LeanIX White Paper How to Enable Business-Led IT through SaaS Management EN

WHITE PAPER
How to Enable
Business-Led IT
through SaaS Management
WHITE PAPER
How to Enable Business-Led IT
through SaaS Management
CONTENT
P3
Introduction
P4
The Rise of SaaS and Shadow IT
P5
Digital Leaders and the Limits of SaaS Marketplace Solutions
P6
Business-Led IT and Comprehensive SaaS Management
P7
6 Steps to Enabling Business-Led IT with
SaaS Management
P11
Conclusion
White Paper How to Enable Business-Led IT through SaaS Management
Introduction
By eliminating the need to install and maintain software
application environment that IT requires, while giving
in company-owned data centers, software as a
the business the flexibility and agility it needs. This
service (SaaS) revolutionized software purchasing and
necessarily involves close collaboration between IT
deployment. From its humble beginnings around 1999,
and the business, with IT letting the business guide the
the SaaS market has grown to over $140 billion in 2021.¹
selection of technology, and the business respecting IT’s
With companies spending thousands per employee on
need to maintain controls over security, compliance,
SaaS applications today, SaaS has clearly become a
and SaaS spend. The right SM solution can both support
fixture in the IT landscape.
the flexibility the business wants and provide the
guardrails that IT needs.
While SaaS helped IT reduce capital expenditures and
operating expenses, it introduced another challenge:
This paper will demonstrate the pivotal role that SM
“shadow IT.” This phrase refers to the purchase and use
plays in adopting a business-led IT approach. By
of technology in the business that is hidden from IT. SaaS
transforming both IT practice and the IT mindset with
aided and abetted the rise of shadow IT by making it
regard to shadow IT, organizations can ensure that
so easy for employees to buy software. With little more
employees have the right tools and business units
than a credit card and an email address, business users
operate nimbly. At the same time, these organizations
can quickly get the applications they want, avoiding the
can effectively manage SaaS spend, maintain
need to go through IT. Unfortunately, this unauthorized
compliance, and enhance security.
purchasing behavior can have a range of downsides.
Among other things, shadow IT can lead to an
overgrown and redundant ecosystem of applications.
And because IT has zero visibility into this ecosystem,
effectively controlling IT spend, ensuring security, and
maintaining compliance become practically impossible.
Runaway costs, security risks, and compliance failures
are undeniably bad, but there is another way of looking
at shadow IT. Specifically, one can see it as the flawed
realization of an ideal: business-led IT. The concept of
business-led IT acknowledges, first and foremost, that
technology should serve the business. Since business
users know best what technology they need, it makes
sense for these users to take the lead when it comes
to selecting and purchasing software. However, when
this purchasing happens in a fragmented and ad hoc
manner, it leads to the problems mentioned above.
Cracking down on business users will not solve these
problems. Ensuring that IT and the business are
aligned will.
Robust and thoughtful SaaS management (SM) offers
a way to achieve this alignment. When done right, SM
In this paper, you will learn:
• How the rise of SaaS has driven
shadow IT
• The limits of SaaS marketplace
solutions
• Why business-led IT requires
SaaS management
• 6 Steps to unleash the value of
business-led IT through SaaS
management (SM)
• How SM enhances application
portfolios to support continuous
transformation
provides both the insight into – and control over – the
1. Gartner Newsroom. April 21, 2021. https://www.gartner.com/en/newsroom/press-releases/2021-04-21-gartner-forecasts-worldwide-public-cloud-end-user-spending-togrow-23-percent-in-2021
3
White Paper How to Enable Business-Led IT through SaaS Management
The Rise of SaaS and Shadow IT
Employees use, on average, eight SaaS applications2 and
they can’t by themselves stem the growth of shadow IT.
a recent Okta study showed the typical company uses
Indeed, the relatively low adoption of SaaS marketplace
close to a hundred.3 SaaS not only comprises the entire
platforms indicates that few view them as a panacea.
software functionality in many emerging enterprises, but
also represents a common software deployment model
According to Gartner, shadow IT today can make up
across organizations of all sizes. According to a Harvey
more than 40% of formal IT spend.5 Uncontrolled costs
Nash-KPMG CIO study, 23% of organizations said they
and underutilized licenses aside, shadow IT brings
were using SaaS marketplace platform implementations
elevated risk on both the security and the compliance
in 2020 – more than triple the 7% reported the previous
front. These risks come in the form of inadequately
year4 – indicating that companies increasingly seek to
secured applications as well as the inability of IT to
control SaaS spend by providing employees with easier
ensure that former employees lose access to enterprise
ways to purchase approved applications (see figure 1).
tools containing sensitive data once they’ve left.
