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There is a significant gap in IT oversight and management of SaaS technologies for many businesses. A recent report reveals that 90% of SaaS applications and 91% of AI tools are unmanaged.
But how is this a problem? And can it pose any issues for your company’s future growth?
This article will examine key differences between managed and unmanaged SaaS applications, their security implications, and the financial and operational impacts on business growth. We’ll also explain strategies for effective SaaS management, and look at emerging technology and future trends in the field.
What Is Unmanaged SaaS?
Unmanaged SaaS applications are software tools and services used within an organization without formal approval, oversight, or management by the IT department. These applications are referred to as shadow IT, where software is acquired and managed outside official organizational channels.
While unmanaged SaaS is usually the result of well-meaning employees looking for more efficient ways to do their work, it can create security, compliance, and efficiency issues.
The main difference between managed and unmanaged applications lies in governance and oversight. Managed applications are officially recognized and supported by the organization’s IT department. This allows IT to make sure they meet security and compliance standards, receive necessary updates, and are integrated with other IT systems.
Risks of Unmanaged SaaS Applications
So, what are the risks associated with the unmanaged SaaS applications? There are a few you should be aware of.
Security Risks
Unmanaged SaaS applications significantly increase an organization’s vulnerability to cyber threats. Without proper oversight, these applications might not adhere to established security protocols, lacking necessary updates and patches.
In addition, when IT isn’t able to vet and manage tools, they can’t verify whether those tools are secure. Employees using shadow resources may not realize they have security issues. This lack of oversight makes unmanaged SaaS more prone to security breaches.
Compliance and Regulatory Concerns
Unmanaged SaaS applications also pose risks in terms of compliance with regulatory standards such as GDPR, HIPAA, and industry-specific guidelines. Unmanaged resources haven’t been approved from a compliance standpoint and may not meet necessary requirements. Organizations may face legal and financial penalties if unmanaged applications fail to comply with these regulations. This issue is particularly precarious for industries that handle sensitive customer information, where compliance is rigorously monitored and non-adherence strictly penalized.
Financial Implications
One of the benefits of IT reviewing and vetting tools is the ability to determine whether the tools are necessary in the first place. In many cases, when an employee or department requests a new tool, IT finds that the organization already has an existing tool that can meet their needs. Bypassing this approval process can cause organizations to adopt multiple tools with duplicative functionality without realizing it. This leads to redundant spending on software licenses and services that overlap in functionality or go unused.
The Effect of Poor SaaS Management on Business Growth
Unmanaged SaaS can put undue stress on your business and hamper its ability to grow.
Impact on Productivity and Efficiency
Poor SaaS management significantly impacts organizational productivity and efficiency. Unmanaged applications often result in disjointed workflows and inconsistent data across different teams. For example, if marketing and sales teams use different CRM systems without integration, it can lead to misaligned strategies and missed opportunities for customer engagement.
Additionally, the lack of SaaS management can mean that employees are spending time navigating unfamiliar or suboptimal tools, reducing their overall efficiency and effectiveness. Unmanaged SaaS applications contribute to these inefficiencies by complicating the IT landscape, making it difficult for teams to collaborate smoothly and access information quickly.
Loss of Sensitive Data
The loss of sensitive data is a dire consequence of poor SaaS management. Not all SaaS applications have the same methods for storing and securing data, and many of them may fall short of your requirements. When employees use tools that haven’t been vetted, they’re inputting data into tools whose data storage practices may not be up to standards. This puts the organization at risk of losing customer information, financial data, proprietary business insights, and other sensitive data.
In addition, unmanaged SaaS tools may use data storage practices that aren’t secure, which opens the door to the risk of data leaks and exposure. Plus, without centralized oversight, sensitive data stored in or passing through these unmanaged applications can easily be accessed by unauthorized parties, potentially leading to financial loss, customer distrust, and damage to the company’s reputation.
Increased Operational Costs
Unmanaged SaaS also leads to increased operational costs. SaaS sprawl — where organizations accumulate more applications than they effectively use — causes significant financial waste. Sprawl typically results from decentralized purchasing decisions and the lack of a systematic approach to assessing the real usage and value of software subscriptions.
As a result, companies might find themselves paying for duplicate functionalities or for SaaS products that are underutilized or completely unused. The administrative costs of managing these inefficiencies further strain the organization’s resources, detracting from potential investment in more strategic areas that could foster business growth.
Strategies for Managing Unmanaged SaaS Applications
If you decide to take the plunge and go unmanaged, there are a few strategies that you can put in place to mitigate any potential issues.
Discover and Inventory All SaaS Apps
One of the most important steps you can take in managing unmanaged SaaS applications is to establish a comprehensive inventory of all SaaS applications in use within the organization. The goal here is to improve visibility into both sanctioned and shadow SaaS tools that might be in use without IT’s knowledge. Conducting regular audits and employing different discovery methods can help you learn the full scope of your SaaS landscape.
Maintaining an updated inventory helps in rationalizing the software portfolio and aligning it more closely with business needs, ultimately supporting more informed decision-making and better governance.
