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Best Practices for Creating a SaaS Center of Excellence

by | Jun 20, 2024

Introduction

SaaS (Software-as-a-Service) applications are indispensable for organizations aiming to maintain a competitive edge and lower IT costs. However, shifting from on-premise software to SaaS creates challenges as traditional software asset management (SAM) software struggles to also shift to manage SaaS effectively. 

Creating a Center of Excellence (CoE) is an effective strategy to navigating these new landscapes. CoEs have proven advantageous in areas such as Public Cloud, AI and DevOps, and the same principles are applicable to SaaS. This article explores the critical role of establishing a SaaS Center of Excellence (SCoE) by providing a strategic framework for managing SaaS implementations, optimizing costs, and driving organizational efficiency.

What is a SaaS Center of Excellence?

A SaaS Center of Excellence (SCoE) is a specialized team within an organization focused on optimizing the adoption, management, and utilization of SaaS solutions. The purpose of an SCoE is to consolidate SaaS-related knowledge, streamline processes, and ensure comprehensive oversight of all SaaS initiatives within the organization.

Why have an SCoE?

Establishing an SCoE is crucial as organizations transition to using more SaaS solutions. Traditional software asset management approaches are insufficient in the SaaS era, where decentralized software procurement and subscription-based models dominate. Knowledge of software applications is now scattered, and information about usage, costs, and contracts is not centralized or hard to see in its entirety. An SCoE provides a structured framework to manage these challenges effectively. Benefits of an SCoE include enhanced visibility, optimized costs, improved compliance, and accelerated innovation.

Traits of a successful SCoE

For best results, be thoughtful up front when forming your SCoE. An effective SCoE is:

  • Small – Start with a small, manageable team of fewer than ten members to enable effective communication and collaboration, and to aid in stronger focus and more rapid decision making. Commitment and alignment among team members is imperative. As the SCoE builds a solid foundation, you can consider expanding if needed.
  • Cross-functional – Include stakeholders from various departments including IT, finance, procurement, and operations. This diversity ensures multiple perspectives are considered and the impact to the entire organization can be analyzed, fostering a holistic approach to SaaS management.
  • Knowledgeable – The SCoE should consist of colleagues who are well-versed in SaaS technologies. Include individuals with expertise in integrations, data privacy, information security, and architecture. This will ensure the team is well-equipped to address the complexities of managing SaaS solutions.
  • Empowered – An SCoE must have the authority to make critical decisions independently. This empowerment allows the team to respond swiftly and effectively to emerging challenges and opportunities, enhancing agility and responsiveness.
  • Efficiency Oriented – The SCoE should be focused on optimizing the use of SaaS solutions within the organization. This includes streamlining processes, identifying cost savings opportunities, and maximizing ROI. They should aim to deliver quick wins to establish credibility while also refining processes continually. 

SCoE implementation

In a recent study only 3% of companies already had an SCoE, but 18% were planning one and a further 57% felt they would benefit from one. How can you join the cutting edge companies in the 3%? The following steps are designed to help with the creation of a successful and sustainable SCoE.

Step 1: Discover SaaS Applications

Initially, the SCoE should conduct a comprehensive audit to identify all SaaS applications in use within the organization. This discovery phase lays the groundwork for subsequent rationalization and optimization efforts.

Step 2: Rationalize Overlapping Contracts

Next, the team should assess and rationalize overlapping contracts and capabilities. By making informed decisions in collaboration with business owners, the SCoE can eliminate redundancies and optimize costs.

Step 3: Optimize Significant SaaS Assets

The SCoE should focus on optimizing the most critical SaaS assets, targeting areas with the highest spending. This phase involves refining processes and implementing best practices to maximize value.

Step 4: Develop Lifecycle Management Processes

Finally, the SCoE should shift from an analytical and advisory role to complete SaaS management. This transition involves developing processes to handle newly discovered SaaS applications, track usage, recycle licenses, upgrade plans, limit sprawl, and manage renewals.

Best practices for on-going SCoE success

Adherence to best practices is essential for the SCoE to deliver sustained value and drive positive change.

  • Prioritize Outcomes – Define clear objectives for SaaS management, such as visibility, compliance, renewal optimization, and centralized purchasing processes. These priorities will guide the SCoE’s efforts and measure success.
  • Foster Collaboration – Build strong relationships with functional SaaS management stakeholders and communicate a comprehensive strategy for SaaS usage within the organization. Alignment among all stakeholders will enhance the effectiveness of the SCoE and ensure cohesive execution.
  • Establish Guidelines – Develop and communicate governance frameworks and policies to regulate SaaS adoption and usage. These guardrails provide the necessary control mechanisms to mitigate risks and ensure compliance.
  • Implement a SaaS Management Platform – Evaluate and deploy a robust SaaS management platform, like FinQuery Software Management, to support the SCoE’s vision and governance frameworks. This technology will facilitate efficient management and oversight of SaaS applications.

Establishing an SCoE is essential for modern organizations embracing the transition to SaaS. By assembling a cross-functional team of experts, implementing best practices, and leveraging a SaaS management platform, organizations can maintain control, improve visibility, and accelerate their digital transformation journey.

Conclusion

In today’s rapidly evolving digital world, SaaS solutions offer unprecedented opportunities for growth and efficiency. However, without a structured approach to managing these solutions, organizations risk facing inefficiencies and compliance challenges. By adopting a SCoE that prioritizes outcomes, fosters collaboration, sets guidelines, and implements an advanced management platform, businesses can unlock the full potential of their SaaS investments and ensure sustainable success. Investing in a strong SCoE positions organizations to succeed in the dynamic SaaS landscape.

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