By giving employees choices when it comes to
The challenge of shadow IT may be pervasive and
purchasing software, SaaS marketplaces can
persistent, but that doesn’t mean it can’t be overcome.
move companies a step closer to business-led IT.
In fact, the solution lies in adopting a business-led
Unfortunately, unless these marketplaces keep pace
approach to IT.
with the continuously evolving needs of business users,
Figure 1
SaaS marketplace implementations reported by CIOs
23%
7%
2020
2019
Source: Harvey Nash-KPMG CIO study 2020
2. Top SaaS Purchase & Usage Statistics in 2020 to Predict 2021. Insivia. https://www.insivia.com/saas-statistics-infographic-2021/
3. Businesses at Work, Okta. 2021. https://www.okta.com/businesses-at-work/2021/
4. Harvey Nash-KPMG CIO Survey 2020. https://advisory.kpmg.us/articles/2020/cio-survey-harvey-nash-2020.html
5. Simon Mingay and Darren Topham. “Integrate ‘Shadow IT’ and Business-Led IT Into the I&T Operating Model to Enable Enterprise Agility.” Gartner. February 5, 2020.
https://www.gartner.com/en/documents/3886073/integrate-shadowit-and-business-led-it-into-the-i-t-ope#:~:text=To%20accelerate%20digital%20 execution%2C%20
the,model%20friction%20and%20mitigate%20risk
4
White Paper How to Enable Business-Led IT through SaaS Management
Digital Leaders and the Limits of SaaS
Marketplace Solutions
Business-led IT focuses on allowing the functional units
Figure 2
of the business to select the right tools to meet their
What makes a digital leader
needs. The companies that excel at this approach to
Are you “very” or “extremely” effective at scaling good
creating value – digital leaders – are the three-out-
ideas and stopping poor ones quickly?
of-10 companies that report being good or extremely
proficient at using digital technologies to implement
their business strategies, according to Nash-KPMG.
49%
Digital Leaders
25%
All respondents
Digital leaders adopt business-led IT to enable their
employees to easily access the technology they need
Source: Harvey Nash-KPMG CIO study 2020
to help the company achieve and maintain market
leadership. When the coronavirus pandemic struck,
49% of digital leaders had much of the necessary
technologies, including intelligent automation, AI, and
digital infrastructure in place, and they were better at
edge computing, saw a higher percentage of large-
implementing emerging technologies, reports Nash-
scale implementations (see figure 3). In short, top
KPMG (see figure 2). Almost half of digital leaders said
companies prioritize efforts that let the business get
they could proficiently scale good ideas and halt poor
the technology required to win in a rapidly changing
ones swiftly – shortening time-to-market for products
marketplace where speed of execution is essential.
and services – compared to just a quarter of all
With thousands of SaaS solutions available and the
respondents.
number of SaaS companies continuing to proliferate,
How do digital leaders get the technology they need to
companies need to be able to effectively manage their
operate nimbly? A substantial 34% of digital leaders –
SaaS application portfolios. And they need to do this in
versus 18% of other organizations – have implemented
a way that supports business-led IT, while mitigating the
SaaS marketplace platforms, according to Nash-
problems associated with shadow IT. This is where SM
KPMG. Only distributed cloud, among other emerging
comes into play.
42%
Figure 3
Large-scale
implementations of
34%
emerging technology
Digital leaders
Others
16%
18%
13%
12%
4%
Distributed
cloud
SaaS marketplace
platforms
Intelligent
automation
11%
2%
Artificial
intelligence /
Machine learning
5%
Edge computing /
Internet of Things
3%
1%
Blockchain /
Distributed ledger
3%
1%
Augmented reality
/ Virtual reality
1%
0%
Quantum
computing
Source: Harvey Nash-KPMG CIO study 2020
5
White Paper How to Enable Business-Led IT through SaaS Management
Business-Led IT and Comprehensive
SaaS Management
While many companies struggle to rein in Shadow IT, the
Nash-KPMG CIO study cited above discovered something
THE VALUE OF VISIBILITY
interesting: 63% of organizations surveyed allow other
departments, not just IT, to manage technology, and 43%
don’t even involve IT in business-led IT decisions. In other
words, what others may call shadow IT is simply standard
operating procedure at these companies. What makes
this possible?
