IT Purchased Services in Healthcare: Managing SaaS Sprawl and Vendor Waste

In the last ten years, healthcare organizations have adopted an excellent number of cloud applications and cybersecurity platforms, as well as analytics tools, telehealth solutions, and other software for better patient care and operations. These investments have sped up digital transformation but have also created SaaS sprawl and reduced visibility into software portfolios, leading to excess vendor spend.

With increasing investments in technology, it has become increasingly difficult to manage subscriptions, contracts, license usage, and duplicative applications. Healthcare organizations need improved insight into controlling costs and maximizing value with IT-purchased services, one of the fastest-growing categories in non-labor spend.

Valify provides a unique set of healthcare spend analytics, benchmarking & contract intelligence that arms health systems with the insights needed to make smarter technology decisions and uncover opportunities for long-term savings.

Why IT Purchased Services Have Become One of Healthcare’s Fastest-Growing Expense Categories

Digital Transformation Has Expanded Technology Investments

Technology has become important in almost every aspect of healthcare operations.

Continued technology investments in health systems:

• Cloud-based software platforms
• Telehealth technologies
• Cybersecurity solutions
• Data analytics and reporting tools
• Artificial intelligence applications
• Specialized clinical software

These investments drive innovation, streamline workflows, and improve patient care. Each new platform, however, brings with it an additional vendor relationship to manage and an ongoing contract and subscription cost.

This complexity increases over time as technology ecosystems expand.

Modern Healthcare IT Environments Are Increasingly Difficult to Manage

SaaS applications require minimal infrastructure, allowing rapid adoption compared to traditional capital purchases. Typically, each department buys its own software applications spread throughout clinical teams, operational teams, financial teams, and IT.

The result is often hundreds of different applications. Centralized governance and oversight become nearly impossible without visibility into technology investments.

The Visibility Challenge

Many healthcare organizations struggle to answer questions such as:

• Which departments are using each application? 
• How well are the purchased licenses being utilized?
• Is this functionality being provided by multiple vendors?

This makes it even more difficult to optimize technology spending with limited visibility. 

Specifically, Valify helps healthcare organizations improve visibility into IT-purchased services and contracts as well as vendor spend to enhance decision-making during technology investment and renewal.

Insight: Software portfolios are growing faster than ever due to the expansion of SaaS applications, but governance is lagging in many cases, leading to overspend.

What Is SaaS Sprawl in Healthcare?

SaaS sprawl is the chaotic proliferation of software subscriptions across an organization.

Instead of following an organization-wide strategy, software is often bought by departments, purchasing point solutions to meet immediate business needs. Over time, these decisions lead to a fragmented technology landscape. 

Common Examples in Health Systems

It is common for healthcare organizations to face situations where different teams use various applications but do the same job.

Examples include:

• Multiple project management platforms
• Duplicate collaboration tools
• Overlapping cybersecurity solutions
• Redundant analytics and reporting software

Lack of enterprise visibility with departmental-specific applications

Although each solution may have met a genuine need at the point of purchase, together they can lead to complexity for no good reason, not to mention cost per user, cost-per-functionality.

Why SaaS Sprawl Is Difficult to Detect

Different from physical assets, software subscriptions are broadly spread across operating budgets, departments, and owners of contracts.

Common challenges include:

• Contracts managed by different departments
• Software costs are distributed across various budgets
• Automatic subscription renewals
• Limited centralized ownership
• Inconsistent software inventories

These challenges are very similar to the overall visibility issues for many organizations when it comes to purchased services.

Valify combines spend analytics, benchmarking, and contract intelligence in one application to help organizations solve these challenges by providing leaders with complete visibility into vendor relationships and the performance of purchased services.

The Financial Impact of SaaS Sprawl and Vendor Waste

Unused and Underutilized Licenses

A common issue for healthcare organizations is paying for unused modules, redundant employee accounts, unused seats, low-adoption enterprise agreements, and retained licenses after mergers or acquisitions.

Together, these expenses accumulate across a variety of applications, reducing the effectiveness of technology investments. Valify enables organizations to measure their software consumption vs. benchmarked peers, assess contract pricing, and identify renewal opportunities that are relevant in the healthcare space via a cloud-based solution for contract analytics.

Redundant Software Investments

When departments independently purchase software, many organizations find themselves with dozens of applications performing the same function, such as collaboration, business intelligence, survey, or workflow tools.

Buying duplicate software can drive up the subscription costs, IT complexity, and vendor management challenges. Regular portfolio reviews discover opportunities to consolidate applications and control wasteful expenses.

Contract Inefficiencies

Many software contracts automatically renew but do not reflect current pricing, usage, or evolving business requirements. These generally include stale pricing, unused subscriptions, rigid licensing arrangements, and legacy contracts.

Periodic reviews of the contracts allow organizations to better align technology spend with current business requirements and avoid overspending.

Why Vendor Consolidation Creates Significant Savings Opportunities

Technology environments grow more complex as organizations add vendors across departments. Consolidating vendors can reduce costs and improve operational efficiency.

