Supplier relationship management: 6 best practices

SaaS Stack Management

Written by

Ashlee Tilford

Published on

August 24, 2021

August 4, 2022

Read Time

Key takeaways:

  • Supplier relationship management is part of the procurement management process and involves the relationships between buyers and suppliers.
  • Each supplier will fit into a particular segmentation, which helps buyers determine what their supplier relationship should look like.
  • SaaS solutions for supplier relationship management are available in the market today and help make a complex process highly manageable.
  • Paying suppliers on time, doing annual scorecards, giving annual rewards, and making site visits can add value to the supplier relationship management process.

Let’s wander back in time for a moment. It was 1983 and the first concept of supplier relationship management was born by a consultant named Peter Kraljic. Kraljic said that supply chains needed to shift their sourcing mindset to a more supplier integrative process.

It was the first time (or at least the first we know about) anyone had challenged the procurement status quo where suppliers were concerned. Then, it created a domino effect of transformations in supply chains all over the world.

Today, thanks to this transformative shift, we understand the importance of supplier segmentation and relationship strategy. But in an ever-changing supply chain landscape (think 2020 early pandemic), our involvement in supplier performance can’t stop at simply understanding. Procurement and supply chain professionals – or anyone engaged with suppliers – also need to be involved in the execution of a well-developed supplier relationship management strategy.

Not sure where to start? We’ve got you covered here with a brush-up on supplier relationship management, why it’s essential, and the best practices you can implement to create a transformative shift of your own. 

What is supplier relationship management?

Supplier relationship management is a step in the procurement management process. In its most simple state, it is the relationship between a buyer and a supplier. But it’s so much more than catching up with a supplier over lunch.

Today, supplier relationship management is an ongoing process of analyzing your supplier base, segmenting it into categories, and then creating and executing relationship strategies appropriate for each type of supplier. Why? To maximize value.

The stages of supplier relationship management

There are three distinct stages of supplier relationship management. But don’t let the number fool you. Each stage relies on the one before it and is chock full of vital strategies for a successful supply chain.

1. Supplier segmentation

The supplier segmentation stage of supplier relationship management involves analyzing supplier risk and profitability impact on your company. Of course, everything the company orders is important, but not everything has the same impact. As a result, treating all supplier relationships the same is a big mistake. Oh, and don’t think for a second that your suppliers aren’t segmenting their customers. Are you all on the same page with the type of relationship you should strive to maintain?

Break down your supplier base into five categories, as defined by David F. Pyke in “Strategies for Global Sourcing”.

Buy the market

These suppliers and the products they sell are in high supply. The products you’re buying from buy-the-market suppliers are important, but your business won’t shut down without them, and they have no direct impact on profitability. Lead times are typically low and pricing is highly competitive. Depending on the nature of your business, office supplies might fit into this category. This type of relationship does not require frequent communication. 


Suppliers in this category have mid-range contract lengths, perhaps longer than the standard one-year agreement but shorter than the more strategic five- to 10-year agreements. Competition is moderately high, and you’re also doing business with some of their competitors. Many technology hardware suppliers will fit into this category.


Suppliers in the partnership segment are those with longer-term contracts. There has been trust established, though the relationship is not exclusive. There is a moderate risk due to limited competition and a moderate risk to profitability.

Strategic alliance

Suppliers your company has a strategic alliance with are those you typically work with exclusively. There is a high risk due to minimal competition and a high risk to profitability. Therefore, long-term agreements, frequent communication, and high levels of collaboration are needed.

An example of a strategic alliance relationship may be your e-procurement supplier, like Unimarket. They aren’t the only e-procurement supplier out there — there are others like SAP Ariba, Jaggaer, Zycus, and Cobblestone — but you’ve invested a lot of financial and labor resources into implementing their solution, and a switch would not be fast or inexpensive. A shutdown or outage could also be highly detrimental to your company. Therefore, your relationship with this supplier is critical.

