Podcast Summary: Metrics that Measure Up

Episode: SaaS Spend Management Trends
Guest: Eric Christopher, Founder and CEO of Zylo
Host: Ray Rike
Date: March 28, 2023

Episode Overview

This episode dives deep into the world of SaaS spend management with Eric Christopher, Founder and CEO of Zylo, the leading SaaS management platform. Eric and Ray discuss what SaaS spend management truly means, when companies should implement a spend management program, and the top trends and best practices for controlling SaaS costs in fast-growing organizations. Throughout, Eric highlights the complexity of SaaS ecosystems, the importance of measuring value—not just cost, and how benchmarking data can lead to better operational decisions for leaders across finance, IT, and go-to-market teams.

Key Discussion Points & Insights

1. Eric’s Journey and the Need for SaaS Spend Management

• Eric’s background as a revenue leader at Sprout Social and in Martech revealed SaaS's complexity: ease of adoption, decentralized purchasing, and visibility issues.
• The product-led growth (PLG) movement and departmental purchases triggered the need to manage SaaS at scale.

"One advisor of mine said when you have a business idea that has complexity about it, it’s worth pursuing. And that’s how Zylo came about."
— Eric Christopher [02:45]

2. Defining SaaS Spend Management

• Eric redefines spend management, emphasizing that it’s not simply about controlling cost, but optimizing and measuring the value from each SaaS application.
• The SaaS market is uniquely complex: thousands of vendors, dynamic pricing, non-commodity solutions, and lack of central oversight.
• Zylo’s mission: “To help companies manage, measure, and maximize the value from every SaaS application.” [04:55]

Zylo’s Value Framework:

1. Full Application Discovery: Identify every app in use.
2. License Management: Continuously track usage and entitlements.
3. Cost Avoidance and Renewal Readiness: Use operational insights to plan renewals and negotiate effectively.
4. Governance: Curate a pre-approved internal software catalog; empower business units while maintaining organizational oversight.

3. Measuring and Demonstrating Value

• It’s not just about spend, but about adoption and utility—is the company getting the expected outcomes from the tools it pays for?
• Data is the foundation: without accurate discovery and utilization info, controlling spend or maximizing value is impossible.

"Measuring value is complex as well… Value might mean driving more adoption out of the application versus reducing the spend."
— Eric Christopher [06:31]

4. When to Implement SaaS Spend Management

• Thresholds to consider:
  • Spending $1–2 million/year on SaaS/cloud costs often signals it’s time.
  • Organization size: Critical by 500+ employees, but beneficial even earlier.
• Early programs set the tone for governance and responsible spend as companies scale.

“It’s never too late to begin proactively managing it… If you don’t start earlier, you can’t set behaviors and set that framework of governance.”
— Eric Christopher [11:20]

5. SaaS Spend Management in the Enterprise

• Even in mature enterprises with procurement functions, the SaaS category is different—dynamic, distributed, and fast-growing.
• Traditional software asset management (for SAP, Microsoft, etc.) isn’t enough; dedicated tooling and processes are required.
• By 2026, projected SaaS spend is $300 billion, making effective management unavoidable (cites Gartner).

6. Benchmarking Trends and Industry Data

• SaaS spend per employee has grown 50% over the past two years, correlating directly to remote work and digital transformation. [15:49]
• Decentralized buying is the default: Most organizations still miss or misclassify a significant portion of their SaaS spend.
  • Average companies have 300+ paid SaaS subscriptions; enterprises are in the thousands.
  • True spend is routinely underreported—by as much as 50%.

“Most CFOs we work with will say, wow, we had no idea how much SaaS we actually had.”
— Eric Christopher [16:40]

7. Current Trends and Consolidation (Preview of SaaS Management Index 2023)

• SaaS adoption is still rising, but the current climate is driving scrutiny:
  • Companies are more likely to non-renew non-critical apps.
  • Net retention (upsell/cross-sell to existing customers) is more promising than new logo acquisition right now.
  • Adoption of collaborative tools soared during the pandemic; now there’s a trend toward consolidation and rationalization.

