendor names, subscription tiers, and cost per licence. Document every application with product name, vendor company, subscription plan level, and per-user pricing. This becomes your single source of truth.
Usage metrics: Login frequency, active users versus provisioned licences, feature adoption rates, and last access dates. Track how many users actually log in weekly or monthly compared to the licences you’ve purchased. Identify power users leveraging advanced features versus casual users who could function with basic tiers. If an application hasn’t had a login in 60+ days, it’s an elimination candidate.
Contract information: Renewal dates, contract terms, cancellation policies, and notice requirements. Record when each subscription renews so you can identify upcoming negotiation opportunities. Note contractual obligations—minimum commitment periods, cancellation notice requirements (often 30-90 days), penalties for early termination. This timing is going to drive your implementation roadmap.
Cost data: Total cost of ownership including licences, hosting, integration expenses, support, and training. Direct licence fees are only part of your true costs. You need to factor in API usage fees, premium support contracts, custom integration development, employee training time, and IT administration hours. Hidden costs often exceed base licence fees by 40-60%.
Business value: Which departments use each tool, which processes it supports, and what stakeholders actually think of it. Interview department heads to understand why they selected specific tools and what business outcomes those tools enable. You need to distinguish between “nice to have” applications and tools supporting revenue-generating processes or regulatory compliance.
Compliance requirements: Data residency needs, regulatory obligations (GDPR, CCPA, SOC 2, ISO 27001), and audit trail capabilities. Document whether applications process sensitive customer data, store information in specific geographic regions, or support compliance frameworks. These requirements often override cost considerations.
Where you find each type varies. Usage metrics come from SaaS management platforms or individual application dashboards. Contract information lives in procurement systems or email archives. Cost data requires aggregating from finance systems, expense reports, and vendor invoices.
Organise your findings in a spreadsheet or dedicated SaaS management platform. Key columns: application name, vendor, cost, licence count, active users, renewal dates, business owner, and rationalisation decision.
How do I analyse which applications to keep, consolidate, or eliminate?
Apply the Gartner TIME Model. Categorise each application as Tolerate, Invest, Migrate, or Eliminate.
Tolerate: Applications that work adequately but aren’t strategic. Keep them as-is with minimal changes. Think departmental tools with satisfied users but limited expansion potential.
Invest: Strategic applications worth enhancing. Your core collaboration platforms, development tools, business-critical applications. These deserve additional licences, advanced features, or custom integrations.
Migrate: Applications to replace with better alternatives. Legacy tools with modern competitors, overpriced solutions, applications with poor vendor support. But only if the migration benefits exceed the transition costs.
Eliminate: Redundant, unused, or low-value applications. Zero usage in 90+ days, complete redundancy with retained tools, failed adoption despite training, abandoned pilot projects.
Start with eliminations where the data shows zero usage or obvious redundancy. Quick wins build momentum. Then tackle consolidation where you’ve got multiple tools providing overlapping functionality. Finally review the borderline cases with stakeholders.
Red flags for elimination: redundant functionality, less than 10% licence usage, annual costs exceeding value delivered. Green flags for retention: supports critical business processes, high engagement, unique capabilities.
Your rationalisation decisions should align with your broader response to rising SaaS costs—focusing your spend on tools that deliver measurable value while eliminating waste.
What is licence reclamation and how does it deliver quick wins?
Licence reclamation is recovering unused or underutilised software licences. 53% of licences go unused according to 2025 data. This is your fastest path to savings without eliminating any applications.
There are three categories of reclaimable licences:
Inactive users: Departed employees whose licences remain active and billable. Set up automated offboarding workflows that flag all software access during employee exits.
Overprovisioned accounts: Premium licences for users who only need basic features. Users with premium Zoom licences who never host webinars can downgrade to basic licences. They keep their access, you reduce your per-seat costs.
Dormant licences: Purchased but never activated, or abandoned after onboarding. Pure waste.
Frame downgrade communications as optimisation, not cuts. Users retain access to features they actually use. The organisation redirects savings to tools that deliver broader value. Simple.
