My Secrets to Driving SaaS Cost Savings
Brittany Linville: You're in the best session of Zylo. It's this one. It's my secrets to driving the SaaS cost savings. So thank you for joining me today.
Brittany Linville: My name is Brittany Linville. I am the manager of Global Enterprise Procurement at HighSpot. HighSpot is a sales enablement platform that increases the performance of sales teams by bridging the gap between strategy and execution, which helps our customers turn initiatives into critical action items for their sales teams. So, I manage the global procurement efforts on behalf of HighSpot and I've been a Zylo customer since 2021. I have a background in compliance, legal, and even spent time as a seller.
Brittany Linville: So, I'm going to give you some of the strategies today that I've learned throughout my career to try to help you realize those SaaS cost savings. So, what we're going to run through today, is a little bit of an agenda that walks through the secrets that I have that build from where you start to where you can go.
Brittany Linville: So, first we need to understand what you have. From there we can build on that and evaluating your overlap and your utilization. And then, I want to talk a little bit about using your price drivers in SaaS to derive what you can commit to. And then finally how to use that data to negotiate like a pro to get the best deal that you can for your organization.
Brittany Linville: So really it's about understanding what you have is where we're going to start because you can't improve what you don't know. I think Julie Andrews said it best, where she said," Let's start at the very beginning, a very good place to start." Again, you can improve what you don't know.
Brittany Linville: So the best place to start is to gather all of the data from all of your sources. And so, for many people they think that this involves looking at your contract management system, looking at your AP system, but that's not really the whole story, right? You have to evaluate those official and those nonofficial channels. So, you need to look at the AP payments, you need to look at your contract management systems, but you also need to look at your corporate card systems and your expense reports. And, it's often those unofficial channels that I think we can all agree with. They're going to give you the most opportunity to reduce costs.
Brittany Linville: So, you need to look at and collect the data from all of these data sources to really get a true picture of where your opportunities are and what those opportunities are. And getting to know your requesters is going to be a key portion of this because you're going to need their insights. Oftentimes when you're collecting from these sources, it's just viewing the data and you're like,"Well, I don't know what this is used for. I don't know who's using it."
Brittany Linville: So, it's often those expense reports, which I wanted to talk about first, where you're going to glean the most insights. So, expense reports, seeing what's in them can be terrifying. I know some of you out there are probably dreading what would come from that, but it's not something that you should necessarily fear. Expense reports are showing you what your teams need in order to be effective, but they may not have known how to use the official channels. They may not have known there were official channels. Then there's the small percentage of people that know there's official channels and don't use them, but we'll set them aside.
Brittany Linville: But really these are ways that people are trying to fill a need in order to be more effective in what they need to do on behalf of your organization. And I think we can all sympathize with the fact that COVID caused an influx of tool purchases, because teams were looking to solve problems quickly in a really rapidly changing environment.
Brittany Linville: But now that the dust is settled a bit, it's time to really evaluate do those tools still bring value? Have you seen ROI from them? Does your team need to keep them? And really looking at these expenses is a way to better connect with those business teams that you serve and helping set a strategy with those stakeholders, figure out what's working and what's not working for them and come up with what apps you might need to migrate to those official channels, and then what can just be straight canceled because it's not necessary anymore. And really in this process, getting to know those expense users, the teams tab is really helpful in Zylo for that if you haven't used it yet. Really a helpful place.
Brittany Linville: But also involving other people in this process. So people like your security teams, your legal teams, your privacy teams, and they're going to be really important to work through in these. Your security team's going to want to know what didn't come through the official channels. And so, while this may be an oh no moment, like that TikTok song that just gets stuck in all of our heads, you can't fix what you don't know about. So really you need to dig in and start exploring all of these things.
Brittany Linville: So, you're probably thinking like, Okay, well now I have all this data and what do I do with it? Because I'm under pressure to see cost savings. This is a lot of information, it's like a fire hose. What do I do with all of this? Well, there's three strategies that I found as we were working through all of this data, to get those quick wins and show value quickly. And so, those are broken down into three main areas for me. It's looking at multi- channel spend, zombie apps, and that recurring low dollar spend, and then apps with multiple users that are expensive.
