At Spendflo, we offer valuable insights into the utilization of spend across your various teams. This information is of paramount importance to finance leaders and budget owners as it empowers them to assess their SaaS spend and implement measures for budget control. However, we understand that distributing spend for an application utilized by multiple teams can be a challenging task. Consider an application such as Salesforce, which is employed by various departments, including Sales, Marketing, Revenue Ops, Customer Success, and more. The process of distributing its spend can be intricate, and different organizations may adopt different approaches to tackle this complexity.
To address this challenge, we have developed a highly flexible feature that allows you to select the spend distribution logic for applications based on your organization's specific criteria.
Spend Allocation Settings
In Spendflo we offer 3 different ways to allocate spend between your teams. This setting can be accessed under Settings>Management Hub>Teams, you'll see an option called Spend Allocation Settings at the top
Please note, for the Spend allocation to work, you need to have the Teams set up in advance, you can refer the "Setting up teams" article to know more.
1. Access-based Allocation
In this method, we take the help of SSO integration and determine the users accessing a Product.
When determining expenses for product X, costing $10,000 USD, we divide it according to the number of people with access through Single Sign-On (SSO) or direct integration.
Here's the key point: We assume all 10 users are paid users, and the $10,000 covers only their paid plan. This means departments A and B can have more than 4 and 6 people, respectively, but only these 4 individuals have paid licenses.
For instance, if 10 employees access this product, split across departments A and B (with 4 people in A and 6 people in B), you calculate a user-level budget of $1,000 each (10,000/10). The expense allocation to A and B would then be $4,000 and $6,000, respectively.
Remember, this feature is disabled if there's no SSO synchronization. You'll find a prompt to sync the SSO in the system.
2. Headcount-Based Allocation
Headcount-based logic is straightforward and doesn't necessarily require SSO integration.
The logic behind the allocation of spend between users is to divide the total cost of the tool by the number of active people in each department. Once the per user cost is determined we allocate the spend to Teams by adding up the spend allocated to individual users to get the total team spend.
Suppose you have a total cost of $5,000 for a tool like Figma, and it's used by 3 teams with 10 users in total:
- Team A: 5 users
- Team B: 3 users
- Team C: 2 users
Expense Allocation per User:
- Total expense per user = $500
Expense Allocation to Teams:
- Team A: $2,500
- Team B: $1,500
- Team C: $1,000
If you choose this spend allocation option, the other two methods will be disabled.
3. Manual Allocation:
If you choose the manual allocation, we split the spend of an app equally between the teams that are using it.
For example, Jira app is used by 10 members of Engineering and 5 members of the Product Team, let's assume the total cost of the app is $10000, so the cost will be allocated equally between Product and Engineering for $5000 regardless of the number of users using the app.
We provide an option of overriding these logics of Spend Allocation at a Product level. To learn the override process, refer to the article here
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