Read more about SaaS optimization: How to Stop Being a Target of Vendor Upsizing

Your Guide to Hands-On SaaS Vendor Management in 2022

6 min read Mansoor Ahmed

When you think about managing business expenses like pens, snacks, and computer monitors, it’s pretty obvious that you need a system to track all of your vendors. Otherwise, you’d have no idea what you’ve spent, what you owe, or whether you have all the inventory you need. 

So why don’t companies have this same mentality when it comes to managing their SaaS vendors? 

In 2021, businesses had, on average, 110 applications – that’s up from 80 apps just a year earlier. At this rate, companies will have hundreds of applications in no time. Make sure you’re not in the dark by taking control of your vendor management in 2022. 

What is SaaS vendor management?

A SaaS vendor management plan provides guidelines that can help you monitor your growing list of software applications, with the goal of understanding risks, lowering costs, and building win-win relationships with your vendors. 

Part of a vendor management program is to allocate enough resources to take care of key elements of your vendor relationships: negotiating renewals, monitoring usage, and ensuring your whole SaaS stack is in compliance with legal and… Click To Tweet

Your vendor management team will handle the entire vendor lifecycle, including: 

  • Identifying when a problem can be resolved through software
  • Researching and choosing a shortlist of vendors
  • Negotiating and vetting vendor contracts
  • Deploying new tools across the organization
  • Maintaining relationships with your most strategic vendors
  • Maximizing the value you get out of your SaaS spend
  • Managing contract renewals 

A vendor management team is also in charge of creating procurement and governance processes that make the best use of spend while delivering the most value.

Why do you need SaaS vendor management?

SaaS vendor management also helps you keep track of constantly changing usage data. As your company grows, the number of applications and user licenses will grow with you. Vendor management tools make sure that you don’t miss any of the constantly moving parts that impact your SaaS spend.

Vendor management software gives you insight into: 

  • Total annual SaaS spend
  • Free trial deadlines 
  • Number of paid licenses per application
  • Renewal dates and notification deadlines
  • Signed contracts, order forms, and statements of work
  • Invoices received and paid
  • Which users are assigned licenses
  • How often users are logging in 
  • Which features users are taking advantage of 
  • Shelfware and other SaaS waste

Avoid problematic contracts

Each vendor will have different terms and conditions in their agreements and some of these providers may include details that are very disadvantageous to your business (like overcharging for onboarding). 

Read More: Avoid These SaaS Dark Billing Patterns

There are two ways to purchase software: completing a click-through agreement and signing an enterprise agreement.

  1. Click-through agreements make buying software feel like you’re shopping online for a new phone. You’re billed month to month and it can appear that you’re getting a good deal. In reality, click-through agreements are super easy to complete precisely because vendors want to avoid negotiating price, terms and conditions, and privacy policies. The risk increases when anyone from your company can make a purchase in just a few minutes. That means that your IT security, finance, and legal teams don’t have a chance to review the contract, exposing you to compliance and legal risk and forfeiting your chance to negotiate on price. 
  1. Enterprise agreements are more work, but offer much more security for your business. Your vendor management strategy will benefit the most from these types of contracts. With a designated team of IT, finance, and legal experts, you can ensure that any new software, and its contract, won’t break any security regulations for your industry and or lock you into bad terms. 

Understand and optimize your spend

Having visibility into every piece of software in your organization makes it clear how much you’re spending and where you can save money. This level of oversight can help your company handle: 

  • Wasted SaaS spend including shelfware, Shadow IT, and underused licenses
  • Automated renewals that reset your contract commitment for another year 
  • Opportunities for savings like downgrading to cheaper pricing tiers or cancelations

Your business spends a lot of money on dozens of SaaS software tools. Without a system that tracks the daily details of your software use, you can’t definitively say that you’re getting the most value for your money. 

SaaS vendor management best practices

saas vendor management checklist

Use a SaaS vendor management tool

It’s possible to manage a small list of SaaS vendors in excel spreadsheets. But for most companies, excel won’t cut it. SaaS vendor management tools like Quolum automatically keep track of renewal dates, license utilization, feature use, and user logins or sentiments. 

Quolum shows you your entire inventory, consumption metrics, and identifies wasted SaaS spend like shelfware. Aside from getting the most value out of your SaaS spend, you can also track your compliance with your vendor agreements. In case of a vendor audit, you don’t want to be hit with overage bills. 

Inventory and contract oversight

Once you have a SaaS vendor management platform, you can start recording all of your software applications in use across your business. You’ll need to audit every department in your company and ask them to send you a list of their applications along with their fully executed agreements. Work with finance to ensure every dollar is accounted for in these contracts. 

During this process, you might find redundant services. For example, if you have three sales teams who have chosen their own software for CRM, you could have three contracts with three different vendors. There’s no reason not to consolidate everyone onto the same platform.

Decide who can make purchases

Create a buying committee that includes representatives from IT security, finance, and legal as well as an executive sponsor (if possible) and a few end users, to participate in a trial. This group will need to be involved in all larger SaaS purchases. For smaller purchases, enforce the rule that each new procurement is logged by your IT vendor manager so they can monitor renewal dates and usage. 

Ensure security compliance

Your main priority is to protect your company data and your customers’ data. That might include following internationally accepted security regulations that keep your business in good standing. If you’ve ever read through software terms and conditions, you know that it’s easy to confuse a buyer who doesn’t have a legal degree. 

Pay the most attention to data privacy terms (you don’t want to suffer a data breach because of your vendor), the liability and indemnity clauses, and what information you’re agreeing to share with the vendor in order for the tool to work correctly. 

Get ahead of your renewals

When you’re working with your vendor account executive, you have the chance to build a reciprocal relationship. This person is tasked with retaining your business and ensuring that your company sees value from their product and (ideally) increases spend over time. 

They’re usually willing to talk about discounts and end of year promotions or come up with a deal that works for both parties. 

Read More: Stop Being a Target of Vendor Upsizing

If you’re dealing with user adoption problems, let your sales rep know well in advance so they have time to come back to you with solutions, like free training or discounted support packages.  

SaaS vendor management platforms track your renewal dates, usually due to auto-renewal clauses. But your actual renewal date might not be the real deadline. Track each vendor’s cancellation window, it may be 30 days before the renewal date. This timeframe only applies if you want to downgrade or cancel your account – your vendor will be happy to talk to you about increasing your spend anytime, of course. 

Is it time for SaaS vendor management?

The best vendors will partner with you to create a win-win contract and vendor management can help you find and nurture those relationships. Properly managing your vendor relationships will also help you identify less-than-ethical providers.

Learn more about how to avoid shady vendor tactics by downloading our guide: Stop Being a Target of Vendor Upsizing

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