- Manual SaaS renewal processes are often time-consuming and ineffective.
- SaaS renewal management puts the reins back in your hands to control things like wasted money, hidden contract terms, missed renewal and cancellation periods, and lack of runway.
- Eliminating auto-renewals and software spending on credit cards is a great way to begin reforming your SaaS renewal management.
- A comprehensive vendor management software is a one-stop shop for SaaS management and can alleviate all of your SaaS-buying burdens.
If your SaaS renewal process starts when you receive a renewal invoice or later, the costs to your organization are probably higher than you think. And we aren’t just talking about subscription costs.
In 2020, Gartner reported that the average 4,000-person enterprise spends over $15 million on software each year. But what is not included in that figure is the countless hours spent on SaaS renewal management and contract management. We found that the average company spends anywhere from one to four hours per SaaS renewal.
One hour or so per renewal probably means renewals are rushed, and there isn’t a streamlined SaaS renewal management process in place. In this post, we’ll talk about the benefits of SaaS renewal management and how not having the right strategies and tools in place may be costing your company exponentially.
SaaS renewals cost more than you think
SaaS renewals take time, and a lot of it. When renewals don’t hit your radar until the invoice arrives, you’ve got very little time to do anything but pay the subscription. Even worse, if your contracts are set to auto-renew and you don’t have a solid SaaS renewal management process, you may be finding out about renewals when you get the “thank you for your payment” notice.
And if you want to cancel? It may already be too late, depending on the cancellation terms in the SaaS agreement. For example, if the cancellation policy requires 60 days of notice and there’s now just a week before the renewal, you’re too late.
Not having a good SaaS renewal management process in place can cost your company valuable time and money. Here are a few reasons why.
Missed renewal windows
Negotiation is a critical component in effective SaaS management. Unfortunately, running your renewals down to the wire may cause you to lose negotiation time and leverage. In our post on software negotiation tips from the experts, we covered that if we cut it too close to the renewal due date, we’ve already lost a lot of negotiation leverage.
What does that negotiation leverage mean for your business? For many, it means avoiding major price increases or changing pricing models to better suit organizational needs.
The same is true for cancellations. Unless your organization has state-defined cancellation requirements, your SaaS stack probably includes agreements with 30-day, 60-day, and even 90-day notices depending on the SaaS supplier.
Without a good method of SaaS renewal management in place, it’s all too common to pay for software no one is using simply because you missed the cancellation window before renewal.
A proactive versus reactive approach to SaaS renewals is critical.
Hidden contract terms
Software companies should reward growth and continued service, not penalize it. There may be things in your SaaS agreements that were initially overlooked or weren’t relevant at the time (but now are). Things like scalability constraints or overage fees are wise to consider before every renewal.
Good SaaS renewal management means having the oversight, visibility, and time to use renewal periods to re-evaluate your partnership with the SaaS supplier.
Without the adequate time and tools to manage SaaS renewals, it’s inevitable that your organization will waste money on shelfware. Unfortunately, shelfware is so common that in 2020 Gartner reported that more than 20% of software spending may have been on software no one was using.
So, what does that 20% of waste equal in dollars for your company? And what about duplicate apps? If your organization is large, it’s even more likely that you’re paying for overlapping SaaS solutions and missing out on potential volume leverage.
Lack of runway
With a lack of SaaS renewal oversight, team members from finance, procurement, and IT often end up rushing through renewal reviews at the last minute. They want to avoid a lapse in service, especially on mission-critical SaaS, so rather than allowing themselves the time needed to do a thorough review, they often move quickly just to get it done.
However, in some organizations, teams have to stop the renewal process until they’ve had time to adequately review the agreements. In that case, stakeholders are delayed in using the software, which can create operational inefficiencies and even loss of revenue.
Finance, procurement, and IT teams need the time to research questions like:
- Is the SaaS application being used?
- Do we need to rethink the pricing model or tier?
- Does the budget accommodate any price increases?
- Is the application achieving the intended goals?
- Are there new IT security considerations or concerns?
- Do we have any new applications we’re going to need this one to integrate with?
3 ways to avoid common SaaS renewal pitfalls
The SaaS renewal strategies that will work best for your company may be different from other companies. However, we recommend some across-the-board SaaS renewal best practices for any company that wants a better handle on renewals.
1. Eliminate auto-renewals
Regardless of what your SaaS renewal management process (or lack of) looks like currently, it’s time to put an end to auto-renewals. One quick way to do this is to eliminate the usage of credit cards for software subscriptions. That’s a fast solution, but you’ll still need to work with your SaaS suppliers to change the renewal terms specified in the software agreement.
Eliminating auto-renewals makes the entire SaaS renewal management process a bit more doable, ensuring that you won’t find out about a renewal after it has already been processed.
2. Merge SaaS renewal, spend, and contract management
To optimize organizational processes, SaaS renewal management should tie in with SaaS spend and contract management. Ideally, all three of these things are done closely together and managed by the same team. Whether your contract and spend management are done through a tool or on a spreadsheet, it’s an excellent fit to include renewal management in there as well.
3. Let vendor management software work for you
SaaS renewal management is so complex and time-consuming that it can be difficult to imagine a situation in which that isn’t the case. That’s where SaaS vendor management software steps in, but it’s so much more than just renewal management.
A built-with-you-in-mind SaaS vendor management solution like Vendr alleviates the challenges procurement, finance, and IT professionals today face in managing ever-growing SaaS stacks. Vendr puts money back into your business and time back into your days by proactively managing all your SaaS buying and managing needs.
Much more than just another SaaS tool, Vendr merges software with actual live SaaS buying experts that will give your SaaS stack the personalized attention it needs while also giving you more time to focus on other mission-critical initiatives.
Do you need SaaS renewal management?
If you want to optimize your organizational processes and ensure maximum value is driven back to the business, you need a comprehensive SaaS renewal management process in place.
As industry leaders and other competitors flock toward SaaS vendor management solutions that include renewal management, they will undoubtedly funnel the money they save into more strategic things to enhance their competitive advantage. So don’t let them leave you in the dust.
Is SaaS renewal management reform overdue? Contact Vendr to discuss how vendor management software can save you time, money, and stress.