Tool sprawl in enterprises: How CIOs can regain control and simplify collaboration

Imagine having to audit your organization’s tool stack. You think you know the tools each team uses. But as the audit progresses, you’re discovering dozens of free tools IT that you were never aware of, redundant tools that overlap with others, and potential security risks in tools that aren’t covered by your robust security policies.

That’s tool sprawl in a nutshell. It’s your organization’s constant acquisition of tools through a disconnected deployment process that no one has full visibility of. Tool sprawl can have a significant impact on your organization’s productivity, your budget, and more.

So how do you identify tool sprawl, especially in enterprise organizations? And what can you do about it?

What is tool sprawl (and why is it happening)?   

Tool sprawl is the spread of software tools in your organization. These tools often end up overlapping, creating redundancies that lead to inefficiencies in your spend, stretching your budget to its limits without actually improving productivity. That overlap can range from having both a project management app and a sales tool with some project management functionality to having multiple versions of the same tool.

When was the last time you reviewed the software tools your organization relies on? If you did, you might be surprised by what you find. According to a study, 60% of organizations pay more for cloud-based services than they expect. On average, they use 112 SaaS (software-as-a-service) apps. And, in 2024, more than half of organizations had to consolidate redundant apps (i.e., apps that had a significant overlap in functionality).

This tool sprawl doesn’t just cause a bump in your software budget. It can lead to disconnected teams, disrupted workflows, and failed projects.

Tool sprawl can be caused by several factors, including:

• Remote work: As more organizations start relying on remote work, collaboration gaps emerge that are usually closed with tools. That leads to teams adding more and more tools to their stack.
• Departmental autonomy: In many organizations, departments have at least some autonomy in choosing the software tools they want to deploy. But without visibility, tool sprawl happens.
• Freemium models: SaaS tools with free plans and free trials have a lower bar to entry. That means a team can quickly adopt, test, and deploy tools even without getting approval, since no budget has to be spent. This can lead to tons of free tools being used for essentially the same needs.
• Shadow IT: IT teams are overwhelmed by default. They can rarely answer requests for new tools quickly enough for teams to get what they need when they need it. This leads to shadow IT, where departments deploy and use tools the IT department isn't even aware of.

The hidden costs of tool sprawl   

Tool sprawl makes getting a handle on all of the tools you use as an enterprise organization challenging. But difficult audits aren’t the only cost you’re paying for having all of these tools. Here’s where you’re losing out.

Security and compliance risks   

Every piece of software is a potential entry point to your organization’s sensitive data. When applications aren’t deployed through your standard IT process, governance and security aren’t anyone’s responsibility. That means your typically rigid security measures have blind spots, with even a single tool potentially serving as a back door for malicious actors.

With so many different tools—and different workflows going through them—documenting how they’re used and how data is kept secure is a challenge. This makes any incident response from IT more complex, because they’re discovering new tools throughout the organization as they’re trying to deal with a data breach.

Productivity tax   

You always want your teams to have the right tool for the job. But eventually, you reach a point where you’ll get diminishing returns from every new tool. Tool sprawl can be a serious drain on productivity, thanks to:

• Context switching: When people have to constantly switch from tool to tool when working on important projects, they don’t just lose precious time. Their ability to focus and stay productive actually decreases, too.
• Information silos: Essential data doesn’t just get scattered across tools, it can actually become locked in what’s called a tool silo. Unless someone manually copies and pastes data out of specific tools or uses software integrations, that data stays trapped, making workflows that rely on it much slower.
• Redundant work: If important work happens across multiple tools, it’s hard for anyone to have full visibility on what’s going on, even when they’re in charge of that work. This leads to massive productivity losses as the same tasks get worked on in parallel.
• Frustration: Few things are as frustrating for a team as having to learn another new tool to complete their work. Every tool added to a workflow adds a new layer of complexity, and a constant stream of new tools builds frustration into even the most routine tasks.

