Compared to previous years, IT SaaS app usage and spending are up in 2024. IT teams showed the highest average SaaS portfolio growth for 2 years running while spending is expected to grow by 15-20% annually, according to a recent report from Gartner. However, IT leaders should not expect their budgets to increase to meet this demand. In reality, most IT teams are juggling tight budgets due to a shaky economy and the challenges faced by the tech sector. 

So how can IT leaders effectively balance budget constraints with the ever-growing need for software applications, and make the right choices for their organization? To navigate these challenges and effectively manage SaaS portfolios within tightened IT budgets, IT leaders need to consider three key aspects: identifying friction points, analyzing usage patterns and making strategic investment decisions. By focusing on these areas, IT leaders can ensure that their software investments align with the organization’s needs and provide the best possible value.

Applications that remove friction

Each application has a different use case and addresses different employee concerns. So how do IT leaders figure out what app is best? They can start by looking at unknown and known points of friction for employees. 

For engineers, tooling plays a huge role in their day-to-day tasks and ability to get things done. If IT leaders know that help tickets get bottlenecked because engineers aren’t able to easily prioritize them, investing in software that can remove that blocker will benefit the organization as a whole. 

In some cases, employees will opt for outside applications — resulting in shadow IT —  use because the applications solve a friction point for them. When asking someone what video meeting platform they like most, they likely have a strong answer and reasons to back up why they prefer it (or why they don’t). However, purchasing a license for everyone’s personal preference simply doesn’t make sense financially. 

To assess preferred software applications, evaluating usage is a good way to understand what applications are providing the most value. If an application is being underutilized, there is likely a good reason that IT leaders should account for.

Worst performers and top shadow IT applications

For IT leaders looking to solve employee needs but not sure where to start, shadow IT is a friend. In 2023, 48% of software applications were categorized as shadow IT, nearly half of an organization’s SaaS portfolio. Evaluating which app licenses are going unused and which unlicensed apps are affecting the tech stack can help IT leaders understand the high-level needs and desires of their employees. Back to the video platform example: if an organization has licenses for one but a competing platform is showing higher levels of usage through shadow IT, it’s worth considering a license switch. 

Getting the best bang for the buck 

Arguably one of the most important aspects of fulfilling software needs with a tightened IT budget: is there a positive return on investment, and is the company paying a fair price? 

When it comes to SaaS procurement and renewing licenses, leaders often fall victim to quick renewals rather than truly assessing price and competitors — some of which might be more cost-effective. There’s a strong chance that an uninformed renewal results in a higher cost and lower ROI. Removing auto-renewals and looking at data regularly can reduce the chances of overpaying for software that isn’t being used or is too costly. 

Navigating IT budget constraints while meeting the organization’s software needs requires a strategic approach. IT leaders must focus on identifying friction points, analyzing usage patterns and making strategic investment decisions. Balancing limited budgets with software requirements is indeed a challenge, but by adopting a proactive and data-driven approach, IT leaders can optimize their SaaS portfolios and maximize value, both financially and tactically, for their organizations.