Best practices for your company’s software vendor management
When you consider the SaaS vendor management systems and practices your company uses today, are you happy with the results?
If considering this topic brings up stress or confusion, you’re not alone. Lack of clarity in SaaS vendor management is commonly cited as a worry among CIOs and their teams. The potential impact of shadow IT and uncontrolled spending is another.
It’s an understandable concern. The security and legal risks of unsanctioned purchasing are far-reaching. Unrestrained spending can bloat budgets and reduce cost-effectiveness. Risky purchases can cost thousands of dollars.
Poor vendor management can result in unused licenses and costly contract duplication. All these issues result in up to 30% waste spending, according to Cleanshelf. With SaaS spending climbing yearly, ensuring efficient SaaS spend is mission-critical.
While SaaS vendor management has lots of moving parts, there are ways to create a more efficient process. Putting in upfront effort can reduce vetting and approval time, and improve your company’s bottom line.
Here are the key areas you can focus on today that offer excellent near-term benefits:
Quantify and organize your SaaS stack
To get a handle on your company's software vendor management needs, you'll need a detailed picture of your current tech stack.
If you’ve never conducted a SaaS audit (or it’s been a while) this will be an all-hands-on-deck project. You’ll need input from every owner and stakeholder.
The best way to get a complete picture is to make the process painless for stakeholders. A simple form to capture primary details is a great place to start.
Start by recording everything you know about your SaaS suppliers and contracts. This breaks the ice with other stakeholders at your company by giving them a guide for filling in their info. It also reduces the likelihood of redundant data getting reported into the form.
When soliciting responses, less is more. When a form asks for every last detail, it’s less likely to receive timely responses from busy employees. Instead, aim to collect just what you need to take control of the licenses:
- Supplier name
- Contract value(s)
- Renewal date(s)
- Method of payment
- Stakeholder/department owner
From there you can gather the rest of the information you'll need to centralize your licenses. With full visibility, you can identify security concerns, legal issues, and pricing opportunities.
Codify your SaaS vendor management process
If knowing is half the battle in SaaS vendor management, a good management system is the other half.
Understanding your current situation allows you to analyze, use, and help you negotiate better rates ahead of renewal dates. It helps you take control of the process, which in turn brings spending into alignment.
Once you have control of your data, you can build a process that makes future buying easier. Doing so reduces the potential for backsliding into shadow IT.
When developing a new buying process or improving upon the existing process, several key points are worth considering:
1. Approval workflow
Create a process where stakeholders can surface a need, suggest software solutions, and help the deal through the approvals process. This may be a single process for every new contract or broken out by department, scope, or contract value.
- Compatibility/Similarity The buying process should consider how suppliers align with the business. It should analyze their functionality and identify if current suppliers offer similar solutions. This discovery process also allows you to negotiate contracts from an informed position.
- Legal Setting standard rules for contracts and renewals can speed the buying process by reducing research. You'll avoid “last mile” problems after investing time and effort into the process.
Understanding what's important to security and IT will avoid issues in closing. If the team can address the common security issues in advance, ironing out details is much easier when it comes time to close the deal.
Once a process is in place, you can begin educating. After all, the most thorough process can only help if people know when and how to apply it. Using good change management practices and communicating the process ahead of time can improve adoption.
Rely on (and support) your software champions and stakeholders
Your stakeholders can tell you what tools are best for their job. Empowering them to start the process can make everything go more smoothly.
An intake form makes it easy for stakeholders to prove the business case, supply details, and pave the way for approval. A well-managed tech stack improves this process by providing visibility into the supplier options already on the table. This visibility is impossible with siloed procurement processes.
The other side of the coin is champion support. Stakeholders shouldn’t have to carry the ball to the end zone on their own. A well-oiled workflow means your stakeholders can get involved only when needed.
How vendor management software can help
Spreadsheets and manual workflows are great as a starting point, but manual SaaS vendor management is prone to human error and data decay. The output is only as good as the effort and time invested in managing it. For large, complex organizations, this investment can be significant. In fact, a typical employee uses up to 44 apps. Seven are never used as a result of a lack of control over a growing stack.
Centralizing your SaaS vendor relationship management can ease the burden on teams by:
- Creating a more efficient workflow for renewals and net new purchases.
- Saving hundreds of hours across departments.
- Creating an extended runway for pre-renewal review and changes.
- Avoiding missed deadlines, costly auto-renewal, and off-the-shelf pricing.
Vendor management software can provide data on the current use and cost of your tech stack. It can inform purchasing, align spending across departments, and ensure high user satisfaction.
With the right platform, the negotiation process can also be easier and less expensive, relying on platform data to ensure buyers are getting fair and reasonable pricing.