Right now, the average company is paying for 7-8 duplicate SaaS subscriptions. Not because Samuel from marketing made a bad decision, but because nobody was keeping track. That's what happens when software buying is decentralized: Approvals are informal, and renewals run on autopilot.
SaaS spend optimization is how you fix that.
Finance, IT, and Procurement teams are the ones who feel this problem the most.
- Finance faces unpredictable budgets
- IT manages software that they can’t fully see
- Procurement tries to negotiate without enough data
All three can benefit from fixing this, and this guide explains how.
What Is SaaS Spend Optimization?
SaaS spend optimization is the process of reducing waste, improving visibility, and maximizing the value of every dollar spent on software subscriptions.
In other words, it’s about paying only for what you need, actually using what you pay for, and making sure you get a fair price.
SaaS spend optimization is different from SaaS spend management.
Spend management means tracking and organizing your SaaS expenses, knowing what tools you have, who is responsible for them, and how much they cost.
On the other hand, spend optimization takes it further by using that information to reduce waste, renegotiate contracts, and ensure your software aligns with your business needs.
You need to manage your SaaS before you can optimize it, but just managing won’t save you money.
To see if your optimization efforts are working, you should track a few key metrics:
- ROI per tool: Is the software giving you enough value for what it costs?
- Cost per user: How much are you actually paying for each active user?
- SaaS utilization rate: What percentage of your licenses are actually being used?
These metrics turn a vague "we're spending too much on software" problem into something you can measure, act on, and report.
→ Learn more about SaaS spend management
What Are The Risks of Not Optimizing SaaS Spending
Ignoring SaaS optimization makes things worse over time. Here's what typically happens when companies let it slide:
1. Budget bleeds without anyone noticing
When there’s no central way to track SaaS subscriptions, unused tools often renew on their own. You might pay full price for licenses that haven’t been touched in months. This can add up fast. 49% of SaaS licenses go unused, meaning nearly half of what companies pay for is never used.
2. Shadow IT creates security and compliance gaps
42% of SaaS apps in the average company are shadow IT, operating completely outside IT's control. When employees buy tools on their own, without any approval process, the IT department can’t see or control what’s being used.
And there’s no way to make sure these tools meet security or compliance standards.
3. Contract renewals happen on the vendor's terms, not yours
If you don’t keep track of renewal dates, you lose your advantage in negotiations. Vendors realize that companies on auto-renewal rarely challenge the terms. If you miss the chance to renegotiate or cancel, you’re stuck for another cycle at a price that might not be right anymore.
These aren’t rare situations. This is what often happens when SaaS spending isn’t managed. The longer you wait, the harder it becomes to solve.
4. AI tools are the new shadow IT
Right now, every team is picking up AI tools, often without letting IT or Procurement know. Marketing might sign up for an AI writing tool, engineering could start using a new AI coding assistant, and operations may begin relying on an AI reporting tool.
None of these go through an approval process, and all the costs end up on the company card.
AI-powered SaaS is spreading faster than any other software category, so the sprawl problem is only getting worse, and most companies still haven't caught up.
What Are The Benefits of SaaS Spend Optimization
When you get this right, the impact goes beyond just saving money. Here's what actually changes:
Reduce unnecessary costs
The first benefit is cutting costs you shouldn’t be paying for, like unused licenses, extra tools, or overlapping subscriptions.
Organizations often lose about 25% of their SaaS budgets to unused entitlements and overlapping tools, meaning a quarter of that spend simply doesn’t deliver value.
Companies that regularly audit their SaaS portfolios often uncover significant savings without affecting the tools their teams rely on.
Improve contract negotiations
When you know when renewals happen, how your tools are used, and what other options are out there... You can negotiate with confidence rather than guess.
Vendors take you more seriously when you’re prepared. This is where Najar stands out. We use both procurement know-how and usage data to help companies get better deals and recover costs.
Increase software adoption efficiency
Optimization isn’t only about removing tools. It’s also about making sure the tools you keep are actually used.
If adoption is low, it often means onboarding or training is missing, not that the tool itself is wrong. Fixing this helps you get more value from what you already pay for.
Better financial forecasting
When you know exactly what you’re paying for, when renewals are coming up, and how usage changes over time, your budget forecasts get much more accurate.
Finance teams aren’t caught off guard by renewal invoices and can plan ahead.
🎉 What does it look like in practice?
Lucca, a French HR software company, had hundreds of SaaS tools across their stack and no clear visibility into what was being used or how much it was really costing them.