Backward vertical integration

This category of suppliers will likely be your smallest — and in many companies won’t exist at all. These are suppliers that your company has fully merged with to the point that they own the supplier. This is common in manufacturing environments where certain components are critical to daily operations. For example, many automotive manufacturers, like Ford, have created Ford subsidiaries dedicated solely to them in providing key components (like rubber or glass).

2. Creation of supplier strategy

Now, it’s time to create the supplier relationship management strategy for each supplier segment. You’ll set goals, objectives, and expectations for each segment and KPIs to measure those. Additionally, you’ll make sure resources are available to meet these needs internally and with the suppliers. 

3. Execution of supplier strategy

Finally, it’s time to put your strategy into action. With buy-the-market suppliers, there may be very little to do here. But for your partnerships and strategic alliances, execution of the strategy will involve collaboration and ongoing evaluation and feedback. 

Why is supplier relationship management important?

Perhaps you’ve already got a solid grasp of the importance of supplier relationship management. However, it is just as crucial that your supply chain and procurement teams have the same comprehensive understanding. Do they?

Let’s dive into the “why” of why supplier relationship management is so important if anyone on the team needs a refresher:

  • It allows you to assess the capability levels of suppliers to meet organizational needs.
  • It gives you the ability to measure supplier performance.
  • It encourages you to identify and remedy challenges from a win-win perspective.
  • It provides the opportunity for forecasting and frequent discussion to improve costs.
  • It can give you a heads-up on new supplier innovations and products.
  • It puts you in the position of being preferred customers and getting premium service.

The best practices in supplier relationship management

Supplier relationship management: Woman on the phone

OK, let’s go back to that fundamental mindset shift Kraljic talked about. If your current supplier relationship management process is a bit lighter-weight than it should be, here are some tried and true best practices to level up.  

1.   Supplier relationship management (SRM) software

The SaaS market is growing rapidly, at around 18% per year. The average mid-sized company uses more than 100 SaaS applications. A solid SRM application is another one you’ll want to add to your SaaS stack.

Why? A good SRM product helps to streamline the entire supplier relationship management process into one centralized vendor management system — no supplier information spreadsheets, no manual onboarding, no feedback emails needed, and no email reminders to do supplier reviews. A supplier relationship management solution does all of that in real-time in one convenient system. 

Expert tip: If you already use an e-procurement or procure-to-pay SaaS solution, ask your supplier about supplier relationship management. Many of those providers also offer supplier relationship management modules.

2.   Hire or assign a Supplier Relationship Manager

Every project needs a project manager and supplier relationships are no exception. Who owns your supplier relationship management process?

If no one or a little bit of everyone does, consider hiring or assigning one or more team members to be Supplier Relationship Managers. These managers will not be in charge of managing every supplier relationship but instead manage the process, which also includes managing the SRM solution. 

3.   Do supplier appraisals and ask for a reverse appraisal

It’s supplier scorecard time! Each year, conduct supplier appraisals – at a minimum on your strategic alliance suppliers – where you review their performance throughout the year. If you’re using an SRM application, you should already have feedback from stakeholders.

While you’re doing your review, ask the supplier to conduct a reverse appraisal of your company’s performance as a customer. Then, schedule time to go over both together. Create an action plan together and involve stakeholders when appropriate.

4.   Implement a supplier awards program

Who doesn’t like a nice pat on the back? Most of us do, and suppliers are no exception. I remember my first national supply chain management conference where Colorado State University’s Procurement Services team discussed their annual supplier awards program. They went as far as hosting an annual awards dinner and making a big deal out of it to make their most strategic suppliers feel valued. Brilliant!

Regardless of where they fit in your supplier segmentation and SRM strategy, good suppliers work hard to be good suppliers. Giving them deserved recognition can be an excellent way to take your supplier relationships to the next level. Use your supplier appraisals to help determine who will win awards. 

Here are a few supplier award ideas:

  • Outstanding performance
  • Diversity and inclusion
  • Sustainability
  • Innovation
  • Strategic alliance
  • Security
  • SaaS 

5.   Payment terms must be a win-win

This one might ruffle some feathers. If you’re stretching supplier payments and not paying on time, your supplier relationships are not a win-win. I can say this because I’ve done it. During my procurement stint in the automotive world, stretching payments was a norm when cash flow was an issue. If you’ve never had to talk a supplier into shipping critical parts when you haven’t paid them in months, keep it that way.