Brittany Linville: So, I want to start with the multi-channel spend because this is really where you have an official arrangement with the vendor, but somebody out there has a credit card transaction for them or an expense report. And so, they're just not using that official channel. And so, those people may not know that you have a company level plan. So working with them to consolidate and fold their usage into the company plan is going to be a really key strategy to realizing the value of the negotiation that you put in place, right? And so, consolidating those and then evaluate your plan type as well.
Brittany Linville: A lot of you may or may not know this, but many SaaS platforms out there have a way for you to claim your domains so that you don't get those rogue user signups in the future. Now, they may require you to be on a certain plan type enterprise in order to take advantage of that, but evaluate if that's something that meets your organization's goals and maybe something that you need to change with your relationship with that vendor to prevent those multi- channel things from happening in the future.
Brittany Linville: And then leverage those consolidated volumes for better pricing. 25 plans with 10 users, it's much different than one plan with 250 users. And so, don't be afraid to contact the sales reps at those companies. I know you're going to end up on their mailing lists, but it is an opportunity for you to leverage that and work on the better pricing opportunity there. And really use your economy of scale to drive down those costs in those unit price reductions.
Brittany Linville: The next one I want to talk about is zombie apps and that low dollar recurring spend. So, zombie apps are the ones where you're like," I thought we canceled this," but like Carl in the Walking Dead, it just rises up and it comes back to attack and just doesn't die. So, with the zombie apps, you really need to realize why do they keep coming up? Is there a need that isn't being met or do you need to evaluate and better communicate out to people like," Hey team, we evaluated this and we shouldn't be using it." And then maybe it's more of a messaging thing internally. So, there's other apps though that could have the need for people and you're like," This is recurring on someone's card every month, but it's like$ 8. What is this?" And so, I'm sure we've all faced it in our personal cards where you see a recurring charge and you're like," I don't remember doing this." And so, it's what the heck is this moment? And just as you may have it in your personal account, companies may have these as well. So, try to find where those low dollar spend recurrences are on your expense reports and reach out to the people that are dispensing those. They may have completely forgotten to cancel it or they may have needed it for a short term project and didn't realize that they were agreeing to auto renew every month. So, looking at those to figure out, these are quick wins, things that you don't need in your environment, you don't need to have anymore, and you can cancel those and get those off your books.
Brittany Linville: And then, it just brings the volume of your SaaS subscriptions down by being able to target those quickly. And then, the third category for some quick wins is where you have multiple users dispensing them. So, in this area, people need these in order to be effective, but everybody's using a credit card or everybody's using an expense report. And so, a lot of the times these things are going to be like your grammar lease, your canvass of the world, or other individual tools that could have broad application across your business but may need to be managed. So, strategy here is similar to the multichannel spend. Use the volume here in order to consolidate, and really bring these under management, and drive down those unit costs. So, you've got a few quick wins under your belt, you know what your data is now what do you do?
Brittany Linville: So, in these cases, the next most effective way to drive SaaS cost savings is to really look for overlap and utilization data. So, the first thing I want to chat about is consolidating for your needs. I've got up on the screen thanks to our friends over at Zylo, the categories that have the most overlap. And inevitably you are going to find overlap when you start exploring what you have. If you don't have overlapping categories, call me, I need to understand how you're so awesome because everybody's going to have overlap. But don't be afraid of the overlap. These are opportunities.
Brittany Linville: Having multiple vendors for team collaboration or project management is really an opportunity for you to work with your teams and see if there's one tool that you can consolidate to as an organization that best meets your needs. So, gather those requesters together because they may not know that another team is using a different application and they may have wanted to use that application but got a different one for some reason or another. But really get their technical requirements from each of these teams and see what are those problems that they're trying to solve for.
Brittany Linville: And also, use it this as an opportunity to look at the future. So, what does this team need to do, not just right now but going forward? Great example of this. Do you have a project management app that needs to integrate with another app to pull in data to help people create better insights? Use those items to determine your technical requirements for what app's going to work best for you in the long term, and then use those things to find the application that's going to work best for you, whether you do it through a formal RFP or just an internal vendor comparison in competition. Find what's best for your organization and consolidate there. And my key strategy when you're doing this and evaluating the overlap is use that as leverage when you are negotiating pricing with your vendor that you've selected. Oftentimes these companies want to steal business from their competitors. They want to displace their competitor in the marketplace. And they may be willing to offer you discounts in pricing reductions in order to do that. So, make sure that you vocalize that and say," Hey vendor, I'm replacing your competitor with you. What are you willing to do to earn this business with us and displace your competitor from our environment?" And you'll be amazed at what they're willing to throw at you in order to do that.
