Finance teams have spent decades perfecting controls for traditional spending categories. Capital expenditures require detailed business cases, multiple approvals, and rigorous ROI analysis. Even routine expenses like travel and office supplies follow well-established policies and approval workflows.
Yet despite these sophisticated controls, SaaS spending has emerged as a persistent blindspot that evades financial governance in even the most disciplined organisations. Today’s enterprises typically underestimate their SaaS spending by 30-40%, with millions in expenditure occurring outside established procurement channels.
How SaaS Sidesteps Traditional Controls
The inherent nature of SaaS creates unique challenges that traditional procurement controls weren’t designed to address:
Distributed Purchasing Authority
In the SaaS era, virtually anyone with a corporate credit card or expense reimbursement authority can become a software buyer. When Marketing needs a new analytics tool or Sales wants a prospecting solution, they rarely begin by consulting procurement. Instead, they research options, start trials, and eventually make purchases—all without triggering traditional controls.
This democratisation of purchasing authority means dozens or even hundreds of individuals across the organisation are making independent software decisions, each seemingly small enough to fly under the radar.
Subscription Model Dynamics
Unlike traditional software with large upfront licence fees that naturally trigger scrutiny, SaaS typically begins with modest monthly subscriptions. A £500 monthly charge rarely raises eyebrows, yet represents a £6,000 annual commitment that automatically renews year after year.
These subscriptions often grow organically through:
- Additional user licences added incrementally
- Gradual tier upgrades as needs evolve
- Premium features enabled one by one
- Usage-based components that expand over time
What begins as a modest expense can silently grow into a significant budget line without ever facing comprehensive review.
Departmental Budget Allocation
Most financial controls focus on how money is spent rather than what it’s spent on. When department heads have discretion over their allocated budgets, SaaS purchases easily hide within broadly defined categories like “Marketing Services” or “Sales Tools.”
This categorisation challenge means finance teams struggle to distinguish between SaaS applications and other operational expenses, making comprehensive visibility nearly impossible.
Credit Card Procurement
The predominance of credit card purchasing for SaaS creates particular challenges:
- Transactions appear as vendor charges without software details
- Applications may be billed under parent company names
- Subscription terms aren’t captured in financial systems
- Renewal obligations remain undocumented
When expenses are simply coded to generic categories during expense reporting, the underlying SaaS commitments become effectively invisible to financial governance.
The Resulting Governance Gaps
These unique characteristics create critical blindspots in traditional financial controls:
No Comprehensive Inventory Most organisations can’t answer basic questions like “How many SaaS applications do we pay for?” or “What’s our total annual SaaS spend?” with confidence.
Untracked Renewal Commitments Future obligations from auto-renewing contracts remain undocumented in financial systems, creating surprise budget impacts when they renew.
Redundant Purchases Without centralised visibility, different departments unknowingly purchase solutions with overlapping functionality, sometimes from the same vendor.
Unmanaged User Lifecycles Licences for departed employees frequently remain active for months or years, creating ongoing waste that escapes detection.
Unoptimised Contracts Without procurement involvement, departments typically accept standard terms without negotiation, missing opportunities for better pricing and terms.
Bridging the Control Gap
Forward-thinking organisations are implementing new governance approaches specifically designed for SaaS spending:
1. SaaS-Specific Discovery Mechanisms
Traditional financial systems rely on purchase orders and vendor management, but effective SaaS governance requires new discovery approaches:
- Integration with single sign-on systems to identify active applications
- Network traffic analysis to detect cloud services in use
- Expense analysis using AI to identify subscription patterns
- Regular department-level software audits
Solutions like Vertice combine these approaches to create comprehensive visibility beyond what procurement systems alone can provide.
2. Centralised Subscription Management
Once discovered, SaaS applications require specialised management:
- Unified renewal calendars with advance notifications
- User lifecycle management integrated with HR systems
- Licence utilisation tracking to identify optimisation opportunities
- Contract repositories with standardised SaaS metadata
This centralised approach transforms scattered subscriptions into a manageable portfolio that can be strategically optimised.
3. Collaborative Governance Models
Rather than attempting to force SaaS into traditional procurement processes (which inevitably creates workarounds), leading organisations are developing collaborative governance approaches:
- Self-service procurement portals for pre-approved applications
- Tiered approval workflows based on contract value and risk
- Advisory support for department-led evaluations
- Post-purchase integration into central management
This balanced approach maintains departmental agility while ensuring appropriate controls and visibility.
4. SaaS-Specific Financial Controls
Financial systems themselves must evolve to accommodate SaaS realities:
- Expense categories specifically for software subscriptions
- Credit card reconciliation processes that capture SaaS metadata
- Renewal obligation tracking in financial planning
- Automated alerts for unusual spending patterns
- Regular benchmarking against expected SaaS spending by department
The Path Forward
Addressing the SaaS blindspot doesn’t require abandoning departmental autonomy or creating bureaucratic hurdles. Instead, it means evolving financial governance to match the distributed nature of modern software acquisition.
The most successful approaches focus on establishing guardrails and visibility rather than centralising all purchasing decisions:
- Empower departments to select solutions that meet their needs
- Provide procurement expertise when it adds value
- Ensure finance has visibility into total commitments
- Maintain central oversight of renewals and optimisation
- Apply appropriate controls based on value and risk
From Blindspot to Strategic Advantage
Organisations that successfully bridge this governance gap don’t merely prevent wasteful spending—they transform SaaS management into a strategic capability that accelerates innovation while controlling costs.
By combining the speed and flexibility of departmental software selection with appropriate financial governance, these organisations ensure their SaaS investments deliver maximum value and minimal waste.
In a business environment where software increasingly defines competitive advantage, bringing SaaS spending into the light isn’t just good financial hygiene—it’s a critical capability for sustainable digital transformation.