Establishing and honoring payment terms is a critical piece of a successful supplier relationship management process. During the procurement negotiation process, negotiate payment term discounts. 

For example, let’s say standard payment terms are net 30. Negotiate with your supplier that if you pay by net 10, you’ll get a 2% discount. You may see that listed under payment terms on an invoice as “2/10 net 30.” At maximum, the supplier gets paid in 30 days. At a minimum, they’ll get paid within 10 days and you’ll have another cost savings to report. 

6.   Pay your key suppliers a visit

If travel budget permits and suppliers are willing, schedule at least one site visit with your strategic alliance suppliers. Even better, your partnership suppliers, too.  This shows the supplier that you’re invested and eager to learn about them and how they work.

It’s common for SaaS suppliers to host or be a part of national conferences. If your strategic alliance SaaS providers have an annual conference, try hard to attend. It not only shows them your support and interest but gives you the opportunity to network, learn more about the product, and enhance relationships.

Supplier relationship management: The shift from operational to strategic

Older person teaching a younger colleague

Supplier relationship management is a complex part of the procurement process with a lot of layers. In other words, it isn’t easy. And because it isn’t easy, many companies either don’t have a strategic approach for it or have one they don’t maintain.

With a great SRM solution and our best practices, you can use the supplier relationship management process to shift from operational to strategic and create tremendous value and competitive advantage for your company.

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Ariel Diaz

SaaS Stack Management

The best guide to managing IT for distributed teams

Over the last few months, as the world has changed, we’ve seen a dramatic impact on our customers, their businesses, and how they’re run. We wanted to share with you some of what we’ve seen on how to best manage and deal with these changes. Here’s a short guide to managing IT in the age of work-from-home.

It’s no question that the Coronavirus Pandemic has had a dramatic effect on how businesses operate. We’ve seen more remote work from home across all industries, with growth in tech, media, and shipping verticals, and other industries essentially shutting down. This change has particularly hit IT and created the question of how to manage SaaS and software for an organization in a very different environment.

Key IT trends are accelerating

A recent tweet by Aaron Levie, the founder and CEO of, highlighted some of these impacts:

This is a brief overview of how IT strategies are changing overnight: From some cloud software to an all-cloud environment, from trusted devices only to any device, from protecting the perimeter to no perimeter – supporting people on home WiFi – from monolithic tools to best of breed applications. From thinking about UX as secondary to UX above all and thinking about the shift from a traditional world of employees to a more extended enterprise.

Technology early adopters have been living in this future for a while, but now most companies are forced into that same reality. These changes are difficult for IT, because the remote first, work from home and decentralized nature that we’re living in now has broken a lot of traditional IT processes. Historically there was a lot of centralization around IT into a command and control environment. Now, with workforces distributed, we’re seeing that really break apart as businesses work through a much more decentralized and organic approach to managing technology and visibility.

As a result of that, we’re seeing a lot of internal challenges because these processes have not been pressure tested. They’re being implemented quickly across organizations because they are necessary, but they haven’t been tested and refined. This is causing a few consistent issues:

  • IT not feeling in control
  • Organizations struggling to execute new processes
  • Overall lack of SaaS visibility
  • The need for tools to help manage a more distributed and decentralized environment.

In the new world, we see a bigger risk for unknown or unapproved apps with fewer controls, especially outside the perimeter, outside of controlled devices and you’re potentially having a lot of risk of wasting money without these controls.

New IT priorities

Saving money on SaaS

In an age of distributed workforces, we’re seeing spend on SaaS rise rapidly. And, with cash flows tightening, organizations are placing a much higher priority on saving money across the board and in particular on SaaS apps. SaaS can often be the third biggest line-item expense in a company after employees and an office. It’s, therefore, a natural place to look at to be able to save money to extend runway and create some operational flexibility.

