Have you ever thought that your SaaS stack might be like your office floor? You are paying rent for desks no one sits at. Those vacant seats allude to your unused licenses, slowly and quietly draining your IT budget every month.
SaaS license waste is one of the most overlooked and costly line items in today’s IT budgets. It is just like leasing 100 office desks, but only 50 employees actually use them. The space is already paid for, maintained, and cleaned, but a significant portion goes unused.
According to Zylo’s SaaS Management Index, up to 50 percent of SaaS licenses are underutilized in a given month. This silent drain adds up quickly, especially in mid-market environments where IT resources are already stretched.
In another research, it was found that globally, 37% of all installed software is never used, leading to $259 in wasted spending per desktop in the US alone.
In this post, we will explore what SaaS license waste is, why it happens (especially in mid-market IT environments, how it affects your budget, and what IT leaders can do to fix it with visibility and right-sizing.
What is SaaS license waste?
SaaS license waste refers to all those software licenses that you have paid for, but they go unused or are underutilized.
Common examples include:
| Shelfware (aka unused licenses) | Purchased software but never deployed or activated; it just remains on your shelves |
| Unused entitlements | Licenses assigned but rarely used |
| Zombie licenses | Active licenses assigned to users who have left the organization |
SaaS license waste is the digital equivalent of leaving lights on in an empty building that incurs constant costs with no value.
Why license waste is so common (especially in mid-market IT)
Imagine yourself in the place of Alex, an IT manager at a 400-person SaaS company. As soon as his company decided to scale up, the license waste started creeping in. Different departments were purchasing tools independently, without the IT team’s knowledge.
Sales had added Salesforce seats. Marketing got seats for Canva. On the other hand, the HR team onboarded BambooHR–all without centralized tracking or oversight.
Could Alex ever know what could have happened? The table below highlights the causes of why license waste is so common, especially in the mid-market IT environments.
| The common causes | |
| Decentralized SaaS procurement | Departments buy tools without informing IT |
| Shadow IT | Employees self-subscribe to tools and expand them later |
| Lack of real-time usage data | Tools used in browsers escape detection by traditional ITAM tools |
| Manual tracking in spreadsheets | License allocations quickly become outdated |
| Organizational growth without IT maturity | License requests scale faster than governance |
In Alex’s case, almost 30% of their SaaS stack was unknown to the IT department until they ran a full discovery audit.
On being asked how to keep track of all the SaaS licenses and tools, a user on Reddit replied:
This is definitely not the approach you should be following.
What SaaS license waste is costing you (and you don’t even see it)
A significant portion of a company’s IT budget goes into purchasing software. Yet, many inefficiencies and non-compliance are found in its usage. Large enterprises purchase unnecessary licenses, while some companies over-license to avoid audit penalties or renewal pressure. Consequently, inefficient use of software licenses leads to a waste of resources.
SaaS compliance is mandatory, and you can’t skip it. With a robust compliance framework in place, you can minimize SaaS compliance risks.
According to a report published by TechRepublic, $34 billion is wasted annually on unused licenses in the US and UK.
SaaS license waste does not just cost your organization money—it also makes it harder to plan budgets, forces you to pay more when it is time for renewals, and weakens your position when negotiating with the vendors for new contracts.
Here’s an example:
Alex, the IT manager, identified 50 unused licenses across five SaaS tools, each costing his company $30 every month.
50 licenses x $30 = $1,500 per month
$1,500 x 12 = $18,000 per year
This makes $18,000 in annual waste, without taking into account the overages on other platforms or missed savings in negotiations with the vendors.
Hence, it is evident that unused software is a silent budget erosion for any company.
Are you paying for this? Here’s the 3-point self-check
Alex or any other IT manager should ask themselves these three questions before every renewal to find out whether SaaS license waste is affecting their organization:
- Did you renew software licenses without usage data?
(If yes, then this is a red flag.)
- Is your SaaS inventory still managed in Excel or Google Sheets?
(If yes, then you are not really tracking.)
- Have you found licenses assigned to users no longer with the company?
(If yes, then this is a zombie license alert.)
If Alex says “yes” to even one of these, then he needs to dig deeper because that’s where the software license waste hides.
Real-world examples of license waste
It would be wrong to say that license waste only exists in theory. It doesn’t. It plays out every day in IT environments of all sizes. Below, we have described scenarios inspired by common issues IT managers like Alex face, backed by real data and platform-specific risks.
1. Salesforce: Inactive users without 2FA still hold active licenses
Salesforce licenses are notorious for being expensive, with some of its plans costing up to $300-$450 per user per year, depending on edition and customization. In one case, Alex discovered that a user was assigned an active Salesforce license but had never completed the two-factor authentication (2FA).
No 2FA meant no login and no usage. The license had been sitting idle for over three quarters, and it was being auto-renewed as part of the yearly contract.
This is more common than many IT teams realize. About 30 percent of enterprise SaaS spend goes to underused or entirely unused licenses, and Salesforce is one of them due to its high cost and long renewal cycles.
This could have been an avoidable waste if license activity and login metrics were monitored regularly.
2. Atlassian Jira: Auto-renewed seats for offboarded employees
In another scenario, Alex found that an engineer who had left the company still had an active Jira license. The HR team had deactivated the employee’s email and removed their Google Workspace access, but they forgot to unassign their seat from Jira. This led to auto-renewal with the next billing cycle.
