The CIO’s guide to optimizing software spend

How to balance budget, performance and ROI

はじめに

The adoption of software is all about investing in a return, whether it’s a return from increased performance, improved efficiency, or streamlined workflows across the organization. Software spend is just as much a bet as an investment, trying to find the right solution.

However, the SaaS explosion has changed all this as companies shift from buying software as a one-off purchase to buying it in the form of licenses and subscriptions. CIOs suddenly have an entirely new landscape to explore, proving more flexible and adaptive to their needs. However, this shift has some drawbacks–namely, an increasing technological sprawl of software, data, and connections. In 2023, the average business adopted between 172 and 664 apps, depending on their size.

Alongside all of that, there’s a new wrinkle. AI-powered tools promise a new era of automation and productivity…once you sort out which ones actually bring in positive ROI. While these solutions promise a lot, they are also expensive and, in many cases, challenging to manage from the perspective of controlling costs.

The CIO job is now a multi-axial balancing act in which you must equip employees with the best tech while controlling spend, proving ROI, avoiding redundancy, and driving better business outcomes.

This guide is designed to help you maintain balance. It’ll help you cut waste and focus spend on the solutions worth your users’ time. We’ll cover:

• Tracking and analyzing software usage
• Identifying and eliminating redundancies
• Assessing ROI, especially with AI solutions
• Driving adoption and reducing support usage

Throughout, we’ll highlight real-life stories of CIOs and other IT leaders who are using Pendo to do all of the above.

A tale of optimization: PharmaLore Biotech

As you read through this ebook, you’ll follow the story of PharmaLore, a (fictional) fast-growing life sciences company that’s starting to push against the weight of an unwieldy tech stack. New CIO Neal Desai has been pulled from his current work in strategic planning to handle the piling license renewal fees, budgetary strains, and demand for innovation against rising IT costs.

It’s up to Neal to bring the stack under control and show ROI at scale.

01: Get visibility to gain control

You can’t fix what you can’t see. Unfortunately, complex IT stacks and software solutions tend to hide more than they reveal, especially if you’re not focused on how they work together and benefit your team. The jumble of third-party SaaS solutions, legacy apps, AI-powered solutions, and browser-based tools will almost invariably cost you more than it’s worth.

According to surveys:

• 84% list managing cloud spend as their top cloud challenge
• 75% mention managing software licenses

These tech stacks are rarely purpose-built all at once, either. A new tool here, an added license there, and over time, it gets hard to say what’s mission-critical and what’s going unused.

It seems like a massive undertaking to sort it all out. But visibility is the first step towards optimization. You need to know:

• How many users are active on each solution
• How many are using the software to its full potential
• Which features are underused (meaning they’d be useful if used)
• Which features are unused (could be cut)

Lack of visibility leads to underused licenses, overlapping tools, and shadow IT: three different flavors of wasted spend.

How to create a software inventory audit
Map your software ecosystem
Track login and feature engagement
Identify low and zero usage licenses
Flag redundant functionality

You can accomplish this manually, of course. But Pendo automates the process for greater speed, efficiency and accuracy.

Neal stops flying blind

Neal’s first week in the CIO seat was a blur of spreadsheets, panicked license renewals, and hand-wavy cost justifications. Every team seemed to have their own preferred tools, most of which were “essential” yet oddly underused.

During a tense budget sync, Neal heard it again: “We’re paying for a ton of stuff we’re not even using.” But when he asked for usage reports, no one had a full picture.

That’s when he met Julia McCarthy (aka Jules), a quiet but brilliant product operations lead. Jules had recently implemented Pendo on a few internal apps to track user engagement. “We can see who’s logging in, what they’re doing, and what they’re ignoring,” she said, pulling up dashboards that showed feature drop-offs and idle licenses.

With Pendo’s analytics and session replays, Neal didn’t just gain visibility—he got context. Tools that looked “active” on vendor reports were barely being used. Redundant features across apps screamed for consolidation. For the first time, Neal had a map of his ecosystem. And that meant he could finally start making smart decisions.

02: Use data for smarter cleanup

As you get a clearer picture of your software landscape and usage, you can begin a smarter, data-driven process to cut dead weight.