SaaS saving tips

Here are some practical tips to think about how an organization can go ahead and save some money on their SaaS applications:

1. Do a SaaS audit. The first part of this is to inventory and understand key vendors, how much you’re spending on them, what’s the usage? This audit creates a foundation for a data-driven approach to spend optimization. You can look at typically some of the bigger line items within your SaaS applications and know based on that audit and inventory how to go down and approach that list.

To get this audit you should leverage multiple data sources, typically export data from a finance system to get some of the vendors you’re paying for. You can also survey users and team leaders to get not just the list of apps they’re using, but also some additional insights into how they’re using these across the organization. This SaaS data tends to be a very natural place to start giving you visibility to identify some ways to actually optimize spending.

2. Once you have that audit in place, a great place to look at is how do you identify or eliminate orphan subscriptions? We see a lot of companies that have subscriptions that they’re still paying for, but perhaps the champion left the company and it was never canceled when they left the company. Now you have these zombie subscriptions still being paid for on a monthly basis or even annual basis that are really not being used. The SaaS audit can help you identify those by identifying ways to have subscriptions, but if you ask around the company and nobody claims it, that is a good candidate to be orphaned.

3. Another step is to reclaim underutilized licenses. Maybe you bought a pack of 100, but you only need 80 of them, to go back and reduce your license count. Similarly, you can remove unneeded users that may have a license but haven’t been using it in a while because it’s not as critical to their role. Another way to think about optimizing spend is to potentially drop a tier if the features in a given tier are not needed. This depends on getting involvement from the team leaders in terms of understanding whether a particular feature set is critical or not.

4. Lastly, think about potential vendor or app consolidation. A lot of SaaS applications might have overlapping features or products might have similar use cases. This might be a little bit more involved in terms of understanding where those overlaps are, but you might want to think about that if saving money is important. The final step would be to actually negotiate with vendors. A lot of vendors are very aware of the pressure that businesses are under and reaching out and talking to them is probably a good way to actually find some ways to save some money.

Managing a remote + WFH workforce

With a huge swath of the country working from home and reducing travel to a minimum, the ability for an organization to manage employees, devices, and software “outside the perimeter” becomes a priority. The primary and most important step in this process is visibility. It’s one thing for an IT department to gather data on software, device, and network usage when all of the above are company property, but when we’re all using our own networks and devices, that data begins to spread in unmanageable ways. Using a SaaS management platform like Blissfully will provide the necessary visibility into your IT environment to be able to manage efficiently and effectively.

Preparing and managing potential layoffs

As workforces distribute, there are often changes to the team. A few tips here as you’re thinking about them: It’s critical to work with legal, HR and management to create a strategy, not just how to execute the layouts, but what’s the long-term business strategy of it? Does this extend runway by X months to put the company on a better trajectory to survive long term? See if the payroll protection plan in the new government stimulus is applicable to you and obviously consult your lawyers and counsel there. Then think about the model and how it’s changing based on new assumptions. Week-to-week we’re seeing different reports on the economy, on health and it’s important to take that into account on a regular basis.

Another consideration is the actual offboarding process. You’ll want to do this upfront so that you have a clear process with checklists and key stakeholders so that you can run this process in a smooth and repeatable way. The type of things that you need to think of when doing that process is: freezing account access, leveraging IT automation where possible, making sure you want to backup account emails and files so you don’t lose any sensitive data and probably identifying the transfer of SaaS billing ownership so that you don’t create more orphan subscriptions that we were talking about earlier.

Recommendations for Today’s IT

Approach IT collaboratively

It’s important to be proactive about IT in this age of uncertainty. The traditional notion that everything is centralized and expected of IT has to change. IT must become much more collaborative in this decentralized remote world. Now what does that look like? We think of some of the traditional differences between traditional IT and collaborative IT and how we think about it. Let’s start with app selection.

Traditional vs. Collaborative IT

Traditionally IT budget was controlled by IT and finance, with adjustments coming during annual renewal cycles. Now it tends to be much more fluid, as teams make decisions on-the-fly and on their own. This can be a double-edged sword if you’re thinking of cutting costs.

