Spend management for SaaS: How to get control of your rising software costs

Software is no longer just another operational expense. For many growing companies, it has become one of the fastest-growing cost categories.

But SaaS spend does not usually become a problem because of one large contract. It becomes harder to control when recurring subscriptions, usage-based pricing, renewals, and decentralised buying all grow at the same time. That matters because software now touches almost every team. Finance, HR, sales, marketing, IT, and operations may all be buying tools independently. Without a clear process, that often leads to overlapping subscriptions, unclear ownership, and renewals that happen before anyone has reviewed whether the tool is still needed.

In this guide, you’ll learn where SaaS spend usually gets wasted, how to review it more effectively, and how to build a process that helps your business stay in control as it scales.

Where software spend usually gets wasted?

For scaling companies, SaaS spend is now one of the fastest-growing cost categories. And that shift is being driven by three factors.

First, software now represents a significantly larger share of IT budgets than it did just a few years ago. Second, pricing models are becoming more complex. Many vendors now combine seat-based pricing (you pay per user), usage-based pricing (you pay more as usage grows), and add-ons, which makes total cost harder to predict. Third, AI tools are introducing new types of consumption-based costs that are harder to predict and control.

At the same time, cloud spend continues to grow rapidly. McKinsey reports that some organisations have seen cloud costs increase by 20–30% annually. Flexera’s latest research shows that 85% of organisations still struggle to manage cloud spend effectively.
These figures refer to cloud infrastructure rather than SaaS specifically, but they point to the same broader issue: digital spend is growing faster than many companies can govern it.

For finance teams, the result is familiar:

• too many tools
• fragmented ownership
• overlapping subscriptions
• renewals happening without review

If you're seeing this already, it’s worth reviewing your broader approach to SaaS spend management and how recurring costs are tracked across the business.

Why software costs become difficult to control?

Most software overspend does not come from one bad buying decision. It builds over time through smaller gaps in control.

For example, one team may buy a project management tool without realising another department already uses one with similar functionality. A manager may forget to reduce unused licenses after headcount changes. A tool with a low monthly starting price may become expensive over time because usage grows faster than expected. And if no one is clearly responsible for a contract, it may simply auto-renew at a higher price.

Common sources of waste include:

• Tool sprawl: multiple teams buying similar tools independently
• Underutilised licenses: paying for capacity that isn’t used
• Auto-renewals: contracts rolling over without review
• Lack of ownership: no clear accountability per tool

This aligns with findings from Gartner, which notes that poor visibility and decentralised purchasing are key drivers of SaaS inefficiency. Over time, this creates fragmentation. Finance loses visibility, procurement loses control, and costs increase without clear intent.

This is closely linked to the broader issue of tool sprawl in finance, where adding more tools actually reduces oversight.

A simple rule applies:
If you cannot clearly answer what a tool does, who owns it, how much it is used, and when it renews, you likely have a cost-control problem.

A 7-step framework to get SaaS spend under control

The goal is not to cut software costs blindly. It is to make sure your software stack reflects current business needs, budget priorities, and how your teams actually work.

1. Discover all software and recurring spend

The first step is finding every software application your business pays for. That includes tools bought through invoices, cards, direct debits, expense claims, or department budgets.

For many mid-market companies, this is where the first challenge appears. Software often sits across different systems and payment methods, which makes it difficult to build a complete view.

FFW, a global digital platform agency, faced this exact challenge. Their spend data was spread across systems, which limited visibility and made it harder to track total company expenditure. To solve this, they centralised their spend data, bringing corporate card transactions and other expenses into one place. This gave finance a clearer, real-time overview of software and operational spend.

As a result, they improved transparency and gained stronger control over company-wide costs.

To achieve this result, you can start by creating a list of all:

• software vendors
• monthly and annual subscriptions
• one-time setup fees
• usage-based charges
• add-ons and surcharges
• renewal dates
• payment methods
• internal owners

This gives finance a baseline. Without it, it is difficult to know where software spend is increasing and why.

