How many times have you forgotten to turn off a subscription you didn’t want? You get the notification that your payment has been processed and only then do you race to turn off the subscription. Depending on the amount paid, you either let it go or go directly to customer service for a refund (which they may or may not grant). It’s a total headache.  

With the proliferation of Software-as-a-Service technology over the past 10 years, applications have become a cost-increasing machine for companies and a headache for CIOs as well. Because companies have so many moving parts - management changes, department changes, and headcount changes - mismanaging applications is more complex and also has the potential to be much more destructive.

As for the complex nature of application management, we’ve noticed three trends:

1. Growing number of applications: Okta reported in their 2021 Businesses at Work survey that their average customer had 88 applications - a 22% increase in number of applications over the past four years. On the high end, their tech company customers had an average number of 155 applications.

Source: Okta

1. Growing complexity in SaaS pricing models: The main levers in SaaS pricing are frequency of payment (monthly, bi-annually, annually, etc.) and structure (usage-based, seat-based, tiered, etc.). Layer on discounts for purchase timing and size of purchase and it gets even more difficult to continuously monitor pricing across applications.

Source: Kalungi

1. Growing number of application decision-makers: The CIO has historically been in charge of the tech strategy and IT budget, which includes application spend. As software has gotten more niche over time, business division managers have become more involved in the software procurement decision. In the past 3 years, product-led growth software companies are driving adoption of their product by going directly to the ideal users of their product, which may mean junior-level employees. Now, you have the CIO, the business division manager, and potentially, the users of the product at the table for application decisions.

Source: Gartner

Some companies have created new divisions to address these growing complexities. Creating processes and procedures around application management can enable more frequent conversation around which applications are critical to business functioning. Other companies have adopted application management technology, like Business Spend Management (BSM) software to better organize application costs. As customer demands change and companies continue to embark on their digital transformation efforts, we believe this area of the enterprise will come into greater focus.

From our conversations with consultants and large companies taking a closer look at their applications, we’ve learned that the best cost reduction and consolidation initiatives start with understanding how applications are being used. There are two layers to this assessment: 1) Looking at applications on a standalone basis and 2) Looking at how applications are used together.

To look at applications on a standalone basis, application usage data is a good place to start. Where do employees spend most of their day? What times of day, week, and month are applications used most often? From answering these questions, companies can evaluate if the licensing for each application is aligned with its usage. Additionally, they can see how much time is spent in legacy applications. For context, Celent estimated that insurance carriers spend $3bn annually to keep outdated systems functioning, showing how costly this problem really is for established firms and important it is to retire applications that require time and attention from IT departments.

The next step in understanding how applications are used is looking at how they are used together. Historically, the only way to go about this assessment was a manual process audit or employee survey. Manual audits across a department tend to miss critical details, given that they are a one-time “snapshot”, and more importantly, they are expensive and disruptive to an employee's daily work. Employee surveys are typically filled with biases and a last priority for employees being asked to complete them. While certain situations may require these methods, understanding how applications are used together is the single source of truth that hasn’t been fully tapped by organizations.

At Zeitworks, we look at common behavioral patterns like context switching, data replication (desktop clipboard usage), and cross-application flows to help teams see a continuous stream of data on how their team interacts with applications. These features enable managers to answer questions like: Where does my team have to go to find information to execute their standard process? What applications are causing most pain to my team as they go about their daily work? And how frequently are employees using their clipboard to copy/paste data in between two applications? These are the questions that need to be answered for good decisions about how to integrate and strengthen your application stack for employee productivity and cost reduction purposes.

At a time when more companies outline their cost-reduction strategy for the next two years, you can differentiate from your competitors by not jumping straight to cutting headcount and instead looking to cut your application bloat. Our customers have been surprised by what the real data says and the new opportunities for cost-reduction they’ve found by having a continuous application measurement mechanism in place.