To summarize, an IT process that used to be fairly rigid, inflexible, and localized, is now broadened into something collaborative and distributed. The tools that managed IT in traditional IT such as ticketing systems and spreadsheets just aren’t built for today’s environment. That’s why we built Blissfully. (See our guide to Collaborative IT)

Beyond just the approach of traditional IT versus collaborative IT, it’s important to think about how you actually collaborate. What are the roles for different people across the entire company? Let’s walk through some of those.

A working example: app selection

Historically app selection has been centralized around IT with some finance involvement, but in a collaborative IT world, team leaders and individual employees have a lot more say about choosing the apps that are relevant to their job function. Consider visibility: traditionally IT had visibility because everything went through IT. It was very centralized. Now in this collaborative shared world, the visibility becomes even more important, and yet, it’s harder for IT to get complete data on a software environment that’s being distributed away from them. At the same time, it’s also important for IT to have a different attitude towards employees sourcing their own software (shadow IT) when workforces are distributed. It’s not about eliminating shadow IT at the perimeter, but instead, it’s about understanding the choices employees are making and what users are actually doing to be able to support them in a very different environment that they’re used to working in.

Security and compliance has historically been about tight controls enforced with very strict security and compliance teams. Now you need to do this outside the perimeter on non-trusted devices. This means cloud-first security and compliance that supports how people are actually working now, and that shares these responsibilities, working with IT and the rest of the organization to enforce controls from afar.

Collaborative roles throughout the company


The role of IT in a collaborative IT environment is to understand the SaaS management program. What’s the company’s approach to SaaS and how do you manage that? Help provide guidance to team leaders when choosing tools. Some industries might have much stricter security and compliance needs than others. It’s IT’s job to help communicate that to people so they can choose the tools that are consistent with the organization’s needs. Finally, IT is the one that’s coordinating with finance on budget and HR to coordinate the on and offboarding processes, which are even more difficult today because it’s so distributed.


Finance has a very key role in the collaborative IT environment by helping manage approved budgets, reviewing spending and obviously managing contracts and renewals. In an age of trying to optimize budgeting, that renewal process is very critical. HR and people ops has a shared responsibility with IT to get new employees up and running, on and offboarded really quickly and smoothly. One of the big goals of onboarding smoothly is getting them access to the apps they need to do their job. Most people in a knowledge economy are doing most of their work in a SaaS application day-to-day. Similarly, for off-boarding, it’s really critical to do that in a secure and time-effective way in order to minimize wasted cost and security risks. We’ll come back to some of those offboarding tips.

Team Leaders

Team leaders in our view have a very key role in a collaborative IT environment, much more so than in a traditional world. They are often the ones on the frontline choosing and evaluating tools that are the best fit for the type of job that they’re doing. They are oftentimes now responsible for managing their team budgets, for actually implementing and rolling these tools out to their teams and to make sure there isn’t overlap or waste across different tools. Sometimes the challenge is they may not have the visibility of what other teams are doing. It becomes a little bit of a challenge for an organization to navigate that, but there’s no question that team leaders have a big role.


Engineering is obviously the one that’s helping integrate SaaS and dev ops tools. They are often managing APIs, oftentimes internal company APIs to different applications and typically have access to much more sensitive information and customer data via the production databases. It’s really critical that engineering is doing a good job of managing access to that sensitive data. The security team, they’re sending controls via permission and authentication and reviewing these logs and protocols on a regular basis. Legal is helping to review contracts.

Individual Employees

Finally, individual employees are actually part of this collaborative IT environment. They’re the ones that are using the SaaS applications and doing their work in a SaaS product. There also often should be giving input about these products to their managers, to IT and how they like them. With fewer controls, you have to put more responsibility and trust onto individual employees to follow the guidelines on security compliance and other best practices, therefore it’s important to educate them. In our view, in a collaborative IT world, IT doesn’t need to go it alone and they shouldn’t. It’s important to get all these key stakeholder holders involved in managing IT and setting up the organization for success.

Create a game plan to save on SaaS

1. Audit your SaaS: Review all your vendors, identify key renewals, analyze usage if possible, and survey your team to see what they need or don’t. >Blissfully can start this process with you right now!