After working with Najar, they recovered €493,000 in savings, not by cutting tools their teams needed, but by eliminating waste, renegotiating contracts, and right-sizing licenses.
Their CFO put it plainly: if you can't be 100% sure how many applications you're using and how much you're spending, it's time to get a SaaS procurement solution.
7 Strategies for a Better SaaS Spend Optimization
Organizations that want to stay in control manage shadow IT by using SaaS Spend Optimization. They make it a regular process and check in often to keep things on track.
The following core practices are the minimum of what a company serious about SaaS spend should have in place.
1. Run Regular SaaS Audits
You can't optimize what you can't see.
A SaaS audit means listing every active subscription in your business, including who owns it, how much it costs, how often it’s used, and whether it’s still needed.
- Track all active subscriptions, including those paid on company cards, by individual teams
- Find licenses that aren’t being used or are rarely used. For example, if no one has logged in to a seat for 60 days, that seat is going to waste
- Use tools that automatically find subscriptions, so you don’t have to depend on people to report them. Most people won’t do this on their own
An audit done once is better than nothing. Done quarterly, it becomes a system.
2. Reduce Tool Overlap Across Teams
Many companies pay for several tools that do the same job in different departments.
For example, marketing might use one project management tool, engineering another, and operations a third. Combining these into one solution saves money and makes it easier to manage vendors.
- Identify functional overlaps across your stack
- Evaluate which tool best serves the majority of use cases
- Standardize on one and deprecate the rest
3. Centralize Software Purchasing aka Procurement
When anyone can buy software on a company card without a formal process, spending becomes impossible to track. Centralizing procurement means every software purchase goes through a defined approval flow.
- Standardize how purchase requests are submitted and approved
- Assign clear ownership to a procurement team or individual
- Make it easy for employees to request tools properly, so they don't bypass the process
This is what Najar’s intake-to-procure workflow is designed for. It gives teams a clear way to submit requests and lets procurement see everything before any money is spent.
4. Optimize Licensing and Renewal Terms
Most companies have more licenses than they need. Teams change size, projects finish, and roles shift, but subscription levels often stay the same.
- Right-size subscriptions per team based on actual headcount and usage
- Negotiate annual contracts where it makes sense, they typically come with better pricing than monthly billing
- Keep track of renewal dates ahead of time, not after the fact. You have the most leverage about 90 days before a renewal.
5. Monitor Real Product Usage
Choosing the right tools is just the first step. You also need to make sure people are actually using them.
- Track real usage metrics, not just logins. Check if people are using the features you’re paying for.
- Identify inactive users and either reassign or remove their licenses
- Enable license reallocation across teams before going back to the vendor for more seats
6. Implement a SaaS Management Platform
Once your organization grows, managing everything by hand is no longer practical.
A SaaS management platform brings all your spend visibility, contract tracking, renewal alerts, and usage data into one place. It also automates reporting, saving you hours of manual work.
That’s why we created Najar. Our platform gives IT, Finance, and Procurement teams a shared view of all their tools, highlights savings opportunities, and manages the procurement process from request to approval.
On average, our customers recover 25% of their spend and see a 7x return on investment.
This isn’t due to just one feature, but to having both visibility and strong processes, which prevent the losses that can otherwise occur.
When you’re considering a SaaS management platform, check for real-time dashboards, automated renewal alerts, usage reporting, and workflow integrations with the tools your team already relies on.
7. Review and Monitor SaaS Spending
Optimization isn’t something you finish. It’s an ongoing routine.
- Set up monthly or quarterly spend reviews with Finance and IT at the table
- Track your KPIs over time, cost per user, utilization rate, and savings captured
- Use dashboards that surface anomalies before they become problems
The goal is to make SaaS spend a line item that's understood and controlled, not a black box reviewed only once a year.
💡 SaaS Spend Optimization Checklist
Use this as a starting point:
☑️ All active subscriptions are documented in one place
☑️ Every subscription has a clear owner
☑️ Unused and underutilized licenses are easily identified
☑️ Access is easy to IT pricing benchmarks
☑️ Negotiation expertise is involved in vendor discussions (internal or external)
☑️ Duplicate tools across teams have been flagged
☑️ A formal approval process exists for new software purchases
☑️ Renewal dates are tracked and reviewed at least 90 days in advance
☑️ License counts are aligned with actual headcount and usage
☑️ Usage logins are being monitored
☑️ A quarterly spend review is scheduled with Finance and IT
☑️ A SaaS management platform is in place to automate the above
How to Measure Success of SaaS Spend Optimization
Once you start optimizing, you need metrics to know it's working. The 5 points worth tracking:
- Total SaaS spend over time: Is it going down compared to your team size and company growth?