The key is collaboration based on visibility. Letting the
business choose the tools it wants depends on letting
IT monitor what is being purchased and how it is being
used. The business then needs to allow IT to implement
guardrails so that insecure SaaS applications don’t
put the company in jeopardy. These guardrails should
A rapidly growing company realized substantial
value with the comprehensive visibility into
its software stack offered by LeanIX SaaS
Management Platform (SMP). Enabling the
enterprise to identify more than 150 previously
unknown SaaS applications, the tool generated
accurate insights into spend, compliance,
usage, adoption, and contracts. The
organization was able to achieve an ROI that
included savings of nearly 20% on annual SaaS
expenses. Empowered by full SaaS visibility, the
company could schedule and track contract
renewals, reduce IT spend on unnecessary
applications and license entitlements, and
focus on scaling the business.
also ensure that redundant applications or automatic
renewals of unneeded licenses aren’t a drain on company
resources.
Only automatic discovery – made possible by an SM tool
application portfolio with data-driven decisions on
– allows IT to continuously monitor large, dynamic SaaS
renewals, upgrades and downgrades, consolidations,
portfolios. Manual processes are simply not reliable or
and sunsetting. By linking application usage and spend
timely enough. With the ongoing visibility offered by the
to departments as well as individual users, these tools
right SM tool, IT gains a more comprehensive picture of
improve budget forecasting and accountability. They
the organization’s actual IT landscape. At the same time,
also make the process of managing renewals easier and
IT can also collect the data needed to have productive
more transparent. Compliance and risk are shored up
conversations with the business about how best to keep
by determining application ownership, user access to
costs under control and the business out of trouble.
services and data, and vendor compliance with internal
policies and regulations, such as SOC 2, GDPR, and PCI-
Visibility and discovery are just the beginning. The right
DSS. Finally, these tools can identify former employees
SM tool helps optimize usage and rationalize the SaaS
who may still have access to company data and pose
security risks. The result is a SaaS portfolio that is not only
cost-effective, but also secure and compliant.
400% ROI IN MONTHS
Despite widespread SaaS adoption, many
dynamic organizations still manage their SaaS
portfolios manually. Even in small to mid-size
organizations, this approach can lead to excess
SaaS spend. Previously spending seven digits
a year on software, one company initially
saved $75,000 – representing 400% in ROI –
just months after implementing the LeanIX
SMP. Its software forecasts became 30% more
accurate, and its security was enhanced by
a rigorous software approval process. During
its first year using our SMP, the enterprise
generated over 15% in savings.
When implemented properly, SM represents the best of
both worlds. By tracking a company’s SaaS applications,
their costs, and security issues, SM tools enhance the
resiliency, scalability, and security of IT infrastructures.
As a result, IT can fulfill its obligations to the organization
through better planning, more rational spending, and
greater security. At the same time, the business gets the
flexibility and agility it needs to deliver a great customer
experience, adapt to changing market conditions, and
continuously innovate.
6
White Paper How to Enable Business-Led IT through SaaS Management
6 Steps to Enabling
Business-Led IT with SaaS
Management
Step 1
Discovery: What’s in your
SaaS portfolio?
Before you can manage or optimize your SaaS portfolio,
you need to know what’s in it. To facilitate this discovery
All companies need tools that allow their employees to
process, you need to start by connecting your SM tool
work efficiently so that the business can nimbly launch
to key enterprise systems, from financial, expense, and
products and serve clients. But when business functions
contract management solutions, to credit card journals,
buy the applications they want without constraints, all
HRIS, CASB, and SSO. The tool should then automatically
too often the result is a cluttered software ecosystem,
pull data to identify which applications have been
suboptimal usage, and soaring costs.
purchased along with essential information on each,
such as associated cost, invoice date, contract start-
Is the company using all the SaaS applications it owns?
and end dates, and so on. The tool should also integrate
Does it have multiple applications that support the
directly with SaaS applications like Office 365, Salesforce,
same business capabilities? Do certain applications
and Zoom to obtain usage and utilization metrics (see
pose unaddressed security or compliance risks? These
Figure 4).