Financial waste   

Tool sprawl has a significant impact on your budget. When teams adopt tools independently, and your IT department has less visibility on your organization’s tool stack, you can’t use your software budget nearly as efficiently. That waste manifests in a few ways:

• Overlapping licenses: Tool sprawl often creates redundancy, with multiple tools serving similar purposes. When you’re paying for all of these tools, you’re inadvertently spending a budget that could go towards different needs.
• Hidden costs: The more tools a workflow depends on, the more difficult it becomes to collaborate. That’s when you need to start looking into software integrations and other workarounds to move data smoothly between tools. This creates additional costs as your tool stack grows.
• Support burden: More tools mean more potential for things to go wrong. If your teams only use a few tools, it’s clear which vendor or support team you need to contact when you run into issues. But when the interactions between tools create complex support issues, you might find yourself bouncing back and forth between support teams.
• IT opportunity cost: The more time your IT team has to spend managing your sprawling tool stack, the less they can spend on other projects. Depending on the projects you have to sacrifice, this may lead to high costs or lost revenue.

How to maintain control over tool sprawl with software governance   

The best way to handle tool sprawl in an enterprise organization is with a robust software governance policy. This centralizes important decisions around tools and software, striking a balance between fulfilling each team’s needs and preventing the security and budget costs that come with tool sprawl. Here’s what your software governance strategy should have.

Tiered approval frameworks   

Having a lengthy approval process for every tool creates unnecessary delays and potentially increases the risk of teams deploying tools without going through the proper channels. Depending on the tool you need to approve, your governance strategy should have a distinct tier for that approval.

• Core platforms: These are the tools that will allow multiple teams to perform the bulk of their day-to-day work. Core platforms should go through stringent, IT-managed approval processes before being universally deployed.
• Approved catalog: To accelerate approval processes for specialized tools, IT departments can evaluate tools for specific use cases from pre-determined vendors. That way, when teams need certain tools, they go through a streamlined approval process rather than starting from scratch every time.
• Innovation sandboxes: With some use cases, teams need extensive experiments to know which tool is a best fit for their needs. A controlled sandbox environment allows for these experiments without putting the organization’s broader data at risk. As teams go through these experiments, they can also check off requirements to get approval.
• Exception process: Some tools might need to sidestep your typical approval process. Have clear guidelines in place for which tools this covers, which approval steps they can skip, and which ones are essential.

Continuous optimization   

Your strategy isn’t a one-and-done deal. Your IT department should review both your governance strategy and tool usage throughout your organization regularly. Here’s how this can be done:

• Use quarterly usage reviews to identify and eliminate software licenses that are either redundant or don’t get much use.
• Regularly review the capabilities of software tools you use to ensure they still meet your organization’s needs and replace them if they don’t.
• Meet with vendors at least yearly to consolidate spend and improve contract terms.
• Monitor software integrations to maintain data flow, verify security standards, and correct inefficiencies.

Balance control and autonomy   

Your software governance strategy needs to both allow enough control to prevent tool sprawl while giving departments enough autonomy to source their own tools. Otherwise, you may inadvertently worsen your shadow IT problem. Here’s how you can maintain that balance:

• Provide platform alternatives that meet departmental needs when tools aren’t approved.
• Build customization and extensibility into your governance framework so teams can tailor tools to their needs.
• Make decision criteria transparent so everyone understands why tools are approved or rejected.
• Create a culture of collaboration between IT and other business functions so they can evaluate potential tools together.

Stop the sprawl with proper governance   

Tool sprawl doesn’t have to be the default. SaaS tools and similar software platforms are essential for your organization, but you can and should be more judicious in how you decide to deploy them. With a centralized software governance strategy, you can avoid the serious costs that tool sprawl creates, from ballooning software budgets to lost productivity. Just ensure that your strategy strikes the right balance between autonomy and control, and you’ll ensure your teams get the most out of every tool they use.