Brittany Linville: The next area I wanted to talk about is utilization data. You've heard this come up a few times today and it's so crucial because the most effective way to control costs is to avoid them. So, although sometimes it's not possible, this is one key area where you can make an impact through the utilization data and evaluating it to your advantage. So, while we all hope that every single license we buy goes fully utilized, and it changes people's lives, and everybody's using everything, not often the case. So, when you do get a request for more licenses, start looking to see whether or not the previous batch of licenses that you bought are actually being utilized. Are people using what you paid for already or did their use case change and maybe they don't need to be licensed anymore. Deprovision those inactive users and allow yourself the ability to reassign them to someone who needs it going forward. So, most SaaS tools do not make this easy to figure out.
Brittany Linville: And so, we at HighSpot leverage Zylo data with the integration with Okta SSO in order for us to take a look at who's utilizing what we purchased and who isn't. And leverage automation here. So, if you have this standard that" Hey, if you haven't used it in 90 days, maybe we're going to pull back your license and reissue it to someone else." Having those automations in place really alleviates that burden from your IT teams from having to constantly go in there and manage it. But the key here is really don't buy more licenses if the licenses you already bought are not being utilized.
Brittany Linville: Okay. So, now you've got the quick wins out of the way. You've looked at your utilization data, you know what's going on in your environment, you've got a bigger picture of it. Now what would you do. What's that next level of strategy? And in this case, it's really knowing about your pricing drivers and what you can commit to. So, understanding your pricing drivers really comes down to you can't reduce cost if you don't know what drives that cost. Everything boils down to cost equals quantity times unit price method. And really you need to find the queue. And the best place to find that is either the contract data or the order forms. And so, you want to find the commonalities in who gets access to that and map it to your growth to project volumes over time. And then, also use this to see are you in the right plan based on your growth projections, right? So sometimes you may have bought a smaller plan because you only had five people up front, but now you have a hundred people. Are you in the right plan type? Because sometimes as you grow that unit price can go down. So, while you may be spending more an aggregate, you're paying less per user because your volumes have increased. And so, understanding what those pricing drivers are may help you identify opportunities to look at different pricing models or different ways that you can approach and work with the vendor that may better meet your needs. Although, every day there seems to be another pricing model.
Brittany Linville: In SaaS, they all typically align to three areas, per user pricing, platform fee, pricing, consumption pricing, or a combination of these. I know that's four, but the combination, I'm just going to say, it's combining one of those three categories. So, knowing what these are. And then I want to share with you some tips that I've utilized to help drive these costs lower. And so, I want to start with the per user pricing model because this is the most common model in SaaS pricing.
Brittany Linville: The key here is to know what role requires access to that system. This is going to be crucial to understand and work with your business partners to map this out. And does that system have different role types? There's a lot of SaaS applications out there nowadays that offer free viewers. And it's really determining what can a free viewer do? Is it truly view only, or maybe can they take some action in the system that'll be unpaid. And map those role types to the app and who needs access to it? And I probably don't have to say this, but optimize that free usage. Really understanding what each role type and the platform can do can allow you to align people to the right place to ensure that you're not over licensing someone for the tasks that they need to do within that service.
Brittany Linville: And like we talked about before, be diligent about reclaiming those unused licenses to not buy more than you need. And then, see if the vendor can support an active user model. It combines this per user and the consumption based model that I'll talk about in a moment. But if the vendor can support it, then really you're only paying for what's actually used versus paying for an active user, or paying for a user all year long where they may not be active. But the key here is to really secure that discounted user pricing as you grow because some of these applications are never going to go away. So how are you going to reduce costs or make them more effective over time? And that's really leveraging your growth to drive the discounting in the unit prices.