Implement a SaaS Management Tool
To effectively manage SaaS applications, organizations should implement a robust SaaS management tool. These tools provide a centralized platform and system insights to track, manage, and optimize the use of SaaS products across the organization.
Key functionalities include managing software licenses, monitoring usage and expenses, and managing renewals and compliance. With such tools, you can reverse SaaS sprawl, reduce costs through more efficient software utilization, and ensure that investments in SaaS are fully aligned with business requirements. A well-chosen SaaS management tool can also facilitate better integration of SaaS applications into the existing IT ecosystem to enhance overall operational efficiency.
Enforce Security Policies and Best Practices
Enforcing security policies and implementing best practices are vital for protecting sensitive data within SaaS applications. IT teams should be able to define and enforce access controls and authorization procedures to follow the principle of least privilege: access should only be given to those who need it. Security teams should conduct regular security assessments to identify and mitigate potential vulnerabilities within the SaaS environment.
Additionally, employing identity and access management (IAM) solutions, such as single sign-on (SSO) and multi-factor authentication (MFA), can significantly enhance security by ensuring robust user authentication and authorization. Regular training and awareness programs for employees about the risks associated with shadow IT and the importance of adhering to company policies are also crucial for maintaining a secure and compliant SaaS environment
Benefits of Effective SaaS Management
It isn’t all a minefield when it comes to unmanaged SaaS. In fact, there are quite a few benefits.
Enhanced Security Posture
Effective SaaS management significantly strengthens an organization’s security posture. By centralizing the oversight of SaaS applications, companies can ensure that all software complies with security policies and regulations, reducing the risk of data breaches and unauthorized access.
Implementing a comprehensive SaaS security strategy, including regular security assessments and updates, helps maintain high security standards across all applications. Enhanced security posture not only protects your company’s sensitive data but also builds trust with customers and stakeholders.
Cost Optimization and Control
One of the most immediate benefits of effective SaaS management is cost optimization. Gaining visibility into all SaaS subscriptions and usage patterns can help you prevent wasteful spending on unnecessary or overlapping tools. Plus, centralized SaaS management enables better budget forecasting and spending analysis, helping finance and IT departments make more informed purchasing decisions.
Improved Operational Efficiency
Effective management of SaaS applications leads to improved operational efficiency by streamlining workflows and enhancing collaboration across departments. With a well-managed SaaS stack, all employees have access to the tools they need, configured for optimal performance and integration.
You want to always reduce friction and delays in processes, so your teams can work more effectively. The unmanaged route can help you do this by helping them to focus on strategic initiatives rather than routine maintenance. Overall, improved operational efficiency through effective SaaS management can drive faster decision-making, enhance service delivery, and increase productivity across the organization.
Future Trends in SaaS Management
There might be some risks now, but the technology behind SaaS management is always improving. So what can you expect the future to look like?
Emerging Technologies and Tools
The landscape of SaaS management is continually evolving, with emerging technologies and tools playing a pivotal role in shaping its future. Cloud access security brokers (CASB) are becoming increasingly important, acting as a security liaison between cloud service consumers and providers to enforce security policies.
CASBs help organizations extend the reach of their security policies into the cloud, providing more granular visibility and control over SaaS applications. Additionally, the integration of AI and machine learning in SaaS management tools is set to revolutionize how organizations monitor, manage, and optimize their SaaS environments.
Predicting Future Risks
With the growing complexity and ubiquity of SaaS applications, predicting future risks becomes vital for maintaining robust security postures. Advanced analytics and AI are key to identifying potential security vulnerabilities before they can be exploited. Leveraging data analysis and predictive modeling can anticipate security incidents and develop proactive strategies to mitigate risks.
Adapting to New Security Challenges
As SaaS ecosystems expand, they introduce new security challenges that require adaptive strategies to address. The dynamic nature of cloud computing demands flexible and resilient security frameworks that can quickly adjust to new threats. Organizations will need to adopt more comprehensive and integrated security solutions that can handle the complexity of multi-cloud environments and hybrid work models.
This includes the development of new policies for access control, data protection, and incident response tailored to the unique challenges of managing a decentralized IT environment. Emphasizing resilience, organizations are expected to invest more in IT training and capacity building to equip their teams with the necessary skills to manage and secure their SaaS applications effectively.
Download our latest SME IT Trends report to learn more about the latest trends, emerging technologies, and how companies are leveraging these tools to better manage their cloud infrastructure.
Why SaaS Management Is Becoming Essential
As SaaS becomes a more integral part of IT infrastructure, managing it becomes equally important. Businesses should be thinking of SaaS management as a critical pillar of their IT program, just like identity, device, and access management. Learn more about the importance of SaaS management in the free ebook, SaaS Management: A New Pillar Is Forged.
To see how JumpCloud can transform how you manage your IT infrastructure and SaaS applications, request a demo or try JumpCloud for free to start optimizing your processes and workflows with expert guidance and tools.
