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The Decentralization of SaaS Buying Is Likely to Stay Here

By Sudipta Choudhury - August 25, 2021 3 Mins Read

The Decentralization of SaaS Buying Is Likely to Stay Here

Technology teams and business leaders need to start working together as partners – where IT teams get visibility into all SaaS in use at an organization.

SaaS technology has experienced steady growth in the last decade. And with the emergence of the widespread pandemic, the trend kick started this growth rapidly. Businesses scrambled to provide their remote workforce with SaaS solutions with the need to remain connected and productive.

A recent study by Zylo, titled “2020 SaaS Management Benchmarks” found that the number of SaaS applications among most organizations increased by almost 9% year-over-year – which is nearly double the growth rate from the previous year’s statistics.

While the global marketplace sees the explosive growth of SaaS, there is also a continuation of another key SaaS-related trend. Basically, SaaS purchasing continues to be more decentralized, and IT teams are controlling less – both SaaS spend and the number of apps.

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Furthermore, SaaS is easy to acquire – similar to applying a credit card number. So it is no different for applications to be purchased throughout a given organization. As such, IT manages a swiftly decreasing portion of SaaS spends as well as application quantity.

In an era of remote working and hybrid work culture, the right software has become essential to driving the overall business effectiveness – this is applicable for both employees and the employer. And decentralized purchasing will last as companies make more purchasing decisions, including SaaS portfolios.

Certainly, this maturity of the technology market is here to stay and is forecasted to grow gradually. In fact, the “Forecast: Public Cloud Services, Worldwide, 2018-2024, 2Q20 Update” report by Gartner reveals that the global SaaS spending will touch around $140 billion by 2022. It is almost a 16% increase from 2020.

According to Sid Nag, research vice president at Gartner – “Organizations that expand remote work functionality will prioritize collaboration software, mobile device management, distance learning educational solutions and security, as well as the infrastructure to scale to support increased capacity.”

In fact, IT still has an essential role in portfolio rationalization as well as ensuring application compliance and security. Technology teams and business leaders need to start working together as partners – where IT teams get visibility into all SaaS in use at an organization.

This can help them in establishing effective processes and policies on buying and managing SaaS applications. However, as SaaS portfolios grow and IT involvement is less, companies may be at a greater risk of Shadow IT.

Typically, Shadow IT involves any software or tools outside the ownership or control of centralized IT companies. Today, SaaS applications can be obtained via credit card, so if a small team requires fast access, it is common for them to bypass an established process and get reimbursed.

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Clearly, Shadow IT has increased – both in terms of spend and quantity. In particular, the spending has doubled year over year. Shadow IT (SaaS applications purchased by employees) represents about 7% of SaaS spends, accounting for roughly 37% of application quantity.

Undoubtedly, with the rise in data breaches globally, companies need to prioritize identifying all SaaS applications in use. The industry experts suggest IT leaders will need to oversee work closely to eliminate Shadow IT – to be able to manage cyber risk fully in this era.

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Sudipta Choudhury

Marketing professional with experience in B2B and MR industry. Skilled in Marketing, Strategy Making, Copywriting and Content Creation, Sales, and SEO with excellent Communication Efficiency. Holding a dual master's degree focused on Marketing from IBS, Pune and ICFAI University.

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