Software buying is IT's low-hanging fruit


Vendr | Selecting a product
Written by
Vendr Team
Published on
September 17, 2021
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Because of the ease of finding, buying, and implementing software, we now live in a world of "Niche IT"--and it's here to stay. G2Crowd has simplified how we search for potential software products. InVision pioneered the freemium sales model, which makes it easy to try new products. Drift has simplified how we buy software. makes it seamless to implement and integrate software.

The result? More software. 

Niche IT is here to stay. 

It’s easier than ever to find, test, buy and implement software within your company. As a result, high growth companies are now flooded with hundreds of software products, fulfilling niche purposes. The bar to find and acquire new software will continue to be lowered, which means that as companies grow, so will their SaaS stack. 

And while software continues to create efficiencies for microcosms within a company, it's become a dangerous burden for the IT department. 

Niche IT is the result of autonomy, at-scale. 

Start-ups were built with a focus on autonomy. Tech companies hired fast, prioritized their people, and focused on top-line growth. Teams were empowered to make decisions and "fail-fast" became standard practice. The start-up mentality prevailed, and employees grew accustomed to autonomy. This mindset applied to how companies buy software. Need something to do your job better? Great--buy it.

Eventually, the technology stack becomes a burden and begins to slow companies down. This is the moment when a company typically decides to invest in IT infrastructure. At first, the IT team is a catch-all for all "technology things". This could include new hire on-boarding, identifying security vulnerabilities, recommending new technology to add to the company’s stack, and search for redundancies in SaaS. 

As the amount of responsibility for the IT department mounts, the SaaS stack begins to enter the hundreds. Easy to purchase to quickly solve a business need, the IT team (often with flat headcount) decentralized the purchasing or renewal of SaaS to internal buyer departments,  or de-prioritized- simply too resource stretched to take a strategic overview of purchasing when security is paramount. Furthermore, once an organization enters the “growth stage,” it tends to become inherently less sensitive to cost.

Nobody wants to be the bad guy, slowing down hyper growth by being the SaaS evaluation bottleneck. Some of the world’s fastest growing companies have found innovative ways to ensure that IT can scale with the business. Specifically, they’ve identified parts of the job that can be managed by other departments or outsourced to specialized teams. Terrifyingly, IT leader’s realized that what once could be managed on a spreadsheet has grown into chaos, and outsourcing became a perfect solution.

IT & Procurement's low-hanging fruit. 

Companies like InVision, Instacart, HubSpot, Gainsight and others have gained efficiencies by streamlining how they buy and renew SaaS. Why? Because they’ve realized that their time is better spent building scalable processes and protecting security vulnerabilities vs. spending time buying and renewing hundreds of software products. 

Outsourcing vendor management frees up the time of IT to focus on the critical parts of their job. There’s lots of benefits to this approach, and more and more companies are taking it.

Save money by investing time. 

Outsourcing your software buying and renewal management leads to serious cost savings. And, it's not because your team isn't stacked with capable negotiators--it's because you simply do not have enough time to invest with each vendor. When your software stack enters the hundreds of products, it's nearly impossible to spend ample time with each vendor. 

So what do you do? If you're like most of us, you prioritize your time based on the most important vendors (either based on criticality to your business or cost). This means that you end up spending most of your time with partners like AWS, Salesforce, etc. Unfortunately, there isn't enough time to spend with the other 80% of your software partners (like marketing automation, e-signature, analytics providers, monitoring, threat prevention, etc. etc.).

When working with an external buyer, you gain immediate leverage. External buyers are able to spend time with your vendors, which means that they can work towards your goals. So, instead of just signing a renewal order form, your external buyer will work to ensure that you are improving your unit economics, maximizing your terms, etc. 

How to buy software, better.

It’s a difficult mindset shift. IT leaders are used to having control of the tools that enable the company to deliver its services to the end customer. In most hyper-growth scenarios SaaS purchasing just becomes too much to manage, running rampant and becoming decentralized with less and less visibility- usually until a finance hire realizes the scale of the problem. Smart IT leaders are getting ahead of the curve and utilizing tools to enable them to see all the SaaS the company currently has, and working with services to help them renew and buy effectively- consolidating in one place with cost savings to be realized. The IT leaders can then focus on those rocket-ship tech to tech relationships and protecting the company from security threats- without all the admin.

Shifting your mindset: uncomfortable, but necessary.

Change is hard. In fact, Harvard Business Review suggests that 60-70% of all change initiatives fail. However, innovative IT and procurement teams have realized that they have no other choice, but to change. The size of the software stack and the complexity of IT and procurement's role in the growth of the business is ever-increasing. That's why it is time to delegate the less critical parts of your job. Software buying and renewal management is a critical component of your team's responsibility but it is better managed by a team that is solely dedicated to working directly with all of your software partners. 

We help scaling companies buy & renew software, better.

Vendr Team
Vendr's team of SaaS and negotiation experts provide their curated insights into the latest trends in software, tool capabilities, and modern procurement strategies.

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