2. Optimize your subscriptions: After your audit you’ll likely find un-used subscriptions, underused licenses, or product tiers your might not be using, all low hanging fruit for ways to save.
3. Consolidate apps and vendors: Your audit will likely also find product or vendor overlaps, enabling you to consolidate apps or vendors.
4. Negotiate with your vendors: Finally, don’t be afraid to reach out to your SaaS vendors to ask for discounts or other helpful terms, especially if your company or industry is particularly hard hit.

Create a plan for offboarding

Waiting to close down email accounts, change passwords, or revoke access to proprietary platforms and resources leaves the company open to security breaches. It can also create confusion and communication roadblocks. Work with IT to promptly reset the employee’s accounts, including:

  • Removing employee access to email and other systems and internal platforms
  • Changing passwords to any company accounts the employee had access to
  • Notifying relevant teams or points of contact of the personnel change
  • Moving billing/usage ownership of the employees tools to a new owner
  • Redirecting emails and calls to the new employee/point of contact
  • Removing the employee from company calendars and meetings

Ariel Diaz

SaaS Stack Management

The best guide to SaaS license management

What is SaaS license management?

Software as a Service (SaaS) licensing can be complicated to manage, and its complexity can quickly increase as an organization grows. At some organizations, License Management can look a lot like the discipline of software asset management (SAM), where the IT team attempts to balance the number of software licenses purchased with those actually consumed or used. The key difference is that modern SaaS management is centered around people, whereas an old-school SAM approach focuses on managing the assets themselves. As we all know, people can be unpredictable!

In the SaaS world, it can be tougher for IT teams to wrangle licensing and usage, since the nature of software purchasing has fundamentally become distributed across the entire organization. In the past, the role of IT has been highly centralized, and has controlled all of the decision-making around software purchasing and licensing. Today’s SaaS-forward organization looks dramatically different; team leaders are buying and allocating licenses across their teams themselves. Without the proper visibility, IT teams are often left at a loss trying to track all of these decisions across the organization, which is where License Management can get tricky.

A subset of SaaS Vendor Management, which focuses on both License Management and the financial and compliance relationships of third-party vendors, SaaS License Management is very specific to how people control and use apps within an organization. Before we get into the specific challenges, let’s look at the two main areas of License Management: Tiers and Utilization.

SaaS licensing: Tiers

If you’ve ever signed up for a SaaS subscription, you probably know that there are usually several tiers you can choose from, depending on your organization’s needs. These tiers typically fall into the following categories:

  • Users: Some licenses may segment billing based on the number of users of the tool, or the total number of employees, if it’s something that will be used by the entire organization. This can also be referred to as the number of “seats.” Users can also have different levels of access to an application, which we’ll get into later.
  • Categories: More often than not, SaaS apps will segment their licenses into specific buckets or category divisions, which can vary significantly. A few examples of pricing models could be based on overall usage or usage of certain features (e.g. a video conferencing tool), number of contacts (e.g. a CRM or marketing tool), or the number of integrations (e.g. a premium fee may apply to integrate Salesforce data).
  • Longer-term Commitments: Every SaaS vendor wants a long-term commitment, and will often offer steeper and steeper discounts the longer you sign on. This can be beneficial if you know that the organization’s needs will not change, but also detrimental and costly to break contract if the opposite is true. Keep in mind: many SaaS vendors will offer a standard 20% discount on an annual vs. monthly contract. Multi-year contracts could see larger discounts.

SaaS licensing: Utilization

Another dimension of SaaS licensing is utilization, or how much an app is used, and how many of those licenses are actually allocated across the organization. Without the proper visibility across SaaS accounts, the question of utilization can often be difficult for IT managers, or even the team leaders themselves, to answer.

When it comes to license allocation, licenses are either used or they’re unused. Taking it a step further, you’ll also want to know if licenses are allocated or unallocated altogether. If there’s an overabundance of unallocated or unused licenses, your organization may be spending significantly more than it needs to on SaaS.

