Optimize your tech stack to reduce risk and free up cash flow – TechCrunch

Companies are hitting a considerable inflection point when it comes to how they assemble and manage their software tech stack. On one hand, the storm of pandemic-related IT changes is beginning to calm down, but on the other, many are facing an economic downturn that could further impact and strain business.

The resiliency and adaptability of any company that survived the pandemic is admirable. But the hard truth is that many of those very companies face a “pay-the-price” moment as the cost of their decisions and actions over the past 18 to 24 months come due.

That said, few parts of your tech stack will have as much exposure as your software license renewals.

The SaaS tsunami

Digital transformation came fast for most businesses — whether they were ready for it or not. The shift to remote work and the need to rapidly scale and onboard solutions pointed in one logical direction — cloud-based software. Lower cost of entry, minimal infrastructure requirements and quick implementation helped made moving to a SaaS tech stack the clear choice.

In 2021, Deloitte estimated that 94% of organizations were using some cloud-based SaaS products. According to our research, the average enterprise organization has doubled its SaaS outlay since 2018 and is now spending $35,000 on nearly 300 different tools.

In the heat of the moment, many companies focused on the immediate challenges that SaaS could solve without truly understanding how this digital transformation would impact how they find, buy and manage their tech stack over the long term.

Minimizing stack exhaustion in the face of a recession

The SaaS buying sprees of 2020 and 2021 have led to tech-stack fatigue, and IT departments are feeling the pressure of managing a complex and diverse set of tools and justifying ROI in the face of rising software costs.

SaaS companies used aggressive pricing to get a foothold in organizations that relied on and benefited from them during the pandemic. Many have been incredibly successful in helping businesses accomplish their goals, improve productivity and recognize ROI during considerably trying economic times. In fact, a large portion of these SaaS products have become ubiquitous. Those with sticky, “can’t-live-without-it” features (think Airtable, Monday.com and Slack) seek to leverage those inroads come renewal time.