Benefits of vendor consolidation:

• Greater purchasing leverage
• More consistent contract terms
• Simplified vendor management
• Reduced administrative workload
• Stronger governance of technology investments

Common consolidation opportunities:

• Collaboration platforms
• Analytics and reporting tools
• Cybersecurity solutions
• Workflow management software

The goal is to ensure each platform delivers unique value while supporting enterprise objectives.

Key Insight: Vendor consolidation can improve efficiency, strengthen contract management, and create opportunities for better pricing.

Preparing for Your Next IT Contract Renewal

Contract renewals provide an ideal opportunity to evaluate whether existing technology investments continue to deliver value.

Rather than focusing solely on renewal dates, healthcare leaders benefit from taking a broader view of utilization, pricing, vendor performance, and organizational priorities.

Before renewing an agreement, consider questions such as:

Utilization

• Are all licensed users actively using the platform?
• Have usage patterns changed since the contract was signed?

Financial Performance

• Does current pricing remain competitive?
• Are there opportunities to optimize licensing or contract structure?

Strategic Alignment

• Does the platform continue to support organizational priorities?
• Has another enterprise solution reduced the need for this application?

Vendor Performance

• Has the vendor consistently met expectations?
• Are support, reliability, and service quality aligned with contract commitments?

Valify supports renewal decisions through healthcare-specific benchmarking, spend analytics, and contract intelligence that help organizations identify agreements that may benefit from renegotiation or optimization.

Building a Strong Renewal Review Framework

Leading organizations typically include several elements in their renewal process:

• Software utilization analysis
• Contract benchmarking
• Stakeholder feedback
• Alternative vendor evaluations
• Financial impact assessments

This structured approach helps organizations make renewal decisions based on data rather than assumptions.

How Benchmarking Helps Eliminate SaaS Waste

Visibility alone is valuable, but benchmarking provides the context needed to act on that information.

By comparing contracts and spending against market data, organizations gain a clearer understanding of where opportunities exist.

Benchmarking can help identify:

• Above-market pricing
• Excessive license counts
• Duplicate vendor relationships
• Contract inefficiencies
• Renewal opportunities

These insights strengthen vendor negotiations while helping healthcare leaders prioritize improvement efforts based on measurable financial impact.

Organizations that benchmark consistently are often better positioned to:

• Make data-driven renewal decisions
• Improve vendor negotiations
• Optimize technology investments
• Generate sustainable cost savings

Moving from Reactive to Strategic IT Spend Management

Technology investments should not be reviewed just before contracts are due to expire.

For instance, leading health systems are moving toward continuous monitoring of IT-purchased services bought with information technology, so they can identify issues earlier and reduce reliance on reactive solutions. 

This approach emphasizes:

• Ongoing spend monitoring
• Regular contract reviews
• Continuous benchmarking
• Vendor performance management
• Stronger financial governance

Instead of viewing optimization as a quarterly crusade, organizations build repeatable processes to sustain performance over time.

Valify empowers healthcare players to evolve from the world of rounding up opportunities quarterly by uniquely combining IT-purchased services spending, performance measurement, vendor activity, contract intelligence, and a technology portfolio ripe for optimization.

Conclusion

Automation is an essential healthcare investment, but SaaS sprawl, wasted licenses, redundant applications, multiple vendors, and legacy contracts lead to astronomical costs.

Leading health systems achieve higher return on investment (ROI) in technology spending by reducing overall costs through budgeting, procurement optimization, vendor contract analysis, software portfolio rationalization, and improved contract management. 

Valify gives healthcare organizations deeper insights into IT-purchased services with healthcare-specific spend analytics, benchmarking, and contract intelligence so they can use smarter technology decision-making to improve financial performance.

Request  a Spend Analytics Demo to see how Valify can help optimize technology spending and uncover savings opportunities.

FAQs

How can healthcare organizations track SaaS applications more effectively? 

Maintain a centralized inventory of software, vendor contracts, and license usage.

How often should software usage be reviewed?

Review usage regularly and before major contract renewals.

What are the common signs of SaaS sprawl?

Duplicate applications, unused licenses, decentralized purchasing, and overlapping vendor contracts.

What challenges exist in managing IT vendor contracts?

Fragmented ownership, automatic renewals, inconsistent pricing, and limited visibility.

How can health systems identify opportunities for vendor consolidation? 

Analyze software functionality, vendor spend, contract utilization, and business needs to identify overlapping solutions.

Valify Team

The Valify Editorial Team is dedicated to sharing insights, strategies, and innovations that help healthcare organizations gain control of purchased services spend. Backed by years of expertise in data analytics, procurement, and healthcare technology, the team curates practical resources and thought leadership to guide hospitals and health systems toward greater efficiency and savings. By combining industry knowledge with real-world case studies, the Valify Editorial Team delivers content that empowers decision-makers to drive smarter, data-driven sourcing strategies.