Home
/
Blog
/
Improve your purchasing process across cross-functional teams

Improve your purchasing process across cross-functional teams

Vendr | Purchasing process

Over the past two years, the Covid-19 pandemic has transformed the software buying process — for the better. Because of an increased attention to rogue spend, CFOs have wrestled software purchasing away from the end user. Their goal is to guarantee better contract terms and a firmer understanding of how each software product contributes to the company’s bottom line.

It's a good thing CFOs now take responsibility for SaaS purchasing. Yet, this trend has added new complexities to the SaaS buying process. For CFOs to truly protect long term business interests, they must codify a cross-functional buying strategy, one that involves the input of the legal and security departments, as well as end users of the product. This cross-functional operation can impact software sourcing, decision-making, negotiation and signing the final contract.

Typically, establishing a purchasing process means installing four levels of approval before any SaaS contract can be signed: initial budget approval, security, legal, and final sign-off from finance. This decision making process ensures that the interests of all relevant stakeholders are secure in the software purchase.

10 steps to improve the way you manage and buy SaaS.
Watch as time and dollar savings compound over time with tips from our free SaaS buyer's guide.

{{cta('c48019d4-4266-4e51-8fc5-649b63dad87f','justifycenter')}}

When done poorly, cross-functional purchases can stretch on for months. This procurement sprawl not only drives up costs, but also deprives the end user of the software they need when they need it.

To avoid procurement purgatory, all departments should collaborate and sign off on a formal workflow that lays out in detail how teams will work in tandem to get a software contract across the finish line. In many ways, this process will become your internal SaaS supply chain.

There are five steps recommend for establishing a cross-functional buying process and implementing internal supply chain management:

Step 1: Establishing brass tacks and non-negotiables in your software purchasing workflow

Before beginning to build out a formal SaaS procurement process, CFOs need to establish the information and rules that should govern purchasing.

Divide these rules into two separate categories: brass tacks and non-negotiables.

Brass tacks

The "brass tacks" are the basic facts about your company that usually find their way into a software contract. Brass tacks include things like your company’s legal name, mailing address, billing email address, and the designated contract signer. When a CFO establishes brass tacks, they ensure consistency across all SaaS purchasing contracts. Something like the company’s name might seem obvious, but the capitalization of certain letters or if you include “LLC” can vary widely from contract to contract if this information isn’t documented. 

Establishing the brass tacks in a centralized, clear way is the first and most basic step in streamlining your software purchasing process across cross-functional teams. By doing this small project management step, you’ll have big time-savings (and cost-savings) by avoiding correcting small mistakes at every stage of purchasing.

Non-negotiables

The non-negotiables are sticking points for each business unit. These are items that are must-haves and dependencies during every stage of the software purchasing process to ensure that the deal and contract is above-board.

For instance, the security department may require any software product offer single sign-on, meaning that any potential service that doesn’t carry this feature is a non-starter. The legal department might have requirements around NDAs or CCPA, and the finance department will likely want to establish rules around how multi-year contracts and preferred payment terms to optimize the companies cash position.

Finance usually leads the charge on collecting non-negotiables from the cross-functional teams. They document these preferences in a centralized, internally available document, like a company intranet or wiki. Once you have this information documented and confirmed, stakeholders purchasing software can then forward it to their salesperson at the start of sourcing conversations.

At Vendr, we've found that making brass tacks and non-negotiables available to key suppliers at the beginning of a sales conversation cuts down negotiation cycles, and ensures software purchasing consistency for customers. Sharing these items can ensure a stronger partnership between the SaaS buyer and seller, setting the stage for a stronger long-term vendor relationship.

Step 2: Team collaboration on the actual buying process

Now that the basic rules are set, team members can start collaborating on the purchasing workflow

The best way to kick off purchasing and supply management is to bring together a representative from finance, legal, and security departments. Design a cross-functional meeting where each stakeholder can easily and confidently share their points-of-view. Work together to determine what the approval flow should look like for getting a contract signed at your company.

You can also invite some of your subject-matter experts (SME) and most frequent software buyers across business units, if their input on current workflow and areas of efficiency would be beneficial. This meeting should provide everyone with space and opportunity to communicate where their department should fit into the SaaS buying process and define the most efficient flow. 

There are two separate contract flows you’ll want to collectively establish: net new purchases and renewals. You may also need a contract flow for off-boarding vendors.

Purchasing net new software

Purchasing net new software is when your company is entering into an agreement with a SaaS supplier for the first time. This is typically the most comprehensive process. Before getting into a contract negotiation, the team will collaborate on a process for researching, sourcing, comparing and evaluating software options.

Finance and procurement functions may establish cross-functional sourcing teams. These teams can own the due diligence required to make fully educated software decisions. Often, these sourcing teams can include an outsourced procurement partner. These partners can share sourcing strategies and leverage their knowledge of the software landscape to educate the purchaser. Additionally, outsourcing allows buyers to leverage experience buying and selling similar SaaS products, leading to a competitive advantage in negotiations.