Brittany Linville: The next one I want to chat about platform fees. Platform fees help with overall adoption and enablement because they allow you to put everybody in your organization within the platform and it alleviates that user ad and remove burden. The trade offs on this though is that they're often more expensive than per user applications because they can be more broadly accessed. The key here is really ensuring that your platform is going to be globally available and include any affiliate organizations if you have them. And assess how that platform fee is going to grow as you grow. Ideally, there should just be one platform fee for your company, but if they charge a platform fee based on your size, this is really a per user model disguising itself as a platform model. So, negotiate accordingly based on that.
Brittany Linville: And then, really question a vendor that's charging you a per user model and a platform fee model. My strategy here has been everybody should need access and access should only be charged once. So users need a platform and a platform needs users. So, there really should only be one way that things are charged and really try to probe and prod why they would be charging you a platform fee model and a per user fee model.
Brittany Linville: The last model here is consumption based pricing. It is great because you are only going to pay for what you use. Downside is this is the hardest to predict and you really have to get close to your stakeholders to understand and figure out how your use case ties to consumption. Again, going back to understanding the queue, what is driving that quantity increase? And your cost savings with consumption based model are really going to be indexed on what you can commit to as a baseline with the rest of it being on demand. And on demand isn't bad and it's always going to be there, but try not to make that the majority of your spend. If you see consistent usage that's happening at a certain level, sign up to commit to that amount because then it's going to reduce your unit cost for that amount that you know that you're going to be consuming anyway.
Brittany Linville: And understand how your consumption may change over time. A great example of this is say that your company leverages AWS as the platform that you run, the product that you sell to your customers on. And you have a major release coming up. Understand how your infrastructure is going to scale when you're doing that major release. It's going to draw a lot of attention, a lot of people are going to be coming back into your application, and you'll want to make sure that you're accounting for that scale when everybody's hitting your application at the same time. And then, maybe you increase a commitment for a period of time in order to account it for that.
Brittany Linville: All right, so now you've got your data, you understand your pricing model. What's next? This is where you really leverage data in order to negotiate like a pro. And so, data driven decisions are often the best ones to make. We all try to make as many of them as we can and having all of this data that you've gathered is really going to be your most powerful asset as you enter into negotiations. In negotiations between sales and procurement historically have always been this us versus them endeavor, but it doesn't have to be that way. I've been on both sides of the deal and I've realized a few things over time. I realized, personally how annoying I was early in my career as a procurement professional because I didn't know what it was like to be in somebody else's shoes.
Brittany Linville: And now coming back to procurement, having spent time in security teams and in sales teams, it's allowed me to be more prescriptive on what I'm asking for and knowing what's important and what's not important. And so, each side has their needs, but each side needs certain information from the other one in order to advocate on their behalf. For example, sellers need to know what you can commit to so that they can go back and try to get you some discounts if you don't tell them what you can commit to. They don't really have anything to stand on internally to try to get you those additional discount points.
Brittany Linville: Buyers on the other side need to know what the pricing model consists of in order to understand how their growth is going to be impacted over time. So being honest and transparent on both sides. And while you may not give all of the information, you do need to disclose what they need from you in order to advocate for you and get you what you're asking for. So clearly outline what you can commit to. That goes back to those quantity models that we just talked about in those different pricing models and knowing what you can commit to.
Brittany Linville: And then know your trade offs in your must- haves. Don't give away things that you must have, but understand that there are some levers that you can use to get you what you need. For example, would you rather have a lower unit cost or a lower price cap for increases on your unit costs? And so, knowing that you may need to trade one or the other, make sure that you're indexing on the right thing.
Brittany Linville: And then, the big key here is if you're asking for a discount, make sure that you have some data to back up why that discount is something that you need. Understand that coming to the table and say," I just want a 50% discount." Is likely not going to be effective. Knowing why that discount is possible, like understanding margins in the industry that you're asking for, or leveraging your own growth in order to ask for that greater discount. Use benchmarks if they're available to understand like," Hey, you're pricing me up here, but I feel like a more appropriate price would be in this range." Zylo can help with that. But outline also what they're getting in exchange for the discount that they're giving you. Can you offer something to them like some of the factors that I'm going to discuss next, which will help secure you a discount and drive that down over time.
Brittany Linville: So, some of the common factors in discounting are, they're not necessarily hidden. They're ones that aren't... When you think about it, they're a bit obvious, but they're the easiest ways for you to secure discounts from the vendors that you're negotiating with.