- Cost per active user: Are you only paying for seats that people actually use?
- Utilization rate per tool: What percent of your licenses are used each month?
- Savings captured: How much have you saved through renegotiations, cancellations, and right-sizing?
- Renewal coverage: What percent of renewals are reviewed ahead of time instead of after they happen?
Keep tracking these over time and share the results with leadership. These numbers don't lie. If the process is working, they'll show it. If it isn't, they'll show that too.
Before you start looking at the numbers, it’s useful to see what you might be missing out on.
Najar's SaaS savings estimator gives you a quick baseline. Try it before your first audit and use the results as a benchmark to track your progress.
SaaS Spend Mistakes That Are Costing You Right Now
Even well-meaning teams can make some common mistakes:
1. Ignoring shadow IT
If your procurement process is too complicated, people will look for shortcuts. This often leads to tools being bought without approval, kept hidden from IT, and left off the budget.
Improve the process first, and shadow IT will be less of an issue.
2. Paying for unused licenses
This is the most common and easiest waste to avoid. Regular usage reviews, even if done every quarter, can help you catch this before it adds up.
3. Not tracking renewals
Auto-renewals benefit vendors the most. If you do not have a way to flag renewals 60 to 90 days ahead, you miss your chance to negotiate, adjust, or cancel.
4. Failing to involve the right stakeholders
SaaS optimization works best when Finance, IT, and Procurement work together. If only one team handles it, you will not have the full picture. Decisions made without usage data, budget details, or security needs are likely to fall short.
Why Choose Najar For Your SaaS Management?
Most companies know they're overspending on SaaS. The problem is they don't have the time, expertise, process, or tooling to address it consistently.
That's exactly why we built Najar.
We bring procurement workflow and spend optimization together in one platform, so you control both what's being bought and what you're already paying for.
Finance, Procurement, and IT teams use us as a shared source of truth on SaaS spend, and we connect with the tools already in your stack.
What does it look like in practice?
1. Spend dashboards give you real-time visibility into spending, broken down by team, tool, and vendor
2. Renewal and contract tracking sends automated alerts before deadlines and keeps all contract details in one place
3. Usage and financial insights give you the data to support renegotiations and right-sizing decisions
4. Procurement workflow covers structured intake, approval routing, and vendor sourcing all in one place
📎 Note
Our IT buyer expertise provides you with procurement partners who know the market, the vendors, and how to get you the best deal. Whether that means cutting costs or simply making sure every dollar goes toward exactly what your teams actually need.
The results speak for themselves: 25% average spend recovery, 7x ROI, €493,000 saved at Lucca, and €406,000 at Welcome to the Jungle. Those numbers come from having both visibility and a process. One without the other doesn't move the needle.
If you're ready to stop guessing and start controlling your SaaS stack, get a demo or use our SaaS savings estimator to see what you could be recovering.
The Sooner You Start, The Less You Lose
To optimize SaaS spending, you need to know what you have, make use of what you pay for, and buy at the right price.
Companies that get this right save money and set up a procurement process that can grow without losing control.
The longer you wait, the bigger the problem gets. And the cost of doing nothing is real.
When you manage your SaaS stack well, you get cleaner budgets, faster approvals, fewer security issues, and stronger vendor relationships.
If you need a starting point, begin with an audit. If you need a tool to help manage the ongoing work, Najar is built for exactly that.
FAQ
1. What’s the difference between SaaS spend management and spend optimization?
Spend management means keeping track of your tools, who owns them, and what they cost. Spend optimization is using that information to reduce waste, renegotiate contracts, and make sure every tool is worth it. You have to manage your spend before you can optimize it.
2. How much can companies save by optimizing SaaS spend?
The amount varies, but most companies find more waste than they expect. On average, Najar customers recover about 25% of their spend. Industry experts say that 20 to 30% of SaaS spending is often unused or underused.
3. Can small businesses benefit from SaaS spend optimization?
Yes, they can. Even a team of 20 people might be paying too much. To get started, just review your active subscriptions every quarter. You don’t need a special platform at first, and you can expand the process as your company grows.
4. What’s the first step to optimize SaaS spending?
Start with a complete inventory audit. Gather every subscription from all departments and payment methods, compare them to actual usage, and see what you discover. Most teams are surprised by the results.
