Gartner has released its inaugural Magic Quadrant and Critical Capabilities for SaaS Management Platforms, highlighting a critical demand for centralised management of SaaS applications. With per-employee SaaS spend averaging $1,370—a 55% increase since 2021—and 25% of provisioned licenses going unused, organisations face significant risks. Alarmingly, most organisations are only aware of 40% of their SaaS applications.
IT asset managers should not only leverage Gartner’s research to evaluate market providers but use the analysis and data provided by Gartner as ammunition to prioritise SaaS management within the remit of ITAM given the overlaps.
Note: These vendors are listed in alphabetical order within these categories and do not represent the MQ graphic provided by Gartner.
It’s important to note that a Magic Quadrant doesn’t exclusively represent the vendors product strengths. That is just a small fraction. It’s important for users to understand what the Magic Quadrant represents, and it’s equally important that users read and analyze the companion document, critical capabilities. This is where the analysts evaluate the products capabilities and utilise specific use cases for deeper analysis.
On July 22nd, 2024, Gartner released the first Magic Quadrant for SaaS Management Platforms. Previously, Gartner provided a Market Guide for SaaS Management and included the topic in its now-discontinued MQ for SAM Tools.
Our Product Manager, Ryan Stefani, a former Gartner Analyst, authored the MQ for SAM Tools and contributed to the SaaS Management Platform Market Guide. We asked Ryan to explain how Gartner decides when to cover a market with a Market Guide versus a Magic Quadrant and to share additional insights into Gartner’s analysis.
Ryan explains, “This is a strong indicator that the SaaS Management market is maturing. Gartner typically starts with a Market Guide to analyse a market. If the market matures and there is sufficient client demand, Gartner will then commit the resources necessary to produce a Magic Quadrant and its companion document, the Critical Capabilities report. This transition signals an increasing need for SaaS Management Platforms. While I led the SAM Tools MQ research, we retired that in favor for a Market Guide as the market had matured. We noted the emergence of new technology management tools such as SMPs, and likely convergence / compossibility of tools as the driver for that change.”
Ryan shared another interesting insight: “Another aspect of Gartner’s approach is that they align content to specific roles. For example, this Magic Quadrant was led by and written for Infrastructure & Operations (I&O) leaders, with support from analysts who assist Sourcing, Procurement, and Vendor Management (SPVM) leaders. This can be challenging for those of us in the ITAM space, as Gartner doesn’t identify a specific IT Asset Management leader role. ITAM often overlaps with many different roles, and this lack of recognition for ITAM as the primary role responsible for central management of technologies like SaaS perpetuates issues. Gartner’s own predictions about the lack of centralised SaaS Management highlight this problem. Despite improvements in technologies that facilitate central management, the absence of a prominent ITAM function continues to result in a siloed approach to buying management technologies like SaaS Management Platforms (SMPs) and fragmented management practices, resulting in waste, poor user experiences, and increased risks.'”
Here at the ITAM Forum, we’ve been tracking and influencing the growth of this tool category since 2018 – back when the three companies highlighted as leaders in the Quadrant had just a handful of employees each. It’s a pleasure to see Zylo, Torii, and Zluri be recognised as leaders in this category. Since 2018, all three companies have been certified for SaaS Management against our standard. We were the first to advocate for multiple use cases for an SMP, use cases such as Automation, Security & Risk, and Employee Experience, which now also feature in Gartner’s criteria for inclusion in the Magic Quadrant.
One thing we’ve mulled over regarding SaaS Management is whether it’s a tool or just a component of a comprehensive SAM platform. It’s noticeable that none of the “traditional” SAM tool providers make the Leaders quadrant, but this is perhaps not surprising considering they were slow to provide this functionality in their existing tools.
Plus, there are now organisations born into the cloud, which do not require a “traditional” SAM tool. They need assistance managing their SaaS applications and potentially, their Hardware Assets. As a result, we do see an up-tick in SMPs and tools that support HAM and SMP.
It is also only recently that customers of those SAM platform providers have begun to pay attention to SaaS Management. This is borne out by Gartner’s analysis – they state that interest is relatively low amongst their clients but growing. Our view is that growth in interest will be for three reasons.
These use cases move SMPs from a narrow operational focus to a critical strategic tool addressing advanced use cases such as Application Lifecycle Management (ALM), Risk Management, and Employee Experience. Whilst organisations may initially seek out an SMP for simple Discovery or Cost Management capabilities, they soon can benefit from these advanced uses cases, which focus more on value rather than cost.
Typically, an MQ increases interest in a category, and this benefits all listed providers, not just the Leaders. The market at present is stable with experienced players in the Leaders quadrant – at present, all are around seven years.
The last round of mergers and acquisitions took place in 2021 with startups being acquired by companies in the security and architecture realms. Perhaps we’re due another round of acquisitions driven in part by this MQ. We’ve noticed an increase in VC interest in the past few months – and such interest usually results in acquisitions. There are certainly smaller players in the MQ ripe for acquisition or further funding to take them to the next level.
It wouldn’t be 2024 without mention of AI. Gartner note that several participants are leveraging AI, LLMs, and Machine Learning in their platforms. Contract ingestion and interpretation is listed as the primary reason for use of this technology. We wonder if the next use case will be for improving app stores and app selection, which should reduce sprawl and shadow IT. A conversational AI, trained on the customer’s SMP data, should be able to help an employee choose the right app for their needs based on what’s already in use, which departments use it, what it’s used for, and whether there is a contract in place and unused subscriptions available. On face value, that feels like a simple ask, but in practice, it’s a surprisingly difficult question to answer.
We would also expect to see SMP providers helping ensure their customers get best value from their AI investments. AI add-ons to existing applications are expensive – Microsoft’s Copilot is 250% more expensive than the typical Microsoft 365 for Business Standard subscription it would be added to. ITAM teams should be on the front line and working with HR, Procurement, and Architecture on ensuring that AI doesn’t become yet another source of unexpected spend or risk and compliance issues.
Finally, we believe we will see this space evolve quite a bit, possibly beyond just SaaS Management. As we mentioned earlier, there are host of new organisations that need to manage their SaaS and hardware. We’ve seen the likes of Oomnitiza and ServiceNow offer products capabilities that would improve management of SaaS and hardware endpoints from a centrally fashioned, enabling an improved employee experience.
SaaS Management Platforms have grown from humble roots, and through customer-driven innovation, have become much more than (probably) what their founders imagined. It’s rare that a management tool succeeds in providing so much functionality to such a diverse group of stakeholders. For some organisations, it may well be the only SAM tool they need.