Digital subscription services – an economic sinkhole

Digital subscription services - an economic sinkhole

From family-owned small businesses to global corporate giants, all companies rely on digital subscription services to organize, communicate, and solve daily challenges. The latest report shows an increase in subscription services among companies in the past year. At the same time, the report reveals an even more significant growth regarding duplicates and orphaned subscriptions.

The use of subscription services among companies increases by 30% every year. Although this may be a reason to wave with the warning flag, we don’t. We love digital subscription services that make everyday life easier for companies, but we also believe that the development can negatively impact financial and security.

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What is meant by subscription services or SaaS?

Subscription services or SaaS (software as a service) are all kinds of software services that companies pay a recurring monthly or annual fee. It can be a mobile application that edits images and movies, a web-based accounting program that helps one keep track of finances, or a CRM system that facilitates the sales process. A few years ago, digital subscription services were primarily in marketing and sales, but today we can see a spread among all departments in all industries.

Digital subscriptions are taking over the business world

Companies today spend more money than ever on digital subscription services. Last year, companies’ total amount spent on digital subscription services increased by 50%. The average company currently uses 137 different applications. The increase is striking, but what conclusions can we draw from the statistics?

New applications are proving to meet the challenges facing today’s modern companies. Today, digital services handle tasks that required several employees to operate only a few years ago. Right now, applications and digital services, which will change how we work in the future, are probably being developed. Therefore, we should not expect any downsizing, rather the opposite: Digital subscription services will take over the business world more and more.

Financial and security risks associated with subscriptions

On the other end of the spectrum, there is an increased risk of companies losing control of their subscriptions, leading to economic suffering or classified information spreading outside the company’s walls. Because at the same time as digital subscription services among companies are increasing, the number of duplicates and orphaned subscriptions is expanding at an even higher rate.

Duplicate subscriptions – a financial culprit

Duplicate subscriptions are typical in fast-growing companies. The risk is more significant in a highly expansive phase that you invest in digital subscription services unplanned and spontaneously. Usually, an employee registers for a service that their company already uses, duplicating the subscription and the payment.

A report from 2020 shows that duplicates of company subscriptions increased by 80% compared with the previous year. The average number of copies of subscriptions per company is 3.6.

The increase probably depends on the fact that services are becoming more accessible. The threshold for buying is lower, which is positive in several aspects but could also be harmful. If a company does not handle its subscriptions and track which employees use them, the duplicates risk increasing over time and causing significant financial damage.

Abandoned subscriptions – a hidden threat

Just as duplicate subscriptions increase, so does the number of abandoned subscriptions. Reports from 2020 show the number of abandoned subscriptions within companies has increased by almost 100%, from 1.4 subscriptions – to 2.6 subscriptions. The average company has an average of 4.3 abandoned subscriptions.

Abandoned subscriptions usually occur due to poorly managed offboarding, resulting from poorly managed subscription management. If you do not know which employees use which services, the former employee risks leaving with one, if not several, subscriptions connected to the company. This means a financial loss, as you probably pay for a subscription that you don’t use. But above all, it entails a security risk, as former employees, through these subscriptions, can take part in and disseminate confidential material belonging to the company.

Endless problems with one solution

There are endless opportunities to use innovative digital services to facilitate all kinds of tasks. At the same time, there are financial and security risks of investing blindly in subscriptions. So what to do?

We believe that spontaneous and unplanned purchases can continue because that is not the fundamental problem. The basic problem is a lack of control. Companies generally have poor control over which subscriptions they have and which employees use them. The solution to the problem is subscription management – By managing your subscriptions, you can take advantage of the opportunities while avoiding the dangers.

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