Most organisations reclaim 20-30% of licence costs within 30 days. Modernizing Medicine reclaimed 2,800 unused licences for $1.4 million in savings. No application elimination required.
How do I consolidate redundant applications without disrupting business operations?
Online training platforms average 14.2 applications per organisation. Project management averages 9.9. Team collaboration averages 9.5. This redundancy is wasting your money and fragmenting workflows.
You’ve got a choice: suite platforms like Microsoft 365 that bundle everything under unified licensing, or best-of-breed approaches with specialised tools for each function. Suite consolidation reduces vendor overhead but might sacrifice specialised capabilities. Best-of-breed maintains superior functionality but increases complexity.
Vendor consolidation gives you negotiating leverage during renewals. Fewer vendor relationships means less administrative overhead for contracts, security reviews, and integration maintenance. Once you’ve completed your audit and rationalisation, you can negotiate from a position of strength with concrete usage data and clear alternatives.
Change management determines success or failure here. Engage stakeholders early. Identify application champions who can advocate for transitions. Document migration requirements—data export, workflow replication, integration dependencies.
Start with a pilot department of willing early adopters. Gather feedback. Refine your processes, training, and support. Use pilot success to build confidence before you roll out more broadly.
Keep both old and new tools active during migration so users can reference historical data and revert if workflows break. Establish rollback procedures. Provide dedicated support during transitions.
How do I implement SaaS governance to prevent future waste?
Without governance, departments will independently purchase tools that recreate the redundancy and waste your audit just fixed.
Set up tiered approval based on cost and scope. Purchases under $100 monthly might need only manager approval. Department-wide tools or subscriptions over $1,000 monthly require IT and Finance review.
Maintain a single source of truth for all subscriptions—ownership, contracts, costs, renewal dates. A spreadsheet works for smaller organisations, a dedicated platform for scale.
Schedule quarterly usage reviews examining active users, licence utilisation, spending trends. Annual comprehensive audits to find new optimisation opportunities. Trigger evaluation 90 days before each renewal to consider downgrades, eliminations, or renegotiations.
SaaS management platforms provide continuous visibility through automated detection of new applications, usage tracking, spending monitoring, and optimisation alerts.
Designate application owners for each tool who manage access, monitor usage, and drive renewal decisions. Establish IT and Finance collaboration. Define decision authority to prevent bottlenecks.
The goal is preventing waste without creating rigid bureaucracy that drives employees toward unapproved shadow purchases.
What tools should I use for SaaS spend management?
Spreadsheets work for initial audits in smaller organisations under 50 applications. They’re sufficient for simple environments but unsustainable at scale.
SaaS management platforms provide automated discovery, real-time usage monitoring, renewal tracking with 90-day alerts, optimisation recommendations, and workflow automation. Platforms like Zylo, Productiv, Torii, and Vertice offer end-to-end capabilities. 70% of IT teams prefer all-in-one platforms over point solutions.
Match platforms to organisational needs. 50-100 employees: single-framework solutions. 100-300 employees: multi-framework platforms. 300-500 employees: hybrid approaches.
Start with a spreadsheet audit to understand the scope before committing to platform costs. Validate that optimisation opportunities exist, then invest in platforms for ongoing management.
Typical platform costs run $15,000 to $50,000 annually for mid-sized organisations. Most organisations achieve 5-10x ROI in the first year through sustained waste reduction.
How do I measure the success of my SaaS audit and rationalisation efforts?
Cost savings: Total spend reduction, cost per employee, eliminated subscriptions, reclaimed licences. Track hard savings from eliminations and soft savings from negotiated discounts.
Efficiency metrics: Application count reduction, vendor count reduction, administrative time saved and redirected to strategic work.
Usage optimisation: Active licence percentage (target 80%+), average utilisation per application, adoption rates for consolidated tools.
Governance metrics: Shadow IT as percentage of total spend (target under 2%), approval cycle time, process compliance.
Business impact: Employee satisfaction, productivity metrics, security posture improvement.
Document your baseline before optimisation: application count, total spend, cost per employee, waste percentage, shadow IT spend, licence utilisation rates. Compare to post-optimisation metrics.