questions can only be accurately answered with
the help of an automated SM solution that delivers
Based on this data, the tool can create a full picture of
ongoing visibility into a company’s SaaS portfolio,
your SaaS application portfolio by building inventories
enabling the management and optimization of its
of application characteristics based on various data
entire software stack.
types, including cost and usage. You can also identify
and assign accountability, ownership, and administrative
To support a business-led IT approach that delivers
privileges for specific applications.
long-term value, companies should implement an SM
tool and take the following steps:
How can you speed up the SM tool’s implementation
along with the discovery process? Ask people with
application administrative rights to help inventory
Figure 4
credentials to enable access. This is much faster than
SaaS Discovery
waiting for project leads to provide access to ERPs, SSOs,
SaaS services and related data detected during
expense management tools, and HR systems.
discovery by the LeanIX SMP.
Source: LeanIX
7
White Paper How to Enable Business-Led IT through SaaS Management
Step 2
Analyze application usage
The discovery process will produce a complete inventory
hanging fruit, take a look at the SaaS applications your
of your application portfolio. This inventory should
vendor says tend to be overbought or undermanaged.
provide insight into: Usage (e.g., licenses quantities,
seats, and users, total spend), renewal terms, business
Quickly identifying your most costly applications can
owner, purchase type (e.g., expensed versus AP), and any
help you determine not just how much ROI can be
contract terms. With this inventory, you should then be
realized through streamlining, but also how to make
able to track usage patterns and identify underutilized
the rest of the portfolio even leaner. Look for emerging
applications and licenses (see Figure 5).
user activity patterns (e.g., inactive subscriptions and
underused applications) to optimize your application
To realize the most value quickly, analyze your discovery
resource allocation. Compare the value of purchased
data systematically. Scrutinize the largest areas of
licenses to used licenses in order to uncover additional
presumed spend first. These areas often provide the
savings and efficiency opportunities.
fastest return on investment. After analyzing this low-
Figure 5
SaaS Application Usage
SaaS application usage based on direct vendor integrations completed by the LeanIX SMP.
Source: LeanIX
8
White Paper How to Enable Business-Led IT through SaaS Management
Step 3
Evaluate and rationalize applications
Step 4
Schedule risk assessments
Rationalization enables companies to get the most value
Continuous monitoring ensures software resources are
from SaaS software by identifying unused, redundant,
used efficiently. It protects the company’s data and
and unsupported applications. Look for functional
infrastructure, maintains compliance (see Figure 6), and
overlap (e.g., between Microsoft OneDrive and Box) and
reduces risk. Conduct regular health checks on your
usage rates to determine which applications should be
SaaS stack using data from monthly reports and your SM
renewed, upgraded or downgraded, consolidated, or
vendor. Allowing the business to freely access the tools it
sunset. Give special preference to software that supports
needs shouldn’t entail creating unnecessary risk. That’s
core workflows (e.g., project management, file storage,
why it’s critical to perform risk assessments for software
and sales intelligence tools).
that the organization is considering purchasing by
implementing automated evaluations as follows:
Set internal renewal dates and custom email
notifications to enable timely contract renewals for
1. Examine data security risks by analyzing security
needed tools. Deploy utilization insights in negotiations
certifications maintained by the vendor and the
and contract right-sizing activities. Discontinue
technical measures implemented (e.g., 2FA and SSO).
redundant tools. Talk to the relevant business owners
and create a transition plan that supports users and
preserves data during any software deprovisioning. And
use role-based access control to manage permissions,
provide quick access to applications for those approved
to use them, and streamline application authorization
and IT provisioning workflows.
2. Maintain regulatory compliance by determining
where the data is stored, who has access to it, and
whether the vendor is compliant with GDPR, CCPA,
SOX, and HIPAA.
3. Determine business risk by assessing whether
vendors have sufficient capital and resources to keep
providing services in the future.
Figure 6
Compliance Tracking
Compliance tracking – including service and status – provided by the LeanIX SMP.
