In today's digital age, it's easy to fall victim to the phenomenon of zombie subscriptions or zombie spending; a situation that can drain your company bank account without you even realizing it.
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"Zombie subscriptions" or "Zombie Spending" is a term used to describe ongoing SaaS (Software as a Service) subscriptions that businesses no longer use or even remember they have subscribed to. Zombie subscriptions are easily overlooked and can be a major financial drain on businesses. As such, it's essential for businesses to be aware of and actively monitor these subscriptions to ensure they don't have a negative impact on their bottom line.
The Impact of Zombie Subscriptions
The term "zombie" comes from the fact that these subscriptions are often forgotten about, but they continue to "live" by siphoning off money from your account every month or year. When businesses continue to pay for SaaS subscriptions they no longer use, it's essentially money down the drain. Over time, these small subscription fees can add up to a significant amount of lost revenue, which can negatively impact the business's financial health.
Additionally, zombie subscriptions can create clutter and confusion within the business impacting overall efficiency. Keeping track of multiple subscriptions can be challenging, particularly when it comes to billing and cancellation dates. This can lead to frustration and anxiety for teams responsible for managing these subscriptions.
These subscriptions can negatively impact the health of your company’s IT environment as well. Often zombie subscriptions happen when there is little visibility and management into the subscription process. This occurs when teams and individuals can purchase software on their own without the IT team knowing or managing the application. This eventually leads to a redundant and inefficient tech stack where a company has several tools that may do the same thing, all outside the purview of the IT team.
So, how do you prevent zombie spending from happening in your company? An article written by the team at Ramp outlined five business best practices to prevent zombie subscriptions.
Preventing Zombie Subscriptions
1. Spend control & Analysis
By modifying policies and upgrading expense systems, companies can better control what employees are purchasing with company funds. According to Ramp, controlling how employees are using company funds for subscriptions is key to preventing zombie spending. Companies should thoroughly analyze company spending to expose potential zombie subscriptions, by giving IT teams visibility into this spend, they can help to control it. Additionally, it is important that companies' IT teams know which tools perform similar functions to reduce redundancies. Although, this level of analysis can be cost-prohibited and taxing on company personnel.
2. Expense tracking
To avoid zombie subscriptions, it is essential to keep track of all employee spending with company funds. This can be done using a spreadsheet, budgeting app, or subscription management tool.
3. SaaS management
IT teams should be monitoring spend and usage of company applications regularly. By reviewing subscription data, IT teams can look for trends that may indicate the presence of zombie subscriptions. For example, if there is a high number of employees or teams who have not used a service in the past month, this may indicate the presence of zombie subscriptions that need to be addressed. Including IT teams in the deciding and purchasing phase of SaaS subscriptions will give them the visibility they need to monitor these subscriptions and will pay off in the end.
Zombie subscriptions can be a costly and frustrating problem for businesses. By proactively monitoring company usage and regularly reviewing subscription data, businesses can mitigate this issue and save money in the process.
By modifying policies and upgrading expense systems, companies can better control what employees are purchasing with company funds. According to Ramp, controlling how employees are using company funds for subscriptions is key to preventing zombie spending. Companies should thoroughly analyze company spending to expose potential zombie subscriptions, by giving IT teams visibility into this spend, they can help to control it. Additionally, it is important that companies' IT teams know which tools perform similar functions to reduce redundancies. Although, this level of analysis can be cost-prohibited and taxing on company personnel.
To learn more about how your organization can protect against zombie subscriptions, contact us today.