Modernizing Medicine reclaimed 2,800 licences ($1.4M) and cancelled 122 applications ($1.6M). These measurable outcomes justify the effort.
Frequently Asked Questions
How often should I conduct a comprehensive SaaS audit?
Annual audits with quarterly usage reviews. If you’re growing fast or doing M&A, audit every six months. SaaS management platforms reduce the need for disruptive periodic audits through continuous monitoring.
What is shadow IT and why is it a problem?
Shadow IT is software purchased or used without IT approval. It’s 3.8% of total spend, creates security vulnerabilities through unvetted vendors, causes redundant spending, and prevents accurate forecasting. It emerges from slow approval processes or employees finding better tools than the sanctioned alternatives.
How long does a typical SaaS audit take?
Discovery takes 2-4 weeks. Analysis takes 3-4 weeks. Implementation takes 8-12 weeks. Total: 3-5 months. SaaS management platforms can reduce discovery to days through automated scanning.
Should IT or Finance lead the SaaS audit process?
Joint ownership works best. IT provides technical expertise on usage patterns and alternatives. Finance contributes cost analysis and contract management. Appoint cross-functional teams with executive sponsorship from both departments.
What percentage of SaaS licences typically go unused?
53% remain unused according to 2025 data. Organisations waste approximately 30% of software spending. Audits typically discover 25% waste, concentrated in collaboration tools, project management, and marketing technology where departments independently purchase overlapping solutions.
How do I handle stakeholder resistance to consolidating or eliminating applications?
Engage early before announcing decisions. Focus on usage data, not opinions. Propose trials of replacement tools. Identify champions to lead the change. Provide training. Maintain parallel access during migrations. Data showing low usage or high cost strengthens objective decision-making.
What’s the difference between SaaS audit and software rationalisation?
Audit is discovery and analysis—identifying applications, gathering usage data, assessing costs. Rationalisation is execution—implementing consolidation, migration, or elimination decisions. Audit provides the data. Rationalisation delivers the savings.
Do I need special tools to audit SaaS spending or can I use spreadsheets?
Spreadsheets work for initial audits under 50 applications. Platforms become essential at 100+ applications, for ongoing monitoring, and when automation delivers significant time savings.
How do I calculate total cost of ownership for SaaS applications?
Include licence costs, implementation and integration expenses, training, support and maintenance, data storage, premium features, and allocated IT administration time. Hidden costs often exceed base licence fees by 40-60%.
What should I include in a SaaS governance policy?
Approval workflows with spending thresholds. Evaluation criteria: business justification, existing alternatives, security review, cost-benefit analysis. Ownership assignment. Contract terms requirements: cancellation policies, data export capabilities. Usage monitoring with quarterly reviews and annual audits. Offboarding procedures for licence reclamation.
When should I consolidate applications versus eliminate them entirely?
Eliminate when you’ve got zero usage, complete redundancy, failed adoption, or vendor concerns. Consolidate when overlapping functionality serves different users, migration complexity exceeds savings, or specialised features aren’t available in your standard tools.
How do I discover shadow IT applications on my network?
Network scanning for SaaS traffic patterns. SSO authentication logs for unauthorised applications. DNS queries for SaaS vendor domains. Employee expense reports. Credit card statements for recurring charges. Employee surveys. SaaS management platforms automate discovery through continuous monitoring.
Conclusion
Auditing and rationalising your SaaS portfolio is your most direct path to regaining control over software costs. The data shows that most organisations waste 30% of their software spend on unused licences, redundant applications, and unmanaged shadow IT. You’ve now got the framework to find that waste, reclaim those costs, and prevent them from recurring.
Start with the quick wins—licence reclamation delivers results in 30 days. Build momentum with eliminations where usage data is clear. Then tackle consolidation where it reduces vendor overhead and increases negotiating power. Finally, implement governance to ensure the mess doesn’t recreate itself.
For a complete overview of the software inflation crisis and additional strategies to protect your budget, see our comprehensive guide on why SaaS prices are rising 4x faster than inflation and what you can do about it.
