How to Manage SaaS Sprawl, Overlapping Subscriptions and Software Costs

How can companies manage SaaS sprawl, overlapping subscriptions and software tool costs?

Run a structured audit: find every subscription from finance, SSO and expense data, assign an owner to each, compare paid seats with real usage, and put every renewal date on a shared calendar. Then decide per tool whether to keep, consolidate, cancel or replace it, and close the loop with offboarding tied to your identity provider. Repeat the review at least once a year and before every major renewal.

Why SaaS sprawl happens

SaaS sprawl is the slow build-up of software subscriptions that nobody is managing as a whole. Each tool made sense when someone bought it: a team needed a form builder, a designer wanted a different whiteboard, a free trial quietly turned into a paid plan on a company card. Over time you end up with overlapping subscriptions doing similar jobs, seats paid for people who have left, auto-renewals nobody reviewed, and data spread across tools that IT does not know exist. The cost is only part of the problem; the larger risk is often security and data protection.

Step 1: Build the inventory from three directions

No single source shows everything, so combine them:

• Finance and accounts payable: search card statements, invoices and the general ledger for software vendors over the last 12 months. This catches annual renewals that only appear once a year.
• Identity and single sign-on: list every application connected to your identity provider (Google Workspace, Microsoft Entra ID, Okta or similar), including apps users have granted access to with their work accounts.
• Expense claims and team surveys: look for small recurring charges on personal cards claimed back, and ask each team lead what they use. This is where most shadow IT is found.

Larger organisations can add network-based discovery. Microsoft's documentation for Defender for Cloud Apps, for example, describes Cloud Discovery, which analyses firewall and proxy traffic logs against a catalogue of cloud apps and scores each app for risk to give visibility into shadow IT. For a small company, the three sources above in a shared spreadsheet are enough to start.

Step 2: Record the facts for each tool

For each subscription, capture: the business owner (a named person, not a department), what job it does, annual cost, number of paid seats, number of active users in the last 30 or 90 days, renewal date and notice period, contract terms (auto-renewal, minimum term), what data it holds (customer data, personal data, financial data), whether it is connected to SSO, and which other tools it integrates with. Tools without an owner after two weeks of asking are strong candidates for cancellation.

Step 3: Compare paid seats with real usage

Most admin consoles show last-login or activity data. The useful number is utilisation = active users / paid seats. Where it is low, reduce seats at the next renewal or move occasional users to a cheaper tier or a viewer role. Check activity over a long enough window to catch monthly or quarterly users, such as finance tools used at month end.

Step 4: Put every renewal on a calendar

Many SaaS contracts auto-renew, and some require notice to cancel or change well before the renewal date; read the terms of each one. Put each renewal and its notice deadline on a shared calendar, with a reminder to the owner well before the deadline. That reminder is when you review usage, ask for a better price, or cancel. Without it, the decision is made for you by default.

Step 5: Assess shadow IT and security risk

An unmanaged tool holding customer or personal data is a risk whatever it costs. For each tool that holds sensitive data, check: is it connected to SSO, can you remove a user centrally, is there a data processing agreement in place, where is the data stored, and can you export it? Data protection obligations differ between the EU GDPR, the UK GDPR and US state laws, so treat this as general information and involve whoever handles data protection for your organisation, with qualified legal advice where needed. Our guides to GDPR and privacy for SaaS and security questionnaires and SOC 2 cover what to ask vendors.

Step 6: Decide what to do with each tool

Step 7: Make offboarding automatic

Seats for former staff are both a cost leak and a security gap. The durable fix is to provision and remove access through your identity provider rather than tool by tool. Microsoft's Entra ID documentation, for example, describes automatic provisioning that creates accounts in connected SaaS apps when people join and deactivates them when they leave, commonly using the SCIM standard. Not every tool supports this, and support can depend on the plan you buy, so check each vendor's current plan details and keep a checklist for the tools that must be handled manually and make it part of your leaver process.

Step 8: Prevent the sprawl coming back

• A lightweight request process for new tools: what job it does, whether an approved tool already does it, what data it will hold, and who owns it.
• A published list of approved tools for common jobs, so people can find the standard before buying another.
• Company cards with merchant controls or a review of recurring software charges each month.
• An annual full review, plus a check before every renewal above a threshold you set.

When a custom internal tool replaces several subscriptions

Sometimes the audit shows that three or four subscriptions, plus spreadsheets and copy-and-paste work, exist only to run one process that is specific to your business: quoting and job tracking, client onboarding, inspections, approvals, or a back-office view across systems. That is the case where custom internal tools can replace a stack of partial solutions with one system built around the workflow. Compare total cost of ownership over three to five years, not the build price against one year of subscriptions.

A custom build also gives you a data model that matches your business and integrations you control. It is a broader custom software decision, though: you take on ownership, so budget for maintenance, security updates and someone who understands the system.

When it doesn't

Do not replace commodity software that does a standard job well: email, chat, video calls, accounting, payroll, HR, password management, e-signature. These tools carry compliance work, integrations and support that would be expensive to reproduce, and their subscription cost is small relative to that. A custom tool also makes little sense when only a handful of people use it, when the process is still changing every month, or when the real problem is unused seats that a renewal negotiation would fix. Consolidating onto one existing platform is often the cheaper first move, and AI coding tools have not changed the fact that running software for years costs more than writing a first version; see is SaaS dead in the age of AI and vibe coding for that trade-off.