SaaS Rationalization: How to Audit Your Software Portfolio

What Is SaaS Rationalization?

SaaS rationalization is the process of systematically reviewing your organization's software subscriptions to eliminate redundancy, reduce costs, and ensure every tool you pay for is actively delivering value. In practice, it means auditing what you have, understanding how it's actually used, and making deliberate decisions about what to keep, consolidate, or cut.

Step 1: Create a Complete Software Inventory

Start by pulling every software purchase from three sources: your finance system (subscription payments, credit card statements), your IT asset management tool, and a survey of department heads. You will almost certainly find tools in all three that don't appear in the others.

For each tool, capture: vendor name, annual cost, number of licences purchased, contract end date, and which team owns it.

Step 2: Measure Actual Usage

A licence purchased is not a licence used. For each tool, gather usage data from the vendor portal or SSO logs. Tools below 60% active usage are immediate rationalisation candidates. Tools below 30% usage should be flagged for immediate termination or significant downsizing.

In a recent audit for a 200-person technology company, we found 34 active SaaS subscriptions with under 20% licence utilisation. Total annualised waste: €310,000.

Step 3: Map Functional Overlaps

Build a capability matrix: list core functions (project management, document storage, communication, CRM, analytics, etc.) and map which tools serve each function. Any function served by more than one tool is a consolidation candidate.

Typically, companies can reduce their tool count by 25–40% through consolidation without losing any meaningful functionality — and often improving integration and data quality in the process.

Step 4: Prioritise Your Cuts

Rationalise in priority order:

1. Zero or near-zero usage tools — cut immediately
2. Duplicate tools where one can replace the other — consolidate
3. Overprovisioned licences — right-size at renewal
4. Expensive tools with good alternatives — evaluate switching

Step 5: Establish Governance to Prevent Recurrence

An audit without governance is a temporary fix. Implement a lightweight approval process for new software purchases — even a simple email to IT and procurement before buying. This single control prevents most shadow IT from emerging and keeps your stack visible and manageable.