At this stage, it’s important to acknowledge that the cost of waste isn’t just measured in money. Redundant and underused tools are symptoms of productivity-killers like:

• Confusion: Employees waste time figuring out which tools to use
• Siloing: Data gets siloed and duplicated, costing time and effort and hindering collaboration
• Support over-dependence: More tools mean more training and more help desk tickets

It’s possible to do this data-driven evaluation process manually, through efforts like interviews with stakeholders, surveys, evaluation of vendor-supplied usage reports, etc. However, it takes more time and effort and can potentially yield less accurate results. An AI-assisted, automated process gives you more trustworthy insights with less manual effort.

Try the “Keep, Cut, Consolidate” Matrix

As you evaluate your current solutions, sort them into three categories:

• Keep: High adoption, high value
• Cut: Low usage, low ROI
• Consolidate: Moderate use with functional overlap

And then there was the cleanup

Neal and Jules both decided it was time for, borrowing from one of Jules’s favorite movies, “the purge.” This meant an evaluation sprint to get a handle on all the solutions in their stack. Their mission was simple—designate every and all solution, software, or platform as either Keep, Cut, or Consolidate.

To help define these categories, they asked themselves key questions:

• Which tools were in use, and which ones weren’t?
• Were there any overlapping features or requirements?
• Were users and employees getting stuck with a particular solution?

They didn’t answer these questions by questioning vendors. They went straight to the source—users.

A targeted and tactical combination of app analytics and in-app surveys showed that users often switched between tools just to complete basic tasks, like asset management or sharing a project brief. Previous assessments had not reported this fact.

Additionally, Neal and Jules discovered two different but functionally identical platforms in use, but with one difference: one had a 90% abandonment rate. So, they cut it.

03: Evaluate ROI beyond just dollars spent

It’s theoretically easy to calculate ROI on a tech stack as a relationship between gains on automation or efficiency and investments into the technology… but only if you’re just thinking about immediate financial gain:

ROI = (Gains – Investments) /Investments

With this formula in mind, improving ROI is a seemingly straightforward process: work with tech that increases gains, costs less, or a combination of the two.

In this way, it’s easy to cut spend. It’s harder to cut spend in a purposeful, optimized way.

In software, ROI is more than dollars spent versus value created. Your evaluation criteria should include hidden value and costs:

• Are people logging in regularly and using core features?
• Does this tool save time, reduce friction, or improve performance?
• Is it tied to a measurable business goal or OKR?
• Does using it increase or reduce morale?
• Are we paying for what we’re using, or overpaying?

In short, it’s measuring outcome rather than just cost versus usage. These questions are especially useful for cutting through AI hype. For example, an AI tool might promise to reduce a four-hour process to a single hour. But if it takes two employees three hours apiece to properly prompt the AI tool every time, there’s no meaningful savings.

Filling the gaps with software that drives value

The problems didn’t stop at assessment. Even as Neal and Jules were digging into user behaviors and waste, he faced the ongoing challenge of building a culture of performance. Namely, he needed to show those around him that it was critical to pick up solutions that could impact ROI even as they were cutting into waste and right-sizing the budget.

In a strategy meeting, Neal’s CFO pushed back on a new procurement request: “Why are we approving spend when we just cut budget?”

Neal didn’t flinch. “Because this one drives measurable value. Let me show you.”

Using Pendo’s Funnels and In-App Feedback, Neal created a testbed of users and traced exactly how the proposed new platform streamlined the deal creation process for BDRs. Instead of anecdotal justification, he had real workflow data—how long each step took, where drop-offs happened, and how the new tool improved completions by 22%.

04: Increase ROI through smarter onboarding

It’s possible to have the right software in place and still see a negligible return on investment. Software that isn’t used properly or optimally is a drain on resources (not to mention morale).

Good onboarding can boost employee productivity up to 50%

When you add a new software tool, it’s easy to see deployment as the finish line. But without proper onboarding and enablement, your users will underutilize their tools. And when people don’t know how to use a tool properly, they’ll work around it, overutilize support, or abandon it for a shadow IT option. Shadow IT is one of the more challenging aspects of managing an IT stack for several reasons:

• 65% of companies with shadow IT in place suffer data loss.
• 25% of employees report using unauthorized tech because there isn’t an alternative at work.

The situation looks even more dire when you consider the standard methods for onboarding and driving adoption:

• One-size-fits-all training sessions that employees struggle to retain
• Slideshows and PDF manuals that get skimmed or go unread
• Filing support tickets after the fact instead of proactive, real-time guidance

Starting employees off right with smarter onboarding

The next fire Neal tackled was onboarding. HR had deployed two major platforms in the past year, but adoption was stalled, and new hires were filing tickets for tasks they were supposedly “trained” on.

