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This white paper will provide tax and accounting professionals with tips to avoid SaaS sprawl and maximize their technology investment. We’ll cover:
The urgency of the 2020 busy season forced many companies to hastily implement several new solutions without proper planning. This mindset of rapid, aggressive transformation unleashed a new threat to practice management: SaaS sprawl.
SaaS sprawl occurs when the volume of third-party applications becomes too large for IT professionals to manage. Consequences can include:
The rise of Software-as-a-Service (SaaS) applications turned the business world on its head. Today, just about every workplace task has several software tools promising an easier alternative. Companies now rely on so many different solutions that the phrase “tech stack” has emerged to encompass their scope.
While the workplace has been trending in this direction for years, SaaS adoption gained extra momentum during the shift toward remote work in 2020. A McKinsey Global study found that the COVID-19 emergency accelerated workplace digitization by three or four years.
But underneath this progress lies a dilemma. The urgency of the 2020 busy season forced many companies to hastily implement several new solutions without proper planning. This mindset of rapid, aggressive transformation unleashed a new threat to practice management: SaaS sprawl.
SaaS sprawl occurs when the volume of third-party applications becomes too large for IT professionals to manage. Consequences can include:
And in an industry like tax and accounting, one with sensitive client data and stringent compliance protocols, it can be especially harmful.
Staffing shortages and colossal workloads have made automation essential to tax and accounting’s endurance. However, success is still dependent on how that technology is implemented and deployed. The next phase of digital transformation will involve a more careful, methodical approach to building SaaS infrastructure. For some tax practices, this may involve consolidating their bloated tech stack into a smaller, more dynamic set of applications.
This white paper will provide tax and accounting professionals with tips to avoid SaaS sprawl and maximize their technology investment. We’ll cover:
When businesses assess new technology, isolated capabilities are typically their top concern. However, they tend to overlook how these individual solutions interconnect to create a seamless workflow.
Combining non-compatible applications can force staff to form unintuitive workarounds and ultimately lose efficiency. Friction may rear its head in obvious ways (e.g., exporting and transposing data into separate programs) or more subtly (e.g., having to constantly switch between applications).
A 2022 study by Harvard Business Review suggests that even minor contextual transitions are counterproductive for the human brain. Their research found that digital workers spent 9% of their working hours just switching between applications.
According to Productiv, the average SaaS portfolio has grown to 371 apps, up 32% from 2021. Most of these tools were purchased with one specific utility in mind, regardless of the other included features.
While this mindset is effective for resolving singular pain points, it quickly becomes unwieldy at scale. As applications begin to pile up, it becomes harder to track which features are already under license. This often leads to firms overspending and purchasing solutions with overlapping capabilities.
Research from Nexthink indicates that more than half of licensed SaaS software isn’t regularly used. As tech stacks continue to grow, company leaders will have increased difficulty monitoring the efficacy and usage of each product. Due to haphazard implementation and staff fatigue, it’s not uncommon for solutions to be informally phased out of processes while remaining under license.
25% of software will be underutilized or overdeployed despite rapidly growing SaaS expenditure, according to Gartner’s forecast.
Source: Gartner’s forecast
Overspending isn’t the only consequence of software clutter. IT blind spots also make firms increasingly vulnerable to security threats. With cyberattacks at an all-time high, having oversight of each application will be critical to ensuring compliance with IT protocols.
A Nexthink Insights poll of 200 IT leaders found that only 5% had complete visibility into the software licenses used by employees.
Source: Nexthink Insights poll
The faster new hires get onboarded to your firm’s processes, the sooner they can become productive members of your team. But that learning curve becomes more difficult as tech stacks become larger and less integrated.
The average SaaS spend per employee was $9,643 in 2023, according to Productiv.
Source: Productiv
Is your firm dedicating adequate training resources to ensuring that its SaaS investment is worthwhile?
Evidently, the transition to a SaaS-driven workplace hasn’t been immune to growing pains. So how can the next phase of digital transformation help resolve these issues?
While previous periods of software adoption were characterized by growth and urgency, the future will be marked by strategy and analysis. Today, businesses understand how hurried technology implementation can go awry. In a post-pandemic environment, they have more breathing room to make research-backed, well-informed decisions.
