These days, there’s no shortage of SaaS apps—some free, others with subscription fees. Many of them are marketed as game-changing solutions for businesses, promising big results. But the reality? A lot of these tools just duplicate features you probably already have in your tech stack.
This flood of similar tools creates a significant cost problem. In 2023, companies spent an average of $9,600 per employee on SaaS, and for SMEs, that figure jumped to around $11,200 per employee.
But it’s not just about the cost. Every one of these apps requires a login, creating yet another entry point into your organization’s data. Each new platform adds to the risk of exposing sensitive information. This challenge is what we call “SaaS Sprawl.”
It gets even messier when you throw in Shadow IT. When employees—especially those without a technical background—can quickly sign up for the latest “shiny” app, they often overlook important details like the vendor’s credibility, data policies, or the potential risks. GenAI is amplifying this trend, making it even easier for teams to experiment with unvetted tools.
And it’s not just about cost or security. Adding layer after layer of SaaS apps complicates your infrastructure, creating data silos and making it harder to integrate and manage the data scattered across platforms.
In this article, we’ll unpack the full scope of SaaS Sprawl—what causes it, the challenges it creates, how GenAI is making it worse, and what CIOs can do to take control.
What Is SaaS Sprawl?
Let’s start by breaking down what SaaS sprawl really means.
At its core, SaaS sprawl is the unchecked growth of cloud-based apps within an organization, often happening without a centralized strategy or oversight. It’s closely tied to the rise of shadow IT, where teams or individuals bring in tools on their own. And here’s the kicker—it’s not just a tech problem; it’s a structural one.
When roles, policies, and approval processes aren’t clearly defined, it’s easy for teams to bypass IT and adopt their own solutions. While this might seem harmless at first, it can quickly lead to overlapping tools, rising subscription costs, security gaps, and a messy, fragmented tech stack.
We’ll get into how to tackle these challenges later, but for now, it’s important to understand that SaaS sprawl is rooted in organizational and procedural gaps, not just technical ones.
The Dimensions of SaaS Sprawl
To get a better understanding of this problem it’s important to analyze the different dimensions that have multiple edges.
The Financial Dimension
Without proper oversight, costs spiral as teams pay for overlapping features and unused licenses. Involving finance early on and enforcing approval processes can bring clarity, reduce waste, and ensure funds go toward solutions that deliver real ROI.
The Data Security Dimension
Each new, unvetted app is another potential doorway into company data. Without clear controls, sensitive information can end up in environments that lack strong security or compliance safeguards. Strong oversight ensures every SaaS platform meets organizational standards.
The Operational Complexity Dimension
Too many tools create a fragmented tech landscape. Instead of a streamlined stack, you get scattered solutions that slow response times, complicate integration, and increase maintenance work. Limiting new additions to those that align with long-term strategy curbs complexity and keeps operations nimble.
The Vendor Dimension
As new apps pile up, so do vendor relationships. Negotiating better contracts, securing volume discounts, and managing renewals is tough when no one has a full view of all suppliers. Centralized governance lets you consolidate vendors, reduce redundancy, and gain leverage.
The User Experience Dimension
SaaS apps promise efficiency, but an overabundance can overwhelm employees, forcing them to juggle multiple logins and interfaces. By thoughtfully selecting tools, you ensure a more seamless user experience that genuinely boosts productivity, rather than burying it under complexity.
| Dimension | Key Issues |
| Financial | Overlapping features and unused licenses. |
| Data Security | Increased entry points risk sensitive data. |
| Operational Complexity | Fragmented tech stacks slow operations. |
| Vendor Management | Inefficient contract and renewal processes. |
| User Experience | Too many tools overwhelm and frustrate employees. |
How GenAI Apps Make It Worse
GenAI apps bring a mix of factors that can add to the problem. They’re flashy, feel cutting-edge, often come with free trials or versions, and are ridiculously easy to sign up for—sometimes all it takes is an email.
But here’s the catch: whether you’re logging in with a personal account or a work email, you’re likely granting these tools access to company data.
As we touched on earlier, when non-technical users adopt these apps, they’re introducing extra layers of risk. They might not fully grasp the level of access they’re granting, the app’s privacy policies, or other critical details. And with new GenAI tools popping up all the time, there’s also a higher chance of duplicating functionality you already have.
Sure, many of these apps are secure and can boost productivity, but we need to stay cautious. It’s essential to avoid exposing sensitive data or wasting money on tools that don’t bring anything new to the table.
What Are the Causes of SaaS Sprawl?
Now we want to try to explain where the causes of SaaS Sprawl lies.
At the core of SaaS sprawl is a mix of overlapping tools, fragmented decision-making, and a lack of oversight. Too often, vendors overpromise, making it difficult for teams to resist shiny new features, even when existing tools could meet the need.
Many acquisitions happen without a solid business case, skipping essential evaluations like feature overlap, integration capabilities, or ROI.
Another contributing factor is that individual teams—or even users—can bypass IT processes entirely, bringing in tools that may not align with company systems or strategies. While some of these tools may address real gaps, many are redundant, adding unnecessary costs and complexity.
The issue isn’t solely IT’s responsibility—it’s a company-wide challenge. IT, finance, and leadership must collaborate to enforce policies that govern procurement and integration. Without this alignment, organizations end up with disconnected tools, wasted budgets, and processes that fail to deliver real value.
These causes highlight the need for a comprehensive approach to managing SaaS applications—one that addresses both user behavior and organizational policies.
How to Manage SaaS Sprawl
Tackling SaaS sprawl requires a combination of governance, collaboration, and technology. Here are key strategies to consider:
- Audit Your Stack: Start by mapping out all the tools currently in use, including their costs, features, and usage levels. Identify redundancies and underutilized apps.
- Implement Approval Processes: Establish clear policies that require IT and finance to review and approve any new SaaS purchases.
- Centralize Vendor Management: Consolidate vendors where possible to negotiate better contracts, streamline renewals, and reduce redundancy.
- Educate Teams: Provide training to help employees understand existing tools’ capabilities and discourage unnecessary new purchases.
- Use Monitoring Tools: Deploy SaaS management platforms to gain visibility into usage, costs, and compliance risks.
How Inclusion Cloud Can Help You Cut Sprawl
At Inclusion Cloud, we specialize in helping organizations untangle their SaaS sprawl. Our expertise lies in providing:
- Comprehensive Audits: We analyze your existing tech stack to identify inefficiencies and opportunities for consolidation.
- Tailored Solutions: With partnerships across leading SaaS platforms, we design integrations that align with your long-term IT strategy.
- Enhanced Security: We ensure that every SaaS tool in your environment meets strict security and compliance standards.
- Cost Optimization: By centralizing vendor management and enforcing approval workflows, we help you cut unnecessary costs and boost ROI.
Whether you’re looking to streamline your tools, improve data security, or align your SaaS usage with business goals, Inclusion Cloud is here to guide you every step of the way.
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