Source: LeanIX
9
White Paper How to Enable Business-Led IT through SaaS Management
Step 5
Implement buying and renewal processes
Step 6
Continuously monitor and review
When people purchase applications the company has
Empowered by full SaaS visibility, it’s time to implement
already licensed, it is a clear waste of money. To avoid
continuous monitoring and regular software reviews.
this, the SM tool should allow business users to easily
Combined with the discovery process – accomplished
see what software the company has paid to access. An
via connectors with enterprise systems and direct
application catalog helps the business make informed
application integrations in Step 1 – continuous
software purchasing decisions. The good news is, if
monitoring and review enables full and continual SaaS
business users end up buying applications outside the
management.
catalog, the automated discovery functionality of your
SM tool should catch it.
Augment the value of the SM tool by tapping into the
knowledge of the vendor team. This can help rally
A systematic renewal process ensures that license
support of key internal stakeholders behind your new
renewals are evaluated to maintain cost control and
solution and processes. The vendor’s benchmarking data,
applications in the portfolio meet business and adoption
peer insights, and knowledge can help you get the most
rate objectives (see Figure 7). Undertaking the contract
value from your ongoing SM journey.
renewal process with an interdisciplinary team makes
sure all tools fit the organization’s various functional
needs. Automatic renewal alerts, ideally three months
BUSINESS-LED IT:
before the renewal date, will give you enough time to
VISIBILITY, INTEGRATION, AND AUTOMATION
evaluate whether a particular application should be
automatic renewal that you missed.
Figure 7
SaaS Renewals Timeline
SaaS renewals timeline – with
financial insights and custom alerts
– delivered by the LeanIX SMP.
A digital agency’s business-led IT procurement
approach relies on the LeanIX SMP for data to
enable its employees to make SaaS purchases that
best meet their requirements. The agency’s selfmanagement governance model depends on total
visibility into its SaaS portfolio – including products,
usage, invoices, and spend – to enable tracking of
the applications being used, how much they are
being used, and by whom. The solution’s automated
functionality integrates with SaaS vendors and
enables cost-effective planning, renewals, and ISO
processes for risk management. The tool supports
yearly subscription reviews and feedback from
service owners so the organization can evaluate
security considerations for all SaaS it buys.
Source: LeanIX
renewed. It should also help you avoid the pain of an
10
White Paper How to Enable Business-Led IT through SaaS Management
Conclusion
As a leading software delivery method for companies
SM tools enable IT to support business-led IT. By providing
of all sizes and industries globally, SaaS is here to stay.
visibility into the organization’s continuously evolving
Because SaaS applications are so easy to purchase and
SaaS landscape, these tools allow IT to serve as a
deploy, we find that business users increasingly buy SaaS
valuable partner to business users and leaders alike.
products outside the control of IT. If your IT department is
From discovery to ongoing monitoring, SM tools provide
focused more on control than on supporting the business,
the data both IT and the business need to optimize the
this behavior can be viewed as shadow IT, which brings
SaaS portfolio, maintain compliance, and enhance
with it a host of bad connotations.
security. By bringing automation, rigor, and insight to
SaaS management, these tools empower the enterprise
If, on the other hand, your IT department views shadow
to operate with agility, guide continuous transformation,
IT instead as business-led IT, then the goal should
and capitalize on new market opportunities.
be to enable and support it, while making sure the
business is protected when it comes to cost security and
compliance.
FREE DEMO
Learn how you can enable business-led IT with the
LeanIX SaaS Management Platform today.
Schedule a Demo!
LeanIX’s Continuous Transformation Platform® is trusted by Corporate IT and Product IT to achieve comprehensive visibility and superior governance. Global customers
organize, plan and mange IT landscapes with LeanIX’s automated and data-driven approach. Offering Enterprise Architecture - , SaaS- , and DevOps-Management,
LeanIX helps organizations make sound decisions and accelerate transformations. LeanIX has hundreds of customers globally, including Adidas, Atlassian, Bosch, Dropbox,
Santander or Workday. The company is headquartered in Bonn, Germany, with offices in Boston, San Francisco and around the world.
Copyright© LeanIX GmbH. All rights reserved. LeanIX and the LeanIX logo are trademarks or registered trademarks of LeanIX GmbH in Germany and/or other countries.
All other products or services are trademarks of their respective companies.
This document is current at the time of its initial publication. LeanIX GmbH reserves the right to alter it at any time.
THE INFORMATION CONTAINED IN THIS DOCUMENT IS PROVIDED AS IS, WITH NO WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLICIT.
2021v1.0
www.leanix.net
11