He shadowed a new employee, Aisha, through her setup. The result? Neal watched her flip between tabs, Slack coworkers for help, and abandon setup steps halfway through. “I thought there was a video or something,” she muttered.

Neal nodded. “There was. In the PDF they sent with your welcome email.”

The fix was obvious: context over content. Using Pendo Guides, Neal and Jules created in-app walkthroughs for critical tasks. Instead of relying on static onboarding documents, they built real-time support that triggered when users reached key workflows.

The result? A 30% decrease in onboarding time and fewer early support tickets. For Neal, it was proof that onboarding wasn’t an event—it was a system. And systems can scale.

05: Reduce support and compliance costs

It’s impossible to discuss optimizing ROI without mentioning support and compliance. Every support ticket has a price tag.
When employees struggle with internal software, they rely on the help desk. Multiply support usage by thousands of users and apps, and you’re looking at a cost center draining money from your budget.

Confusion about proper software use can also lead to compliance risks. This is especially true for tools that handle regulated or business-critical data. Employees don’t misuse these tools out of malice, of course—it’s the result of poor UX or lack of guidance—but the result is the same.

Compliance and support cost drivers

• Confusing workflows
• Complex compliance tasks without reminders
• Training sessions that don’t stick
• Reactive vs. proactive support models

Closing the gaps (and waste) across support and compliance

Despite the wins, one department was still bleeding: support. Neal’s IT helpdesk was buried in repeat questions about everyday tools, and compliance teams were constantly reviewing user behavior to preempt risk.

One audit revealed that two teams were mishandling sensitive data in a cloud app not approved for such use. “It’s not their fault,” Jules said. “They weren’t trained on what’s allowed.”

Pendo became their compliance safety net. Analytics and session replays flagged risky behaviors before they escalated. In-app Guides popped up reminders for compliance-sensitive workflows. And over time, Neal’s team built automated knowledge into the tools themselves.

Support tickets dropped by 45%. Compliance issues shrank. And users stopped fearing the tools—they started trusting them.

Strategic spend leads to higher ROI

Software is a business’s nervous system. Every app, license, and feature determines how users work and collaborate, ultimately driving business outcomes. In this context, managing spending directly impacts how the business operates.

If you’re like most businesses, you don’t necessarily have a spend problem. It’s likely a visibility, adoption, or measurement problem. Optimizing for higher ROI depends on identifying the exact nature of the problem and fixing it with a scalpel, not a sledgehammer.

For a more strategic approach, set the right TEMPO:

• Track actual usage, not assumptions
• Eliminate waste and redundancy
• Measure progress with comprehensive data
• Promote morale and productivity
• Optimize support usage and increase compliance

Optimizing software spend at PharmaLore

By the end of his first year, Neal wasn’t fighting fires anymore—he was building systems. The executive team now saw software as a strategic asset, not a necessary evil. Neal introduced the TEMPO framework.

Jules presented a final report: 32% reduction in unnecessary software spend, 40% increase in adoption rates, and a roadmap for future scaling. “This is what happens,” Neal said, “when IT stops guessing and starts leading.”

Optimizing your own software spend

Pendo gives CIOs a powerful X-ray view into employee behavior within and across tools. It doesn’t rely on vendor data or anecdotal feedback. And it provides clear data to help them understand their software stack, measure costs and benefits, support their employees (new and established), and promote overall ROI.

With Pendo Analytics, you can track activity across your tech stack, including virtually every SaaS solution in the market. You can see which solutions are getting used, how much time is spent on each, and what your users are spending that time doing. AI-driven summaries also make it easy to find useful insights in all that data.

Pendo Session Replay adds another valuable layer of data and insight. It captures recordings of actual employee sessions so you can see every click and field entry. As with Analytics, AI surfaces moments of interest for you to focus on.

Pendo Guides helps you mobilize critical information at the most crucial point: where employees and customers need it. With these guides, you can deliver contextual information that supports onboarding, migration, user needs, and more, either overlaid as a walkthrough or embedded to feel site-native.

At each step, Pendo is built to help. Pendo Analytics, In-App Guides, Listen, and Session Replay make it easier to:

• Optimize every license
• Justify every new investment
• Maximize every user experience

Ready to take control of your software spend? Get a demo or start for free today.