What is SaaS sprawl?

SaaS sprawl can contribute to many negative outcomes including wasteful spending, inefficient workflows, data silos and security risks. “SaaS sprawl usually isn’t the result of bad intentions—it’s often the result of good people trying to solve real problems quickly,” says Savannah Cherry, director of marketing and new business at Slingshot, a software development firm.

According to a report from the IBM Institute for Business Value (IBV), only 36% of enterprise tech executives reported that their investments in cloud, data, AI and product engineering are managed as integrated portfolios defined by business objectives and common architecture. And, according to a 2024 Productiv report, a whopping 48% of enterprise applications are unmanaged, with nobody specifically assigned to monitor and audit usage, security, licenses, renewals, vulnerabilities and other particulars. That lack of proper, intentional oversight and integration very often shows up in the form of SaaS sprawl.

Software as a service (SaaS) is application software hosted on the cloud and used over an internet connection by way of a web browser, mobile app or thin client. The SaaS model has exploded in popularity, in large part because of its ease-of-use and scalability benefits.

A SaaS provider is responsible for managing and maintaining the software and supporting infrastructure. There’s no need to install programs on individual devices, nor does an organization need to ensure that their hardware can handle increased workloads. Updating software is also no longer a concern; that’s handled remotely by the SaaS provider, ensuring that SaaS apps are always up to date. The customer simply subscribes and accesses the software.

SaaS is an increasingly vital part of modern organizations, with the average organization spending about USD 49 million annually on SaaS, spread across an average of 275 apps, according to a Zylo report.

There are many different types of SaaS tools; companies as varied as Zoom, Slack, Salesforce, Adobe, Trello, Microsoft, Google, Box and Amazon all offer SaaS products. These products are used to complete an extensive variety of tasks, from advanced chat functionality to video calling, project management to IT management, and file management to creative services.

SaaS application access is often tiered: many providers offer free versions, freemium versions—which enable access to basic functions for free and allow users to pay for upgraded capabilities—or premium packages with varying capabilities, user seats and other differentiators. Many providers also offer enterprises packages that can be tailored to different sized businesses. 

However, this ease of access can lead organizations to over-index on SaaS, jumping from platform to platform like so many lily pads in a pond. So how do organizations recognize, address and prevent the sinister creep of SaaS sprawl?

SaaS sprawl refers to the tendency for organizations, especially larger ones with multiple divisions, to acquire a bewildering array of products in their SaaS environment. “Multiply (SaaS adoption) across departments, remote teams and the explosion of niche SaaS solutions out there, and before you know it, you’ve got dozens, sometimes hundreds, of apps floating around your org,” says Cherry. This can result in redundancy, inefficiency, confusion—or worse. Here are some hallmarks of SaaS sprawl:

A classic indicator of SaaS sprawl is the presence of different applications that overlap in functionality. These redundant applications usually result in unnecessary spending and can lead to data siloing and a lack of visibility across functions.

If the sales and marketing teams both use the same project or resource management apps, for example, they can easily share information and work off the same insights in real-time. When these teams use different apps for the same tasks, this cross-functional visibility is lost, and additional integrations are needed to achieve the same level of collaboration.

There’s always a hot new product in technology. But frequent adoption, though it might seem agile and flexible, can create adoption issues. The learning curve that accompanies new product adoption can cause errors and create a drag on production and user experience. In more severe cases, the productivity losses that often accompany an ever-changing SaaS landscape can outweigh the benefits of new software altogether.

Ideally, an enterprise’s SaaS products all work together, seamlessly sharing data in an integrated ecosystem. This is often achieved by using integration platforms or iPaaS. A lack of integration between SaaS apps, or between SaaS apps and other enterprise systems and databases, can lead to data sharing inefficiencies, lack of shared visibility, data errors, security breaches and other negative outcomes.  

Any organization can fall into the SaaS sprawl trap, but larger ones with multiple autonomous divisions are especially prone. There are so many SaaS options on the market, with more arriving every year boasting of slightly new or improved features. This deluge can tempt adoption without intentionality.

Notable causes of SaaS sprawl include:

Without a centralized procurement process, teams are often left to acquire software on their own. This uncoordinated approach can result in different teams using new applications that serve the same function, which can lead to inefficiency both in cost and effect.