Brittany Linville: And those really come down to growth, reference rights, and term. Growth is your best friend when securing discounts. And so, while the goal is always to control costs, as we've talked about earlier, there's no avoiding that apps and SAS will grow over time. Leverage your growth to get better pricing over the term. We talked about mapping the growth to a figure you're estimating like headcount growth, but don't overcommit ensure that you can add prorated licenses at a later date to avoid paying for a bunch of them upfront, that may not go used until later in the year. If they want a commitment for user increases over time in order to discount you up front, make sure that you schedule those ads out for when you are comfortable with having those increases happen.
Brittany Linville: The next one is reference rights. They're increasingly important. And the bigger your company is, the more that you can work this to your advantage. One thing I will always say is, for all of my marketing friends out here to make all of you happy, always work with your marketing teams before you agree to your logo and reference rights to ensure that you honor the terms that they care about most. But if you can be a reference or do a case study, this can often secure you a greater discount with that vendor that you're negotiating with. There's value to being listed as a reference. So don't give this away for free if you can't be a public reference, because maybe your marketing team has some restrictions around that, see if you can still be a stealth reference. Let the vendor know you're happy to be on a reference call for a customer, but you can't be listed publicly on their website or in their documentation. And leverage those opportunities for pricing concessions. The more that you can help derive additional business to them, the more you should see that reflected in your pricing.
Brittany Linville: But perhaps the biggest asset that people under value is the term of the agreement. Multi- year agreements will always secure you the highest discounts because that company can rely on you being a customer in the future over a longer period of time. In today's economic climate, that may not be possible. A lot of companies are pulling back on multi- year deals because they want more flexibility in their cash flows over time. But if it's a critical vendor to you that you know isn't going anywhere, maybe evaluate those multi- year agreements to secure those greater discounts.
Brittany Linville: Another strategy that I've used, and sometimes it'll be successful, sometimes it won't, see if you can opt in to those additional years. So, you're negotiating in advance for what those discounts would be if you maintain your customer relationship over that period of time. But rather than having a full commitment to those three years, you opt in at the end of year one, you opt in at the end of year two. Again, it may work, it may not work, but it may be a strategy that you can try in order to secure those discounts over time.
Brittany Linville: Really know your organization's priorities and what you can commit to for timing. And again, this may vary by category. You may not want to commit to... Oh, I don't know, a marketing application, but you may want to commit to your HRIS system that isn't going anywhere. So just know your categories and know that this may vary and understand the trade offs. Shorter term deals are going to lead discount points on the table, but that may be less important to your company than having the flexibility to be able to get rid of the vendor if you need to in order to reduce costs elsewhere.
Brittany Linville: Really what this all boils down to is leveraging data. Data is your friend. It is the best resource for you to secure better pricing. And the more you have of it, the more effective you can negotiate. And I have some tips here that I wanted to pass forward to you that have helped us secure better costs. You can see some of our results here on the screen. If you've seen low utilization, as we talked about earlier, ask for an active user model. So, many companies don't share the number of users that they see as active. But instead you let that vendor know," I've got a hundred licenses, but only 50 people are logging in here every month. We're seeing really low utilization. Can we possibly move to an active user model so that we can keep these people licensed, but reduce our overall costs?" Also, ask for free enablement resources if your utilization is low. And if it's negotiated on headcount growth, make sure you get some tiered pricing. Use your competitor displacement and leverage your new and future use cases as you're growing over time.
Brittany Linville: So my key takeaways here, really just explore all of your data, get to know it well, utilization data is key, look at your overlap, don't fear it, and try to consolidate. Know what your pricing drivers are and what you can commit to. And work with your stakeholders and make them part of this journey. And leverage those common discount levers in order to secure the best pricing that you can.
Brittany Linville: And so, that is all of my super awesome strategies I have for you. I know they're going to put a poll up to let me know how you felt about this session, Let Zylo know as well. And, I really thank you all for taking some time and spending it with me today.
How can you ensure your SaaS investments are money well spent? Hear how Highspot’s Global Enterprise Procurement Manager Brittney Linville has been able to drive cost savings through license management, shifting expense spend to AP channels and tackling redundant applications.