2. Categorise your spend

The moment you have visibility, the next step is organising the data in a way that supports decision-making. Understanding your SaaS costs is the first step to gaining control.

A useful categorisation model includes:

• vendor name
• tool category
• department using it
• internal owner
• contract value
• pricing model
• renewal date
• cancellation notice period
• business purpose

This is where many finance teams start to see patterns.

You may find three tools solving the same problem, vendors with multiple contracts in different departments, or subscriptions that no longer match current team size. Grouping software spend this way makes it easier to spot overlap, identify recurring costs, and plan reviews before renewals become locked in. Companies like Payhawk make this process easy with subscription spend monitoring.

It's also important that you're aware of the difference between one-time fees, subscription costs, surcharges, and other add-ons. You need total visibility into which costs are susceptible to these changes to avoid racking up large future expenses.

3. Analyse your usage

Once you know what you spend, the next question is whether you are using those tools in the right way. This is where finance and procurement teams often find quick wins. Some software is still useful, but the plan is too expensive. Some tools are underused. Others solve a problem that another approved system already covers.

The goal here is not to cut software blindly. It is to right-size your stack based on actual business need.

A useful review should ask:

• Is this software still needed?
• Is the current tier right for the users?
• Are there duplicate tools solving the same problem?
• Is the spend tied to a measurable business outcome?
• Would consolidating vendors reduce both cost and admin?

KPMG’s guidance on software asset management makes the same core point: you need visibility into SaaS and cloud usage to optimise spend and reduce risk.

4. Consolidate duplicate tools and right-size plans

When you have cleared out usage details, you can start taking real actions.

In practice, this often means:

• reducing unused seats
• moving to a lower plan tier
• removing unnecessary add-ons
• consolidating similar tools
• standardising vendors across teams
• stopping spend on software with low adoption

For a mid-market business, these changes can improve more than cost. They can also reduce approval admin, simplify reporting, and make it easier for finance to understand what each team is actually using.

5. Negotiate all of your SaaS contracts

The moment you understand which tools you use, where overlaps exist, and where licenses are oversized, you are in a stronger position to negotiate. That usually starts with simplification. If two tools can do the same job, standardising on one can reduce both cost and complexity. If you are over-licensed, bring your seat count or plan level back in line with how the tool is actually used.

Then go into renewal conversations with data, not assumptions.

That means using:

• usage data
• contract history
• owner feedback
• alternative vendor options
• budget context

McKinsey’s work on software and cloud pricing reinforces the value of data-driven pricing decisions rather than passive renewals. Gartner also notes that mature IT organisations review excess spend continuously and plan reductions ahead of contract renewals.

For mid-market companies, negotiation is not only about discounting. It is also about getting terms that better match the way your business operates now, whether that means more flexibility, fewer unused licenses, or less pricing friction at renewal.

6. Keep on top of renewals

Renewals are where software waste often becomes permanent. With 89% of SaaS contracts including auto-renewal clauses, you must also be on top of these renewal deadlines and cancellation periods. Leaving it too late to amend or terminate a contract can put you at risk of paying for an unwanted tool or excess licenses for another year — often at a huge cost to the business.

If you leave reviews too late, you can end up:

• carrying unused licenses for another year
• renewing a tool the team no longer needs
• accepting an uplift you could have challenged
• missing the cancellation window altogether

A stronger process is to review contracts at least 90 days before renewal. For larger or more strategic tools, 120 days is even better.

A useful renewal review should cover:

• current owner
• usage and adoption
• whether the software still solves a priority problem
• pricing changes
• competing tools already in the stack
• cancellation deadlines
• whether procurement or finance should renegotiate terms

This is one of the clearest reasons to centralise software oversight. If contract ownership sits only with individual teams, finance often gets visibility too late.

7. Build controls into procurement and approvals

When you get your software stack into shape, the next step is making sure it stays that way. That means building a process that is structured enough to create control, but simple enough that teams do not bypass it.

