was very distracted by the Ring and his plans to get hold of it.  Also, I think Saruman was being overly clever -- second- and triple-guessing everything; double- and triple-checking every planned move.  In the final analysis, although his plans were well-laid and he had lots of surprises in store for his foes (e.g. the blasting fire), he never acted decisively enough; never followed through on a stroke as cleanly as he should have.  As Pippin observed, "he hasn't much grit; not like Gandalf."

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All that is gold does not glitter,
Not all those who wander are lost;
The old that is strong does not wither,
Deep roots are not reached by the frost.
From the ashes a fire shall be woken,
A light from the shadows shall spring;
Renewed shall be blade that was broken,
The crownless again shall be king.