Whether your firm is looking to reduce digital clutter or build a tech stack that lasts, planning is everything. Consider these best practices to avoid SaaS sprawl and maximize software efficiency.
It’s impossible to determine how your tech stack needs to change without first assessing how it’s currently operating. That’s why it’s vital to conduct a thorough audit of your entire SaaS ecosystem before proceeding.
Depending on the size of your firm and tech stack, this may seem like a daunting task. But you don’t need a CIO or CFO to get an accurate appraisal—just teamwork and cooperation. Here’s how you can get a holistic view into your digital landscape.
1. Inventory existing licenses
Collect the purchase records of all licensed software applications in your firm’s tech stack. Be sure to list the full functionality of each solution.
2. Survey your staff
Ask each member of your team to tally every software application they interact with and to estimate how often they use them.
3. Reconcile application access logs
Compare user access licenses to the usage data attained in your survey. See if there are opportunities to eliminate excess licenses that aren’t being used.
4. Review software usage
Analyze patterns for how each SaaS tool is used. Are any being underutilized or ignored? Is there any overlap between app functionalities?
Your firm may also want to consider studying user behavior to ensure that it’s in accordance with your own internal policies.
5. Identify cost savings
Once you have a firm grasp of your usage data, it’s time to turn it into financial determinations. Are you getting the desired efficiency gains out of your technology spending? If not, is it due to sprawl, insufficient capabilities, or something else?
Be sure to also consider indirect costs like onboarding time, workflow bottlenecks, and the value of staff expertise relative to the tasks they assume.
If your SaaS audit is successful, you should be able to pinpoint opportunities to optimize your technology spending. Any overlapping, unused, or underutilized applications should be first on the chopping block.
But there’s more to improving your tech stack than just reducing waste. You may also find opportunities to replace, upgrade, or better integrate existing applications that are falling short of their potential. Make an annual habit of searching the market to see how your current technological capabilities compare to alternative solutions.
Compare the number of SaaS applications in your tech stack to the breadth of functionality they provide. You might be able to reduce costs and improve integration by replacing single-service applications with multifunction solutions.
For example, think about how many products your firm uses to collaborate with clients. To achieve a fully digital workflow, you’ll need SaaS tools for:
Rather than managing these tasks across five or more applications, why not simplify collaboration for your staff and clients? Some applications consolidate the entire process into a single cloud platform.
Isolated functionality is naturally a top consideration when assessing SaaS applications. However, many of those efficiency gains can be negated by attempting to establish processes with incompatible solutions. Software integration should also be an elevated priority when building your tech stack.
Look at the in-suite options offered by your primary software vendor and see how they compare to third-party applications. Some vendors even offer out-of-suite integration with competing products as a convenience to their customers.
The failure of certain SaaS applications can’t always be attributed to poor functionality. Sometimes haphazard implementation is responsible for your firm’s technology woes.
That’s why it’s crucial to mandate effective training protocols for each solution your staff interacts with. Standardized learning programs help ensure that each team member, whether they’re new hires or veterans, receives the same onboarding experience.
Reach out to your SaaS vendors to see what resources they provide for training and implementation. Some technology providers offer comprehensive e-learning material in addition to hands-on support.
The COVID-19 pandemic challenged us to rethink what a tax office could look like. Remote and hybrid work have helped firms attract and retain talent without sacrificing productivity. That’s why it’s important to have software that facilitates remote flexibility.
While locally installed applications are unintuitive for remote work, cloud software allows staff to access files from anywhere with a secure connection. Even in-office work becomes easier: Cloud computing allows users to access files from centralized locations and collaborate on documents in real time.
Moving your storage to the cloud can reduce your firm’s carbon footprint and simplify file management if it’s done correctly, that is. Carelessly storing disorganized files in a digital environment creates disconnected information silos. Firms can risk losing important data or reducing accessibility for team members that need it.
Any detached data silos should be reassembled into a centralized, well-organized cloud ecosystem that provides easy access to all authorized staff.
An Application Programming Interface (API) is a software intermediary that connects two or more separate applications. They eliminate manual work by better integrating software programs that would have otherwise been disconnected. If you’ve ever made a payment with Venmo or PayPal on an e-commerce website, you’re already somewhat familiar with APIs.
