The Rise of the Consolidated Tech Stack: What It Is and How Your Company Can Benefit

Under constant budgetary pressure, IT departments are tasked with finding new ways to eliminate financial redundancies. Software is a significant area of focus for businesses seeking to trim their spending, and the rise of the consolidated tech stack is one increasingly necessary strategy to accomplish this.  

What is a Consolidated Tech Stack?  

Tech stack consolidation, or tech rationalization, involves reviewing all software to remove or replace unused and underutilized tools. This can be accomplished by canceling unused software licenses, or searching for more comprehensive software tools that combine overlapping functionalities. In addition to cutting wasted spend, tech stack consolidation offers many benefits beyond the bottom line. 
 

The Benefits of Consolidating Your Tech Stack  

Scale Down Tech Budgets: Total software spending has become one of the top expenditures for modern enterprises. According to Gartner, global software spending will go up by 12.7% by the end of 2024, the most significant percentage increase in total global IT spending, outpacing spending on data center systems, devices, and IT and communications services. 

Considering that an estimated 30-50% of software is unused or underutilized, tech consolidation offers the potential for significant cost reduction. When it comes to SaaS, these potential savings are especially relevant. In 2023, small companies lost an average of $2 million from unused SaaS licenses, while enterprise companies lost as much as $127 million and forecasts for waste in 2024 are set to increase.

“Companies wasted an average of $18 million on unused SaaS licenses in 2023, a 7% increase from the prior year. Companies are throwing away money on underutilized software-as-a-service licenses, with such waste ranking as a top challenge for organizations struggling to keep their technology spending under control, according to SaaS management services.” 

- CFO Dive, 2024

Cutting redundant software tools or consolidating functionality with more holistic products is a surefire way to trim tech budgets, stay competitive, and increase the ROI of remaining tech tools. 

Improve License Compliance: Fewer software contracts to manage can make license compliance easier to attain. Eradicating redundant licenses also reduces time spent on managing contracts for unnecessary or unused applications. Consider the sheer time burden that SAM and ITAM professionals are under:  

Staying on top of ever-changing license metrics is a crucial task. It’s time-consuming enough without being spent on the management of unused and underutilized apps. Tech stack consolidation enables organizations to only manage the licenses that really matter.  

Enhance IT Security and Data Management: Trimming application stacks enhances IT security and data management. A tech stack not reviewed for redundancies can contain poorly managed access controls, sensitive data exposure, undetected malware, and more. And the sheer number of applications in a tech stack extends the level of risk exposure. 

For example, up to 30% of employees still have access to SaaS tools from their previous employers. In large companies, a SaaS app can house up to 5.5 million company-wide data assets. Consolidating applications can centralize data management and protect against data breaches and other security threats in unmanaged applications that have been ignored due to disuse.  

Increase Employee Productivity: Increased employee productivity is another benefit of tech stack consolidation. It can reduce decision fatigue, which may start to creep in when selecting between many tools for the job. It can also reduce the mental effort necessary to continually master new software. 

Consolidation also enhances productivity through actual time savings. Harvard Business Review found that toggling between multiple applications and devices leads to 40 wasted minutes per day, per employee. Employees at one company switched about 350 times between 22 different applications and websites to complete a task, totaling 3,600 switches per employee in one day. During “context switching”, the brain can take up to 9.5 minutes to return to peak focus. This process is inherently taxing to productivity, attention, and creativity, and it can be minimized by simplifying software stacks. 

How to Consolidate Your Tech Stack 

Tech stack consolidation can feel like a monumental task. Consolidation efforts can be challenging for many reasons, but with a few simple considerations and actionable steps, it can become a permanent fixture of organizational policy and infrastructure. 

Determine What You Have: Recognizing all existing applications is the first step to tech stack consolidation. While simple in theory, many companies grapple to gain total visibility across their IT environments. You can read more about these challenges in our recent blog: Exploring Digital Transformation, SaaS Security, and the Impact of Shadow IT >>

Total visibility is a tall order, but it’s non-negotiable for successful consolidation. Xensam’s platform offers advanced recognition of nearly 500,000 SaaS and on-premise software applications, giving companies broad-spectrum insight into their IT infrastructure and empowering rationalization efforts.  

Identify Redundancies: The next step for companies looking to consolidate their software is to identify redundancies. Some essential criteria to use during this phase include:  

These questions are difficult to answer accurately without granular consumption data. While most SAM platforms offer total usage data on applications, Xensam’s platform goes one step further by differentiating between total and active minutes used with Active Usage data. With this functionality, companies can accurately identify redundancies with data and achieve substantial cost savings. 

“Before Xensam we knew what we had, and where it was, but not if it was being used. We searched the market, and there was no other platform that could provide us with information on actual application usage down to the minute like Xensam.” 

- Senior Technical Specialist at Isle of Wight NHS Trust, Case Study

Moving beyond consumption, a more advanced evaluation of redundancies in software environments might include the following criteria: 

Conduct a Cut: Once the above evaluations have been made, it’s time to conduct a cut. This can include canceling unused licensing, downgrading underutilized licenses, clearing out SaaS user seats to ensure no prior employees still have access, and adequately uninstalling any old or unused software from devices.  

This is a crucial step to reaping the benefits of consolidation and should be a thorough cleanup.  

Outline Ideal Provisioning Policy: The final step relates to IT policy. To preserve consolidation efforts moving forward, it’s crucial to outline and communicate ideal provisioning policy.  Key considerations could include:  

While education and policy change are not a catch-all, trained and informed employees are less likely to engage in software-related unsafe habits. This is a vital step to making the most of consolidation efforts.  

Conclusion 

Tech stack consolidation is an organizational process with multiple benefits for operational efficiency, cost savings, security enhancements, and license management. While consolidation steps are straightforward, many companies grapple with the software visibility necessary to execute. This is the cornerstone of consolidation efforts, enabling every other step in the software rationalization process. Comprehensive software visibility, consumption data, regular internal audit practices, and unified corporate policy and education are crucial to achieving and maintaining the benefits of tech stack consolidation.