Is your business quietly bleeding money? The SaaS cost leak

Many small and medium businesses eagerly adopt the latest software-as-a-service (SaaS) tools with good intentions (often spurred by flashy marketing and the fear of missing out), only to later discover they're paying for far more than they actually use.

Unused software licences, overlapping subscriptions, forgotten auto-renewals, and shadow IT (tools acquired without IT's knowledge) all create leaks that quietly bleed your budget. In fact, studies show up to 30% of SaaS spend is wasted on underused or duplicate tools. On average, businesses only use about half of the software licences they've purchased, meaning the rest is money thrown away.

The hidden costs of unused software

Wasted software spend isn't just an enterprise problem. It affects businesses of all sizes. Even smaller companies can collectively waste millions on unused licences each year.

This often happens through tool overlap and shelfware. For example, one team might be using Trello while another team uses Asana for essentially the same project management purpose - paying for two tools when one would do.

It's not uncommon to find companies paying for both Slack and Microsoft Teams, or maintaining multiple cloud storage services at once. According to Gartner research, roughly 25–30% of SaaS spending is pure waste due to under-utilised or overlapping applications.

Put simply, overlapping subscriptions mean you're double-paying for functionality you already have.

Unused user licences are another money pit. Companies often purchase more licence seats than they actually need "just in case," or fail to downsize licences after projects end. The result: dozens of paid accounts sitting idle.

One industry report found organisations on average utilise only 50% of their SaaS licences – the rest lie dormant.

While an SMB's waste will be a fraction of that, the percentage of spend wasted is similar. This is a budget that delivers zero value back to your business. It's essentially like paying monthly for software that no one is using.

SaaS sprawl – How good intentions backfire

How do we end up in this situation? The answer is often "SaaS sprawl."

It starts with good intentions: a team finds a tool that promises to solve a problem or boost productivity, so they subscribe. Another department adopts a different app for a similar need. There's usually no central visibility or strategy, so each group optimises for itself. Over time, the company accumulates a patchwork of apps – many with overlapping features or redundant purposes.

Every new marketing or productivity tool seems helpful on its own, until you step back and realise those monthly fees are adding up, and several tools are doing the same jobs.

The marketing hype cycle contributes to this sprawl. SaaS vendors constantly tout the latest features and integrations, creating pressure to "buy now and figure it out later."

Business owners often feel that if they don't jump on a popular new platform, they'll fall behind. This leads to software purchases without a thorough plan for adoption or without checking if an existing tool could suffice.

Meanwhile, there's the fear of letting go of tools "we might need someday." Teams hold onto subscriptions for old software just in case, or because a few folks might be using it. Cancelling feels risky, so nothing gets removed. All of this means unused services continue renewing and charging your card in the background.

Shadow IT makes the problem worse. This is when employees or departments sign up for software outside of official channels, often expensing it on corporate cards without IT's awareness. The result is that IT and finance departments lose track of who's using what. In fact, shadow IT now makes up roughly a third of a company's SaaS stack on average. Those unsanctioned apps not only carry security risks, but they also add cost.

Why we avoid audits (until it's too late)

If SaaS sprawl is so costly, why don't businesses catch it sooner? The truth is that many companies delay auditing their software until a crisis forces them to.

During boom times or rapid growth, teams are focused on expansion, not pruning back tools. There's also often a lack of clear ownership: nobody is explicitly in charge of reviewing software usage, so the issue falls through the cracks.

Psychology plays a role, too. People are naturally reluctant to give up tools and systems they've become accustomed to, even if they're underutilised. There's the worry that "if we cancel it, we might need it next month." This fear of missing out or disrupting someone's work can lead to subscription inertia – renewing contracts by default, even when usage data says it's not justified.

Finally, conducting a thorough software audit can feel daunting. Busy owners and IT managers may assume it's a huge project to inventory all apps, analyse usage, and negotiate cancellations. After costs have already sunk, the waste has accumulated.

Taking back control: visibility and quick fixes

The good news is you can regain control of your SaaS stack – and it doesn't require a herculean effort.

The first step is visibility. Start by pulling together a list of all software subscriptions your business is paying for. Check accounting records, expense reports, and team credit card statements to discover every tool. Many organisations are surprised to find they have two or three times more SaaS applications than they initially thought!

Next, assess who is using what. For each tool, identify an owner or point person – someone responsible for that software's use and licence management. Then check user logs or ask teams directly: how many people actively use this tool? When was the last time each account logged in? This helps flag the obvious waste like "zombie" accounts (paid licences assigned to staff who have left or never use the software). It's common to find licences still enabled for ex-employees months after they quit, because nobody revoked access.

Now, let's get to some quick fixes. There are actions you can take today to start saving on tool costs. Common quick fixes recommended by experts include:

1. removing inactive or offboarded users
2. downgrading under-used plans
3. cancelling clearly overlapping tools
4. negotiating down pricey renewals

In practice, simply revoking licences that no one is using and consolidating duplicate apps can yield immediate savings. Some companies have seen a 10–20% reduction in SaaS spending within months just by eliminating obvious waste like unused licences. For a small business, that could mean thousands of pounds back in your pocket without impacting any productivity.

Consider implementing permission controls and alerts to prevent waste from creeping back. For instance, ensure that when an employee leaves, there's a checklist item to promptly remove or reassign their software accounts. Set up renewal reminders ahead of time, so you consciously decide to renew a subscription (or not) instead of auto-paying by default.

Even a simple shared spreadsheet that tracks all subscriptions, owners, costs, and last use dates can work as a makeshift dashboard for a smaller company.

Checklist: Plug your SaaS budget leaks

Use this quick checklist to spot potential software waste in your business:

• Who owns each tool? – Make sure every application has someone responsible for it, or it may fall into "shadow IT" with no accountability.

• What percentage of licences are active? – Check your usage logs. If only 50% of your paid seats are actually used, that's a red flag.

• Are you paying for tools with overlapping features? – For example, are you paying for both Asana and Trello for project management? Redundant apps are prime candidates to cut.

• Do you have any "zombie" subscriptions? – Look for software accounts still assigned to employees who have left, or tools no one on your current team claims.

• When's the last time you audited your SaaS spend? – If it's been a year (or never), schedule a simple audit now. Catch the low-hanging fruit – unused and duplicate tools, and you could reduce your software spend by 10–20% almost immediately.

By staying vigilant and proactive about your digital tools, you can stop the SaaS cost leak before it drains your resources. A lean, well-managed set of tools will not only save you money but also streamline your team's workflow – a win-win for your business.

Appify Digital is a leading web and mobile app development company in Dublin, serving clients across Ireland and the UK. We specialize in creating innovative, AI-powered solutions that deliver exceptional user experiences and drive business growth.