How to Conduct a SaaS Audit in 6 Easy Steps

With the average organization using over 100 SaaS applications, managing this sprawling ecosystem can quickly become overwhelming. Unmonitored SaaS usage can lead to skyrocketing costs, security vulnerabilities, and compliance risks. A SaaS audit is the first step in regaining control over your SaaS stack, ensuring that every tool delivers value while aligning with your organization’s goals.

This guide walks you through six easy steps to conduct a successful SaaS audit, offering real-world examples and actionable insights to optimize your SaaS management strategy.

What Is a SaaS Audit?

A SaaS audit is a systematic review of your organization’s SaaS applications, focusing on their usage, costs, security, and compliance. The primary goal is to eliminate waste, improve efficiency, and ensure that your SaaS tools align with your business objectives.

Why Is a SaaS Audit Important?

• Cost Savings: Identify unused licenses, duplicate tools, and overpriced subscriptions.
• Security Enhancement: Mitigate risks associated with shadow IT and outdated permissions.
• Compliance Assurance: Ensure your SaaS applications adhere to regulations like GDPR, HIPAA, or SOC 2.

What’s in It for Me? Conducting a SaaS audit reduces costs, mitigates risks, and ensures your team has the right tools to succeed.

Step 1: Inventory Your SaaS Applications

The first step in a SaaS audit is creating a comprehensive inventory of all active SaaS applications. This process helps uncover hidden tools (often resulting from shadow IT) and provides a clear picture of your SaaS ecosystem.

How to Create an Inventory

1. Check Expense Reports: Analyze financial records to identify recurring SaaS charges.
2. Analyze Network Traffic: Use tools like Torii, Zylo, or Okta to detect active SaaS applications.
3. Survey Employees: Ask teams to list the tools they use, including free or trial versions.

Real-World Example: VMware

VMware conducted a SaaS inventory to manage its sprawling ecosystem of tools across multiple departments. Using Zylo, they uncovered redundant licenses and optimized their subscriptions, saving over $3 million annually. Learn more about their success.

Internal Link Opportunity: For more tips on managing shadow IT, visit How to Discover and Mitigate Shadow IT in Your SaaS Stack.

Step 2: Categorize and Evaluate Applications

Once you’ve inventoried your SaaS tools, categorize and evaluate them based on their purpose, usage, and relevance.

Categories to Consider

1. Core Tools: Critical applications like CRMs (e.g., Salesforce), communication platforms (e.g., Slack), and accounting software (e.g., QuickBooks).
2. Department-Specific Tools: Apps used exclusively by teams, such as HubSpot for marketing or Asana for project management.
3. Duplicate Tools: Multiple tools with overlapping features (e.g., using both Trello and Monday.com).
4. Underutilized Tools: Applications with low adoption rates or sporadic usage.

Evaluation Criteria

• Usage: How often is the tool used, and by whom?
• Cost: Is the subscription cost justified by its value?
• Integration: How well does the tool integrate with your other SaaS applications?

What’s in It for Me? Categorizing tools helps identify redundancies, reduce costs, and consolidate your SaaS stack.

Step 3: Assess Costs and Licenses

Understanding the financial impact of your SaaS ecosystem is critical. This step focuses on analyzing SaaS spending to ensure every dollar contributes to business growth.

How to Analyze Costs

1. Review Invoices: Identify subscription fees, renewal dates, and payment terms.
2. Calculate Cost per User: Divide the total cost by the number of active users.
3. Identify Unused Licenses: Cross-check usage data with active licenses.

Real-World Example: Slack

Slack faced criticism in 2022 when several large organizations, including Amazon, revealed underused Slack licenses during internal audits. By reallocating licenses to active users, these companies saved hundreds of thousands annually. Read more about the importance of license optimization on Amazon's SaaS practices.

Internal Link Opportunity: Learn more about cost optimization in 7 Tips to Optimize SaaS Costs for Maximum ROI.

Step 4: Review Security and Compliance

SaaS tools often handle sensitive data, making security and compliance critical. Review each application to ensure it aligns with your organization's standards.

Key Areas to Audit

1. Vendor Compliance: Check certifications like SOC 2, ISO 27001, and GDPR compliance.
2. Access Control: Ensure role-based permissions are in place to minimize unauthorized access.
3. Breach Policies: Confirm vendors have notification protocols for security incidents.

Real-World Example: Zoom

During the COVID-19 pandemic, Zoom faced scrutiny over its security practices. By updating their compliance certifications and introducing end-to-end encryption, Zoom regained user trust and strengthened its position in the market. Learn about Zoom's security updates.

External Resource: For GDPR compliance guidelines, visit GDPR Info.

Step 5: Gather Feedback from Teams

Employee feedback provides valuable insights into how SaaS tools support workflows and where improvements are needed.

How to Collect Feedback

1. Conduct Surveys: Use tools like Google Forms or Typeform to gather user feedback.
2. Host Focus Groups: Engage with department leads to discuss their software needs and pain points.
3. Review Support Tickets: Analyze IT support requests to identify recurring issues with specific tools.

Key Questions to Ask

• Which tools are indispensable for your work?
• Are there any tools you find difficult to use or unnecessary?
• Are there features missing in your current tools?

Real-World Example: Canva

Canva improved its product development by regularly soliciting user feedback. Their SaaS audit process revealed underutilized features, leading to enhancements that boosted adoption rates by 30%. Discover how Canva prioritizes user experience.

What’s in It for Me? Feedback ensures your SaaS stack aligns with employee needs, improving productivity and satisfaction.

Step 6: Develop an Action Plan

The final step is to translate your audit findings into a clear action plan that addresses inefficiencies, reduces costs, and strengthens security.

Components of an Action Plan

1. Tool Retention: Identify which tools to keep based on their value and relevance.
2. Tool Consolidation: Eliminate redundant tools or merge functionalities into a single platform.
3. License Optimization: Adjust subscription plans to match actual usage.
4. Security Enhancements: Implement multi-factor authentication (MFA), role-based access control (RBAC), and regular security audits.

Real-World Example: Netflix

Netflix optimized its SaaS ecosystem by consolidating project management tools across departments. By switching from multiple tools to Asana, they streamlined workflows and saved over $250,000 annually. Learn more about Netflix’s IT efficiency practices.

The ROI of a SaaS Audit

A SaaS audit delivers measurable returns by:

• Reducing Costs: Eliminating redundant tools and unused licenses saves money.
• Improving Productivity: Ensuring employees have access to the right tools enhances efficiency.
• Enhancing Security: Strengthening access controls and vendor compliance reduces risks.

Conclusion

Conducting a SaaS audit is essential for managing your SaaS ecosystem effectively. By following these six steps, your organization can optimize spending, improve security, and align tools with business goals.

Ready to get started? Explore additional resources on SaaS management:

• Mastering SaaS Management: A Comprehensive Guide to Success
• Best SaaS Management Platforms for 2024

For actionable tips on managing compliance, visit SaaS Compliance Checklist: Key Steps for Every Business.