Renewing software

Software renewals are typically much more straightforward, since the groundwork was set during the initial contract negotiation. For instance, security already ensured terms were met the first time around. Because of this, their team’s involvement should be minimal during the renewal negotiations. The same goes for legal, which would typically only need to review any changes to the existing master service agreement or terms of service upon renewal.

Establishing clear and simple workflows early on are critical to the sustainability of your processes during renewals. Often, there are parts of renewal operations that can benefit from process automation.

This actual approval flow will vary widely from company to company. The most important thing is that each department owns its respective role in the process. Not only will this ensure company-wide buy-in, but it’ll also eliminate many of the inefficiencies that typically crop up during contract negotiations. 

Step 3: Testing and tweaking the cross-functional process

Any workflow before you work through it is — by nature — theoretical. It isn’t until you apply the process during actual contract negotiations that cross-functional teams will identify unexpected the inefficiencies and hurdles that will naturally pop up in establishing a supply chain.

In your procurement workflow, there will be edge cases you didn’t account for and exceptions that need to be carved out. You may also find that some terms you thought were dealbreakers weren’t actually dealbreakers after all.

It is important that the procurement stakeholders approach each software negotiation with an open mind. Finance team leaders should continue to collect feedback on how the cross-functional guidelines can be tweaked to better streamline all SaaS buying initiatives. These performance metrics should be agreed-upon and shared with the cross-functional teams.

As the company scales, departments may restructure and more cross-functional linkages are layered in. Finance leaders will discover new questions or cases up that need to be addressed within the guidelines and the process.

Step 4: Circulating the purchasing guidelines to all stakeholders

Once your team has tested and refined the process, it’s then time to educate stakeholders across the company about the new guidelines.

The SaaS end users often have the first point of contact with a software supplier and are the ones who are typically initiating this process, because the vendor reached out to pitch them on a needed solution or because the user identified a need and set out to find a software solution on their own.

By the time the end user hands the vendor over for review and approval from finance, the two parties have sometimes already held lengthy discussions on the product’s features and associated costs. This is a good thing, since the stakeholder will be equipped to make a business case to the finance department for why this product fits their needs.

When you have a stakeholder who’s educated on the cross-functional buying process, they'll also be able to prepare the supplier for what lies ahead once they've progressed conversations for internal approval. Armed with that knowledge, the vendor can get ahead of and prepare for what finance, security, and legal will require. This proactive supplier management cuts down on back-and-forth cycles and ensuring speedier review and approval. 

Step 5: Analyzing and forecasting your SaaS spend

Once you’ve wrangled together your software stack, reversed the spread of shadow IT, and instituted a cross-functional buying process, then your team gets to reap the benefits of all this labor. FP&A will be able to analyze supplier performance, understand the functional value added by each product, forecast total cost far into the future, and arm yourself with data as you head into each renewal.

What’s more, your company will have brought employees across all departments together in a way that builds understanding of how each cross-functional team contributes. When the process is done correctly, each department is able to vocalize their concerns and explain why they're important. In other words - these steps won’t just save you money; they’ll also build a stronger, more empathetic and efficient organization.

How Vendr can help you manage purchasing across departments

Struggling to make SaaS purchasing work across departments? Vendr's SaaS buying platform offers both a product and people-powered service to enable fast-growing companies to procure software quickly and with guaranteed savings. 

Vendr has facilitated over $2.5 billion in SaaS purchases across 2,600+ suppliers for finance and procurement teams at companies like HubSpot, Brex, Canva, Reddit, Toast. With leveraged knowledge of thousands of transactions and billions of data points, the Vendr team partners with your organization to streamline your entire SaaS buying process to get your team working on better software, faster.

Looking for more? Learn how we help consolidate your tech stack, perform a free savings analysis, and identify buying process challenges all before you even become a customer with our self-guided tour of our SaaS buying approach.

See What Others Pay For Software
Free Price Recommendations in Minutes — Powered by AI
Reading time
Reading time
Published By
Perin Adams
Last Updated
December 2, 2024
Sellers Mentioned
Categories

Latest Articles

Vendr
Databricks Competitors: 4 Top Alternatives in 2024

Discover the best Databricks competitors and find a tool that can help you save on data analytics and management solutions.

Vendr Verified
Vendr Team
Vendr
Unlocking a New Era of Software Buying: Fair, Fast, and Easy

The era of price transparency in SaaS is here. Today's buyers expect and deserve transparency. They want to buy software at fair prices without the usual haggling. Meanwhile, forward-thinking software sellers are looking to build trust by leading with validated, transparent pricing.

Vendr Verified
Ryan Neu
Vendr
What is Zendesk? An Overview of Top Features & Functionality

See how Zendesk improves customer service and sales metrics, its key features, pricing plans, top competitors, and how to secure the best deal.

Vendr Verified
Vendr Team