Organizations handle an average of 247 SaaS renewals per year—roughly one per business day. Most of the SaaS renewals occur without proper usage analysis, and offboarding gaps are also a leading cause of waste.
If you don’t have automated offboarding linked to your SSO or ITAM system, unused software licenses often remain active long after an employee leaves.
3. Zoom: Paying for teams, but only one host uses it
The paid plans for Zoom include Zoom Business and Pro licenses, which offer advanced features like longer meetings, cloud recording, and webinar hosting. Alex discovered that 20 out of 25 licensed hosts hadn’t held a single meeting in the last quarter in one mid-sized team.
These licenses were purchased at the peak of remote work, but usage never scaled. In Zoom’s billing model, licenses renew by default unless manually adjusted, and usage isn’t always tracked unless integrated with admin-level reporting.
A BetterCloud report highlights this pattern, stating that “platform overbuying” is one of the key reasons for SaaS budget waste, especially in collaboration tools.
Each case has one thing in common: Preventable waste
If you read into each case closely, you will notice that each of them has one thing in common: preventable waste. This is a symptom of larger issues: lack of visibility and automation.
If Alex’s team had regularly audited login activity, set idle-user thresholds, integrated license data with SSO/HRIS platforms, and automated alerts for inactivity or departure, then each of these expenses could have been highlighted and eliminated proactively.
What’s the fix? (Start with SaaS usage tracking)
Most IT managers, when faced with the challenge of managing the SaaS license waste, would come to realize that the real fix is not just auditing—it’s visibility.
The solution only begins with having visibility into your SaaS usage. Without knowing what software is being used—or not—by different teams within the organization, IT teams won’t be able to make informed decisions.
Tools that enable SaaS usage tracking ideally provide browser-level tracking of app usage, idle license alerts based on login activity, and automated syncing with SSO, HRIS, and identity providers to catch offboarded users.
In Alex’s situation, introducing him to AssetSonar can help him gain real-time visibility into license assignments and usage trends across his organization. Within a span of three months, his team will be able to reclaim over $30,000 in redundant licenses.
Tools like AssetSonar help IT teams know what software is being used and what’s not, so they can take back control of their SaaS spend.
Final thoughts: Visibility is the first step
Let’s admit: once you see SaaS license waste in your organization, it is hard to unsee it. License waste isn’t just a budget issue; it’s a governance and operational issue.
Organizations like Alex’s now understand that budget planning can become guesswork, renewals may lack usage insights, and costs can slowly accumulate if there’s no visibility into entitlements and SaaS usage.
The first step to solving the problem is quite simple: know what’s in use. Know what isn’t. And then, act accordingly.
By cutting down on your shelfware, you can reclaim a significant amount of dollars, trim your stack by a major percentage, and build trust with your finance team. More importantly, you can free up a budget for tools you would actually use.
If you’re not sure where to start, try this:
👉 Download our SaaS License Audit Checklist
👉 Take the 5-minute self-assessment
Frequently Asked Questions
How much SaaS license waste do companies usually have?
Many orgs report 30-50% of licenses are under-utilized or unused each month. Waste often comes from idle seats, inactive users, or unneeded features.
What’s “shelfware” and how does it contribute to SaaS waste?
Shelfware refers to licensed software purchased but never used. It adds hidden cost because you’re paying for capacity you never use.
What are “zombie licenses”?
Licenses assigned to people who’ve left the company or no longer use the software. They remain on the books and often get renewed unless tracked.
How can I detect which SaaS licenses are actually in use?
Use login/SSO data, app usage logs, monitor inactive users over time, compare assigned vs active seats. Tools that integrate usage + entitlement help.
What role do auto-renewals play in license waste?
Auto-renewals can lock you into paying for licenses you no longer need. Without reviewing prior usage before renewals, costs accumulate.
How does department-level purchasing contribute to waste?
When departments buy tools independently (shadow IT), overlapping features or duplicate tools often slip through, and centralized tracking is weak.
What are quick wins to reduce SaaS license waste?
Common quick fixes: remove inactive or offboarded users, downgrade under-used plans, cancel overlapping tools, negotiate renewal terms.
How does license waste affect budget forecasting?
It makes renewals unpredictable, inflates recurring costs, reduces bargaining position with vendors, and forces last-minute purchases or upgrades.
Which metrics are most useful to track to monitor license waste?
Metrics like active vs assigned seats, cost per active user, feature usage, number of unused licenses, renewal waste, shadow IT inventory.
How do you build a process to prevent ongoing license waste?
Use workflows for periodic audits, require usage data before renewal, formal offboarding process, central procurement, automated alerts for idle licenses.
What tools or methods do organizations use to track SaaS license cost & usage?
Common approaches: connecting invoices + contracts + user activity data, using dashboards, using discovery tools or agent logs. Manual tracking often fails at scale.
How big is the invisible cost from licenses nobody knows are active?
Significant—companies often pay for licenses nobody uses (e.g. software used by 1 user being licensed for many). Many only realize this during audits.
What are common stumbling blocks when trying to reduce license waste?
Barriers include resistance from departments, lack of clear usage data, lack of ownership of licenses, manual tracking burdens, missing renewal visibility.
How often should license usage & assignment be reviewed?
At minimum quarterly. Some faster-moving orgs do monthly checks, especially before major renewal cycles.
How can EZO / AssetSonar help in reducing SaaS license waste?
EZO / AssetSonar allows you to centralize all licenses, track user-vs-seat usage, alert on inactive or offboarded users, show renewal dates, and generate reports so you only pay for what’s used.
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