FinOps for SaaS: A Step in the Right Direction, But Will It Work?

FinOps for SaaS: A Step in the Right Direction, But Will It Work?

The FinOps Foundation is making a bold attempt to get better visibility and control of SaaS applications. This has been driven in part because the vast majority of FinOps teams also manage SaaS to some extent. This is a welcome move because the Foundation can potentially leverage the FOCUS standard to improve reporting. It’s a logical and necessary step to try to standardise billing data. However, while the intent is commendable, my view is that several structural and operational challenges could prevent it from delivering the expected benefits. 

A Needed Framework for SaaS Cost Control 

SaaS management is challenging. This challenge has seen the rapid growth of dedicated SaaS Management Platforms (SMPs) such as Zylo and Torii. Existing ITAM tools such as Flexera One and USU Software Management have also added SaaS management capabilities to their tools.  

Unlike Infrastructure-as-a-Service (IaaS) – where costs are closely monitored and optimised – SaaS procurement is often decentralised. This leads to duplicate licenses, unused subscriptions, and a lack of visibility into overall spend. The FinOps Foundation’s move to standardise SaaS cost and usage reporting through frameworks like FOCUS™ (FinOps Open Cost and Usage Specification) has the potential to bring much-needed clarity to a murky landscape. 

If done right, this initiative could enable organisations to:

• track SaaS expenditure more effectively
• compare costs across vendors
• integrate SaaS financial management into their broader cloud strategies.

Establishing a common language for SaaS financial operations could empower finance, IT, and procurement teams to collaborate better on cost optimisation. 

The Challenges: Why It Might Fail 

Despite the promise, the reality of managing SaaS spend presents unique challenges that could undermine FinOps’ success in this space. 

Lack of Standardised Cost and Usage Data

One of the biggest obstacles is the lack of transparency from SaaS vendors. Unlike cloud providers like AWS and Azure, which offer detailed billing and consumption data, many SaaS providers do not provide granular insights into usage. Pricing structures vary widely—some charge per user, some per feature, others via complex enterprise agreements. Without standardised cost and usage data, FinOps principles become difficult to apply. The FOCUS standard has strong support from all the major cloud players but that was something relatively straightforward to achieve due to market concentration – by getting Google Cloud, AWS, and Azure onboard, they already cover more than 60% of market players. Furthermore, 30+ FinOps tool providers support the FOCUS framework. In contrast, there are thousands of SaaS providers and whilst several hundred of them provide access to usage and cost data via API, those interfaces are not standardised, and as a result, billing data is inconsistent. For hyperscalers, the decision to support FOCUS was any easy one as it was a source of differentiation and competitive advantage. Once one moved the market concentration meant that the other ‘Big 4’ players had to move as well. Even Oracle, not known for its friendliness when it comes to measuring and optimising software spend, is on board. 

Multiple vendors, multiple consumers

A significant portion of SaaS spend happens outside of IT’s control. Business units and employees frequently subscribe to SaaS tools on company credit cards without going through centralised procurement. This fragmentation makes it difficult to enforce governance or cost-saving initiatives. Shadow spend with the hyperscalers is much less of an issue. Once again, only payments to a handful of vendors needs to be tracked. This will be a big challenge for FOCUS for SaaS to solve.

Limited SaaS Cost Optimisation Levers

In cloud infrastructure, FinOps provides direct levers for cost control—such as right-sizing instances, optimising reserved instances, or leveraging spot pricing. SaaS lacks these optimisation mechanisms. You often can’t ‘scale down’ a SaaS license in the same way you can deallocate cloud resources. Most cost savings in SaaS come from renegotiating contracts, eliminating unused licenses, and consolidating vendors—processes that require human intervention rather than automated cost controls. AI may play a role here, and whilst most SMP tool providers use a degree of automation – particularly for onboarding and offboarding – there are still many moving parts that require human oversight and approval.

Tool Support

Most FinOps tools and methodologies were designed with cloud infrastructure in mind. Extending these to SaaS requires significant adaptation. If existing FinOps platforms cannot easily incorporate SaaS spend data, organisations may struggle to implement the framework effectively. Furthermore, each SaaS Management Platform (SMP) takes a different approach to solving the challenges of SaaS Management. The FOCUS working group should aim to get tool providers to standardise on the FOCUS dataset standards. But, I think this will be challenging. 

Conclusion 

FinOps for SaaS is undoubtedly a much-needed step in the right direction. Establishing common standards for SaaS cost management and encouraging collaboration between finance, IT, and business units is necessary. However, the success of this initiative hinges on overcoming structural challenges—particularly the lack of standardised data, decentralised procurement, and limited cost optimisation levers. There is a bit of a chicken and egg issue in that the highly decentralised and diverse SaaS landscape has fewer incentives to support the standard than the hyperscalers do. To date, only Microsoft 365 supports the new standard. For me, this does give me hope that the standard will be more widely adopted. Microsoft 365 has a very large user base and will likely constitute the majority of EUC software spend for most organsations. A decade ago, several SMP tool providers started by offering management of what was then Office 365. 

Further Reading 

• To find out more about FOCUS visit https://focus.finops.org/ 
• Read the FinOps for SaaS paper here https://www.finops.org/wg/finops-for-software-as-a-service-saas/