Let’s return to our previous example, where the sales and marketing departments use different project management software. This not only requires twice as much time and effort to research and purchase said software, but also leads to difficulties interfacing between the departments (perhaps requiring new integrations). 

Without a proper organizational policy, teams might not know which SaaS products are already available for use through an enterprise license, or which products other departments are already using. This oversight can hamper data sharing and other collaborative synergies.

Lack of guidance can also cause compliance risks and other SaaS security issues, for example, if restricted data is shared with unauthorized applications.

SaaS has an annual growth rate of over 20%, according to Zylo, and is expected to pass USD 300 million in 2025. There are tens of thousands of SaaS companies, from tiny startups to the biggest names in technology. This proliferation leads to an excess of choice and can drive pressure to adopt.

A classic sales tactic, low- or no-cost adoption can make trying out something new seem like an easy idea—until the bill comes. “Easy, frictionless access enables adoption of tools without IT or procurement intervention, leading to duplicate functionality and inadequate integration,” says James Allsop, CEO of iNet Ventures, a digital PR agency.

From the top down, organizations need to understand both the value and the potential pitfalls of SaaS products. Roughly half of all SaaS licenses go unused and forgotten. This waste is often the result of a culture that does not prioritize SaaS efficiency.

The most significant cause of SaaS sprawl is a lack of a clear procedure, hierarchy and communication. Departments or teams will adopt SaaS products based on their own needs and wants; without a system to assess, monitor and guide them, SaaS sprawl can easily arise.

SaaS sprawl can lead to many issues, ranging from organizational inefficiency to active security breaches.

The lack of an intentional procurement plan for SaaS products can drive unnecessary spending throughout the tech stack. This can be the result of suboptimal bargaining at scale, redundancy or even forgotten active subscriptions.

In addition, providers can easily raise rates for SaaS services once their clients are dependent on them. “Simply put, when fees go up, you have to pay or you lose access. And fees will go up,” says Bryan Granados, a technical product manager and engineer at the AI-focused firm Valere.

While upfront costs might be low or even non-existent in the form of trials, the eventual long-term cost sometimes surpasses that of local solutions. At the very least, a centralized SaaS plan enables organizations to plan for such increases and take advantage of enterprise licenses.

Too many different systems can result in lost efficiency. When teams are working across numerous platforms, files can be lost, schedules and timetables can become less timely and accurate, and meetings can be missed due to misunderstandings. Even in “normal” operation, spreading teams across too many tools can simply cause wasted time and employee frustration. Streamlining this process can improve workflow efficiency.

When data is spread across siloed platforms and applications, data management and cross-functional collaboration suffers. When different teams have access to the same up-to-date information, they can more easily align their efforts behind broader departmental and organizational goals. Awareness of the pitfalls of data silos helps encourage teams to stay on the same page.

What’s more, integrating data from different databases and applications enables organizations to derive greater value from their AI tools. For machine learning and other AI tools to be most effective they need access to lots of data. The more complete and current the data, the sharper and more valuable the insights the AI can produce.

It can take time to adjust to a new SaaS application. During this adjustment period, mistakes can (and often will) be made. In many case, new systems are necessary and some degree of training time is unavoidable. But it’s important to make sure that these new software additions drive value and are not done in a haphazard manner. Doing so helps avoid wasted employee time and employee confusion caused by unnecessary onboarding. 

SaaS sprawl can increase security vulnerabilities and create additional opportunities for data breaches, particularly when new SaaS products are not managed under a centralized procurement, governance and data security policy. SaaS products without authentication and proper oversight from IT or other security departments can lead to unauthorized access or misuse of information.

This can create shadow IT in which IT departments are unaware of usage that should be under their bailiwick. Integrations might also be carelessly applied, leading to the sharing of sensitive data with unauthorized products or platforms.

“The rapid growth of unauthorized IT usage produces complex tool networks which damage security systems, makes compliance more difficult and wastes organizational resources,” says Rafay Baloch, a cybersecurity expert and white-hat hacker. “Unmanaged applications expand attack surfaces by revealing sensitive data while misconfigured systems provide entry points for hackers.”

Combatting and managing SaaS sprawl is difficult, but vital. “Ultimately, SaaS sprawl is a byproduct of innovation and agility, but without intentional management, it can undermine both,” says Granados. There are a few steps any organization can take to both reduce and prevent future sprawl.