One of the biggest challenges in SaaS spend control is ensuring that purchases go through a consistent approval process before costs are committed.

Aventum Group, a leading global insurance business with over 450 employess globally, struggled with visibility and control over procurement decisions, especially as purchasing became more distributed across the business.
They addressed this by introducing structured approval workflows tied directly to purchase orders. This embedded financial control earlier in the process, rather than relying on retrospective review. As a result, their procurement team gained clearer ownership, and the business was able to identify cost-saving opportunities before spend was locked in.

The PO features have given us a lot more visibility and control.. Now, with the approval workflows in PO, we can embed the controls in-house and give our procurement manager complete control... It’s now much easier to spot opportunities for cost-saving and find discounts that help the bottom line.

A sustainable software procurement process should:

1. route requests through clear approval workflows
2. document vendor ownership and contract terms
3. give finance visibility before spend is committed
4. connect software purchasing to budget context
5. support renewal planning and usage reviews
6. reduce the need for off-process card purchases

This is where software cost control becomes part of a wider procure-to-pay and supplier management model.

For finance directors and heads of finance, this matters because a scalable process protects both efficiency and reporting quality. It reduces manual chasing, improves budget versus actual visibility, and helps a lean team stay focused on control rather than firefighting.

How to build a sustainable procurement process?

A sustainable process does not need to be heavy. But it does need to be consistent.

For most mid-market companies, a good model includes:

Clear ownership

Every software vendor should have an internal owner. That person should be responsible for business need, usage review, and renewal input.

Approval rules

Not every purchase needs the same level of scrutiny. Smaller software tools may only need manager approval, while higher-value or multi-team tools should go through finance and procurement review.

Centralised supplier and contract data

Finance should not have to search across inboxes, spreadsheets, and different systems to understand what the business is paying for. Supplier records, contract terms, invoices, and approvals should be connected.

Budget context

Software requests should be reviewed against team budgets, not in isolation. This makes it easier to understand whether a new tool is affordable and justified.

Ongoing review

Software management should not happen once a year. The strongest teams review spend, usage, and renewals throughout the year so they can act before costs become fixed.

What to look for in a software spend management setup?

Once software buying becomes more complex, spreadsheets and disconnected systems often stop being enough.

At that stage, finance teams usually need a setup that brings together:

• software purchasing
• approvals
• supplier data
• invoices
• recurring payments
• card spend
• budget visibility

The benefit is not simply having more data. It is having the right data in one place, with enough context to make better decisions.

When finance, procurement, and budget owners can all see what has been bought, who approved it, which team owns it, and when it renews, software spend becomes easier to govern.

How this helps in practice?

A connected setup can help you:

• spot duplicate software earlier
• review renewals with better context
• connect software costs to budgets
• reduce manual chasing
• improve audit trails
• strengthen cost control without slowing the business down

That is particularly important for mid-market finance teams that need to scale processes without adding unnecessary manual work.

Find a partner that can help

Getting software spend under control is easier when finance teams are not trying to manage subscriptions, approvals, invoices, and renewals across disconnected systems.

In practice, the challenge is rarely a lack of data. It is that the data sits in too many places, which makes it harder to see what has been bought, who approved it, which team owns it, and when it renews.

That is why many growing companies look for a setup that brings these workflows closer together. When software purchases, supplier data, invoices, and approvals are connected, finance teams can review recurring spend more consistently, spot overlap earlier, and make renewal decisions with better context.

The aim is not simply to add another tool. It is to make software spend easier to see, easier to govern, and easier to connect to the rest of your finance processes.

Payhawk helps finance teams centralise software purchases, approvals, supplier data, invoices, and card spend in one place. That makes it easier to see which subscriptions are recurring, who owns each vendor, which costs need review before renewal, and how software spend tracks against budget. If you want to make SaaS spend management more structured without adding complexity, book a demo and see how it works for yourself.