Vendor management done well - how?


Michael Fornander


September 15, 2023

If you are the person in your company responsible for SaaS vendor management - you should already be feeling the pressure from managing the constantly growing list of SaaS tools your company is adopting. And no wonder - with bigger budgets getting allocated for tech spend and organizational policies facilitating the expensing of SaaS by employees - your SaaS stack is likely to be expanding, every single day.

But, organizations are not looking to just spend big budgets on SaaS - they are looking for smart spend, and good SaaS management. This means that you are always faced with decisions on: 1/ priority tools to spend on 2/ tools the subscription for which should be terminated 3/ minimizing the potential for wasted SaaS spend.

But SaaS management should be done in a balanced way - keeping control on the spend while still enabling the employees to innovate and be productive. How to create and maintain this balance, however? Here is some advice on how to control your SaaS - with regard to terms, budget and usage.

Get yourself familiar with the contract details of each SaaS software

This may sound like a thing everyone should be doing, but in reality, most people are quickly skimming through the SaaS contract details. To prepare yourself, proactively, for any upcoming cloud software renewals, be sure to:

  • Make a record on the SaaS subscription renewal terms - whether the software gets renewed monthly, annually, etc.
  • Get familiar with the license terms - number of seats included, feature package purchased, etc.
  • Set up a renewal review well in advance of the actual renewal date, so you can evaluate the software usage, get feedback from the employees working with it, evaluate the return the organization is getting, etc.
  • Know how the renewal should happen - whether calling support is required, sending an email, etc.

Reach out to the vendor for negotiations well in advance

If you have left SaaS renewal for the last minute, chances are you would not have time to prepare yourself for negotiations, nor have time to complete them. The result would be - hasty renewal, with no opportunity taken to secure better terms with the vendor.

Hence, make sure to schedule any renewal negotiations well in advance, and set them up in your calendar. Having ample time before a renewal will let you go over the tool usage and employee feedback collected, evaluate the ROI of the tool, compare it against similar other tools and make a decision on whether or not you want to continue the renewal. Then, you are in a position to start negotiations with the software vendor for better license terms. If you are negotiating for a better renewal price, it may be wise to schedule those negotiations for the end of the month/quarter.

Figure out the license usage

To find out whether or not a license should be renewed, you need to ensure there is enough return on investment from its usage. And return depends on the extent to which employees are actively using the software and its upgrade features.

The usage data can be collected from the tool dashboard, or based on team records, employee feedback, etc. Alternatively, if you have a SaaS management platform like Viio which directly integrates with the SaaS tools, you can get usage statistics right inside the platform.

For example, if you are paying for a premium package of some tool but see in the statistics interface that the employees are only using the free features, there is no reason to continue with renewing the upgrade package. 

In any case, ensure that you are evaluating the usage statistics on a team and individual level, so you can get a clear picture of whether some software is actively used and appreciated by specific departments, specific positions inside the company, etc. Viio can help here as well, generating SaaS usage reports by team and by team member. Then, remember to document your findings, so you are in a position to negotiate the renewal terms with your vendor.

Take advantage of downtime

Nowadays most SaaS tools are hardly experiencing any downtime, with most claiming to be keeping it under 0.01%!! But downtime can well be used in your favor during negotiations!

Downtime means hours of lost productivity, especially with a big organization and a widely used cloud tool. So, make sure to record any downtime occurrences, and use those in your favor when starting negotiations for better renewal terms.

Know your SaaS stack

Managing your SaaS requires that you first have a complete view on what tools your organization is paying for. Hence, make sure to obtain the full SaaS picture, along with how each SaaS license is being renewed. Nowadays, at least a third of an organization’s SaaS stack is purchased by an employee who is using a personal credit card and then expensing the cost. This increases the likelihood of purchasing redundant applications throughout the organization.

In addition, categorize the available cloud software and review it, to make sure you are not paying for software with overlapping functionalities. For example, video conferencing, project management and e-learning software is highly likely to duplicate in terms of functionality with other software in those same categories. 

Consolidate redundant tools

New tools are entering the SaaS market every day and many others get improved. If you want to be efficiently managing your vendors, you need to be monitoring the SaaS market, to keep yourself up-to-date with all new features released and understand what they mean for your current SaaS portfolio. For example, a new feature released in a tool you are already paying for may be duplicating with the functionality of another SaaS tool in your software stack. Hence, you can consider eliminating the duplicate functionality subscription.

It is also recommended that you monitor the SaaS market for newly released cloud software, for example based on software review platforms.

Research replacement tools well in advance

If you need to replace an existing tool, be sure to allocate enough time for research of alternative tools. Ask around your peers and business leads, set aside ample time for testing tools where you need to cover a longer period to evaluate their usage. Thus, if the tools researched do not meet your needs, you would still have ample time to look for new vendors.

Take advantage of long-term vendor relationships

If there is a SaaS vendor that you intend to stick with for the next years, you can negotiate better terms for maintaining a long-term relationship. For example, you may ask for bulk discounts for multi-year renewal, or get free upgrades on top of your subscription package. 

Ask for deals

While you may be unsure as to whether it is appropriate to negotiate the renewal price with a SaaS vendor, most vendors consider negotiations absolutely normal. According to a ProfitWell research, SaaS vendors are very willing to offer discounts to close deals, and most consider a discount of 25% highly appropriate. Hence, paying the full subscription renewal price is not the standard, but rather an exception, when it comes to renewal negotiations, and you should definitely look to strike better deals when managing your vendor renewals.

Using a SaaS vendor management platform in your favor

To conclude, effective SaaS vendor management requires that you stay proactive - that you plan renewals well in advance, review and evaluate them, and take action with negotiations. And ongoing SaaS reporting done by a SaaS vendor management platform like Viio would certainly support you and save huge manual efforts on the way. How? Find out in a personalized demo!

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Michael Fornander

Chief Executive Officer

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