Today, more and more software vendors are developing their own APIs to streamline workflows and improve in-suite integration. Check to see if your technology provider offers API add-ons and ask how they could simplify your processes.
Remember, your digital transformation journey will always be ongoing. Make a habit of regularly reassessing your tech stack after each tax season to see what worked, what didn’t, and what new technology is on the market.
Of all the tax and accounting work your firm oversees, 1040 preparation has the greatest potential for automation. Unlike advisory services that are rooted in complex expertise, a large bulk of 1040 time is spent entering data, indexing workpapers, and following up with unresponsive clients. Leveraging technology to streamline those tasks frees up time that can be better allocated toward more value-added work.
But not every 1040 technology vendor can deliver the efficiency gains that firms want. Consider this:
SurePrep provides greater automation and integration than the competition. TaxCaddy, 1040SCAN, and SPbinder combine to deliver better efficiency and functionality in a more compact set of solutions. Let’s take a look at how SurePrep enhances and simplifies your 1040 tech stack.
Many 1040 clients are notorious for waiting until the 11th hour to provide their tax information. But what if there was a reason behind their procrastination?
Think about all the programs your clients interact with to upload tax files, sign forms, fill out their questionnaire, message your firm, and pay their invoice. That application confusion coupled with the chore of scanning or printing documents might discourage your clients from responding proactively.
TaxCaddy boosts client engagement by collapsing the entire collaboration experience into one user-friendly, cloud-based platform. It allows taxpayers to upload documents in whatever way is most convenient to them.
TaxCaddy’s user-friendly features include:
TaxCaddy saves progress as users upload documents and fill out their questionnaire. This allows clients to send tax information throughout the year and gives your firm earlier opportunities to begin preparation.
“It’s what clients want. More and more clients are becoming less enthusiastic about paper organizers. The benefit is faster responses from clients and not having to worry about unorganized emails and blurry photos of documents.”
Lindsay Park, Perkins & Co
Scan-and-populate software is designed to automate preparation, but the extent of that automation can vary drastically between products.
For example, most scan-and-populate software only automates data entry on primary fields of standard tax forms. Preparers are still tasked with inputting minor details and manually organizing workpapers.
In contrast, here’s what 1040SCAN does:
“When I evaluated [SurePrep] and saw the differences compared to what we had, I felt like it would be a disservice not to implement it, knowing the constraints of busy season and the need to elevate people to their highest and best use. We saw that efficiency and a return on our investment in the first year.”
Leah DiGregorio, Partner, Hoffman, Stewart & Schmidt, P.C.
1040SCAN provides more assistance to tax preparers than any other 1040 solution on the market. Once data is exported to tax software and workpapers are organized, the workpaper index flows directly into SurePrep’s complimentary workpaper management system, SPbinder.
Once documents are uploaded in TaxCaddy, they can be processed through 1040SCAN and imported to SPbinder at any time. Even if the taxpayer uploads additional documents after the fact, they can still be added to the same binder.
While 1040SCAN saves preparers from endless hours of data entry and workpaper indexing, SPbinder gives them the tools to allocate their freed-up time toward detailed workpaper preparation. SPbinder provides tick marks, stamps, notes, calculator tape, and hyperlinked cross-references that can be applied across all file types. Preparers have all the 1040-specific tools they need to help facilitate maximum clarity for reviewers.
And since workpapers are auto-indexed using standardized methodology, your staff know exactly how to navigate the binder for each return.
“We have a consistent process for all 1040s. Every return is the same whether you’re working for Partner A or Partner B. This is key for any firm not only looking to gain the most from its technology, but also its staff.”
Steven Hart, Chief Information Officer, Janover LLC
Once the tax return is finalized, your firm doesn’t have to bring in new applications to facilitate client delivery and payment. The completed return flows back into TaxCaddy and your client is automatically notified.
Through TaxCaddy, your clients can:
Condensing the client experience into one interface reduces friction for your clients and enables faster payments to your firm.
Embracing digital transformation is a must for the tax and accounting industry. The demand for accounting services far exceeds the capacity of staff—and automation can help bridge that gap. But as with all change management, planning is paramount.
Not every SaaS application is right for every firm. And taking a hyperaggressive approach to tech adoption can incur hidden costs and pain points that slip under the radar. That’s why it’s helpful to know exactly how new solutions will interact with your existing software beforehand.