How to build a software procurement project plan to meet your SaaS buying requirements

Procurement

A software procurement project plan optimizes the way you buy software in support of a project. Learn more about developing a solid software procurement plan.

Written by

Belynda Cianci

Published on

September 29, 2022

October 26, 2022

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Launching a new project is a multi-faceted process. Managing the flow of RFPs, purchase orders, and procurement documents require a comprehensive understanding of the process and commitment from all team members. 

Software procurement should be a priority in any successful procurement plan. A significant portion of your project procurement might involve changes and additions to the tech stack throughout the project schedule. Managing this complexity within the procurement management plan can greatly improve the cost efficiency of your project, but how can you accomplish it successfully? 

Today we’ll discuss using a procurement project plan methodology to control your SaaS buying in large-scale projects. We’ll cover the steps you should take in planning for and purchasing software, what you should include in your plan, and costly issues to avoid when planning software purchases as part of your procurement activities for the project. 

What is a software procurement project plan?

A procurement management plan is a strategy for getting goods from outside vendors and suppliers in support of a project. Procurement management is one component of project management and follows a specific process for ensuring the right goods are delivered for the project, at the best price, under the right terms, at the right time. 

A procurement management plan outlines all the goods and services needed and lays out a process and timeline for acquiring them. It also intersects with the budgeting process of the project to ensure software buying doesn’t overrun the total planned cost. 

Where do you start with an annual software budget?
Check out our webinar: Jumpstart your SaaS budgeting

What to include in a software procurement project plan

The more detail you bring to a software procurement project plan, the better your outcomes. When building a plan to buy SaaS software in support of a project, your procurement team should include the following information: 

Type of software

Establish the total software needs of the project, including categories such as:

  • Communications and teleconferencing
  • Project management
  • Accounting, budgeting, and reporting
  • Content and development management
  • Security and access controls

Usage

For every app, outline the number of users and variety of user types necessary to aid productivity and optimize spending. Consider the percentage of time users will spend interacting with the software, and whether subscription or usage-based pricing might be advantageous. Consider the length of contracts necessary to fulfill the needs of the project objectives without spending money on orphaned tech products after their useful window within the project. 

Duration of use

When managing a large-scale or multi-year project, it’s important to manage apps and services, sunsetting those no longer needed in order to avoid excess software costs. Setting up contract management for your software ensures that licenses don't auto-renew beyond their expected useful life. 

The 7 steps to create a software procurement project plan

Follow these steps to establish a strong, optimal software procurement plan for your next project:

Define procurement project scope

Before you procure goods for a project, you must know — in detail — everything needed to bring the project to completion. So the first step in the development process is to thoughtfully outline the comprehensive list of tools and services needed throughout the contract schedule. This may include materials, services, and software. The list should be as comprehensive as possible. 

Establish contract terms

Understand and outline the contract terms and conditions each supplier must meet. This could encompass departmental prerequisites, estimated cost, payment terms, contract type (for instance, annual subscription, usage-based billing, etc.), and other important components of the agreement. These contract terms will be used to negotiate for sourced goods. 

Consider risk mitigation

Outline the potential project and contract risks to the degree they can be foreseen. Establish plans vendor risk management and establish protocols for evaluating and resolving risk issues. Evaluate the potential for third-party risks to your tech stack and where possible use proven, pre-vetted suppliers to meet contract needs. Consider the project impact of delays or inadequate contract compliance when looking at suppliers and assessing risk.

Define project costs

Establish the costs associated with procuring necessary equipment, services, and software during the project. Begin collecting information for an RFI, RFP, or RFQ process to satisfy the needs of the project. Consider using beneficial procurement techniques such as strategic sourcing, prequalified vendor lists, or e-procurement. Establish pricing benchmarks and standard pricing where practicable. 

Define blocking issues

Consider any project constraints (time, execution, financial, or supply chain-related) that could impact the future feasibility or execution of the project. As with risk management, establish contingency plans for any likely blocking issues and consider the cost of enacting these plans as part of the project budget. 

Seek project approval

Gain approval of preliminary plans from departmental stakeholders. Evaluate the project bids and include necessary stakeholders in the decision-making process. Including all relevant stakeholders de-siloes spending and contractual data and ensures all parties begin the project with full visibility into the process. Consider a decision criteria matrix to help evaluate bidders objectively and efficiently. 

Establish supplier management

Projects with considerable third-party procurement needs require a vendor management plan in order to maintain high visibility, track performance metrics, optimize cost, and ensure continuity in procurement and delivery. This is especially important for software, where a single project can still generate dozens of contracts representing hundreds of users and considerable budget allocation. Consider using a vendor management platform to ensure the smooth operation of your project technical stack. 

The stakeholders to include in your software procurement process

Software procurement is a team sport. Involving your full project team in the process early will ensure a smooth implementation and optimal outcomes when purchasing software

Finance

Getting early approval for estimated budgets makes the planning and negotiation process far easier. When included early in the process, finance can guide pricing discussions, provide competitive pricing data, and collaborate on negotiation. 

IT and Security

Understanding how procured software will fit into the larger software structure can inform your request for proposal (RFP) process, and ensure any security requirements are considered prior to negotiations and implementation. IT may also be able to assist with supplier evaluation based on its knowledge of the company’s total technology portfolio.

Legal

Your legal team is ultimately responsible for the strength of agreements it executes. Therefore, involve Legal early in the process to ensure any negotiations integrate any legal prerequisites. Additionally, identify the Legal team contact responsible for the contract review and approval process, and integrate them into the workflow to ensure they have the capacity for upcoming legal review. 

Avoid these common pitfalls when managing your software procurement process

Moving too fast or cutting corners during software buying mistakes can have costly and consequential long-term effects. Avoid these three common software procurement issues: 

No competitive process

The inclination to move quickly on software agreements can be a costly and frustrating mistake in the long term. Ensure that each software purchase gets the competitive analysis and evaluation process it deserves. This results in better pricing and lowers the potential for third-party risk. 

Insufficient software budgeting

Depending on the tool and the type of contract, underestimating usage and feature needs can result in software costs that far exceed the planned software budget. When establishing needs in the early stages of a procurement project, consider outlier scenarios that could drive up cost. Be sure to address these in the course of the negotiation. A general rule: you should never be penalized for becoming a better customer. 

Failing to set up contract management

Tech stacks are complex and evolutionary. When establishing a procurement project plan, start your software procurement on the right foot by setting up deals in a software management platform. This ensures active monitoring and lifecycle management for licenses and usage, compliance with contract terms and SLAs, and ample research time at renewal. It enables a robust and continuous vendor performance process. 

How Vendr can help you manage the software procurement process end-to-end

Vendr helps companies of all sizes to streamline and clarify their SaaS buying process. Using procurement software as part of your procurement management plan can give your organization the visibility and real-time reporting features it needs to successfully manage services, ensure strong relationships with project partners, and maintain budget optimization while delivering the software necessary to ensure project success.

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