8. Category-Specific Insights: Martech/Sales Tech

• Both Martech (10,000+ tools) and Sales Tech (7,500+) are experiencing scrutiny.
• Buyers are demanding clearer business cases and ROI, facing delayed decisions and potential vendor stack compression.

“Right now, your buyer… is the CFO. Everything needs a business case and a clear direct ROI.”
— Eric Christopher [21:49]

• The market is not shrinking drastically, but is getting more efficient—companies are evaluating and consolidating spend.

9. How SaaS Vendors Should Engage Spend-Managed Buyers

• SaaS companies should expect smarter buyers and embrace this shift.
• Sellers are encouraged to:
  • Engage in conversations about business impact, not just departmental needs.
  • Position solutions in terms of company-wide outcomes and be prepared for value-based discussions.

10. The Intersection of Product Utilization and Value

• Utilization data is crucial; sellers and customer success teams must track how products are used to demonstrate ongoing value and retention.
• More informed buyers will expect vendors to articulate product ROI and value delivered.

“Tying usage and what you’re paying together… allows at least that’s part of the measurement of extracting value.”
— Eric Christopher [26:29]

11. Is SaaS Spend Management Just a One-Time Exercise?

• No. It must be continuous.
  • SaaS portfolios and usage patterns are constantly evolving.
  • Ongoing measurement = ongoing optimization and cost/value alignment.

"You definitely need an audit, but it is an ongoing continuous challenge."
— Eric Christopher [27:52]

Notable Quotes and Memorable Moments

• On complexity:
  “What other category exists in the world with thousands of vendors that are dynamic, priced differently… Most are not a commodity… Measuring value is complex as well.” [04:43]
• On shift in mindset:
  “It’s not about price necessarily… you’re really trying to get the most value out of those applications.” [04:20]
• On ongoing management:
  “Every renewal, every app that comes into the business, treat it like an employee: know what it does, how it benefits your business, and measure it.” [27:35]
• Advice for early-career professionals:
  “You either need to be able to sell or you need to be able to code… Be an expert level at one and have a curiosity to understand the other.” [31:16] “…Make the effort, build the relationships. It will benefit you, I guarantee it.” [32:51]

Timestamps for Key Segments

• Eric’s Origin Story & Zylo Formation: [01:16]–[03:28]
• Defining SaaS Spend Management: [04:04]–[06:00]
• How to Measure SaaS Value: [06:00]–[10:47]
• When to Implement Spend Management: [10:47]–[12:59]
• Enterprise Segment & Procurement: [12:40]–[15:19]
• Benchmarking Trends & Data: [15:19]–[17:49]
• Expense vs Departmental Spend: [17:39]–[18:55]
• Preview of Zylo’s 2023 Index & Trends: [19:14]–[21:16]
• Vendor Stack Compression Trends: [21:16]–[23:39]
• Impact on SaaS Vendor Strategies: [23:39]–[25:43]
• Utilization Data & Value Alignment: [25:43]–[27:17]
• Continuous Nature of Spend Management: [27:17]–[28:58]
• Rapid-fire Personal and Tech Recommendations: [28:58]–[31:16]
• Career Advice for Aspiring Founders: [31:16]–[32:51]

Takeaways

• SaaS spend management is a continuous, value-driven process: Success means discovering, managing, and optimizing not just licenses and costs, but business value and outcomes.
• Start early: Early establishment of good governance prevents later chaos as SaaS portfolios grow organically.
• Data rules: Accuracy in tracking apps and usage is foundational; expect continued trends toward spend consolidation and vendor scrutiny.
• More informed buyers & sellers: Both sides benefit—higher efficiency, greater alignment, and better products result.

Recommended Resources (As Mentioned)

• Sprout Social: SaaS platform admired by Eric for strong execution and leadership. [29:21]
• GONG: Conversation intelligence tool recommended as essential for SaaS CEOs. [30:05]
• Book: Malcolm Gladwell’s "Outliers" — 10,000 hour rule for mastery. [31:16]