How companies spend on SaaS

There are many flavors of SaaS licenses out there, but some of the most common pricing models include:

  • Flat Rate: An annual flat fee can be offered at a discount to a monthly subscription fee.
  • Pay-Per-Use: Like a utility, users spend based on the amount they use the application.
  • Pay-Per-User: Some apps charge by the user/seat, or monthly active user.
  • Tiered: The higher the fee, the more features that become available to the user.

Implications of SaaS license management

The relationship between apps and people is far more complex than most organizations realize, which can have major, hidden business implications. Much like Facebook’s “Social Graph” for people-to-people relationships, the SaaS Graph illustrates people-to-app relationships and the complexity they can introduce into the organization. SaaS licenses are one dimension of the SaaS Graph, which you can read more about here.

Data from Blissfully’s 2019 SaaS Trends report shows that the typical 200-500 person company uses 123 apps, which doesn’t sound too out of control. But, when you consider the SaaS Graph relationships, it gets much more complicated: the same sized company has an average of 2,700 SaaS Graph relationships. The number of relationships get deeper and more complex as the organization grows: companies with 500-1,000 employees have an astounding 5,671 app-to-people relationships!

Imagine how complicated this gets from a SaaS licensing perspective, as people move between roles, shuffle responsibilities, and new employees come and go. The one thing constant about the SaaS Graph is change, so here are a few key implications you should be aware of for License Management.

Employee Lifecycle Management

In simple terms, Employee Lifecycle Management refers to the steps HR, IT, team leaders and other stakeholders take as an employee joins, progresses within an organization, or as an employee leaves an organization. From a pure SaaS licensing perspective, there are a few key phases of the employee lifecycle that organizations should focus on mastering:

  • Onboarding: As new employees join the organization, they must be effectively onboarded onto the right tools. Often, the onboarding process can be ad-hoc and difficult to manage, where it should be streamlined and automated as much as possible. New employees should receive access to the applications they need to be productive from day one and prevent unnecessary downtime. The Blissfully Guide to Employee Onboarding covers this process in detail.
  • Changes in role or admin status: As employees progress through an organization, they may change departments or roles, which may mean they require access to an entirely different set of applications (and no longer need access to previous ones). Or, they may have increased responsibility on their team, which means they should have privileged access or an administrative role within the application. Conversely, some people may no longer need admin status, and should have it revoked accordingly.
  • Offboarding: When an employee leaves an organization or is terminated, it’s equally important to turn off access to all SaaS licenses effective immediately. Often SaaS access opens up access to sensitive company data, which should be terminated when an employee walks out the door for security and compliance purposes. In addition, if licenses are going unused by employees who have left, that could add up to major wasted spend. The Blissfully Guide to Employee Offboarding details an efficient SaaS offboarding process.


Not all SaaS users look alike. As new team members are on- and offboarded throughout the year, the role of each user can get especially complicated. Without a clear understanding of these roles, organizations could be wasting time on inefficient processes, wasting money, or worse, granting permissions to the wrong people (which could be a big security concern). Here is a suggested list of internal roles to assign to one or more team members, to effectively manage each SaaS subscription.

  • IT Admin
    Think of this person as the one who holds the “keys to the kingdom.” Admins can add or remove users, or change permissions for anyone across the organization.
  • Contract Owner
    Usually the contract owner is the initial buyer or decision maker who selected the SaaS app. In many organizations, this could be a team leader.
  • Billing Recipient
    This person may sometimes be the same as the contract owner, but could be different (for example, billing recipients could be on a finance team vs. a team leader).
  • User
    This role includes any team member using the software, and user types are defined by each individual app. Licenses are assigned usually by the admin, and are either granted at onboarding, or when a change in employee status takes place (e.g. a promotion or team change).


In 2018, the average company spent $343,000 on SaaS, a whopping 78 percent increase over 2017. In fact, companies spend more per employee on SaaS than on laptops. The average midsized company has 32 different billing owners for SaaS apps, effectively distributing the task of IT budgeting across the entire organization.

Top 3 issues with SaaS spend

  • 1. Unused licenses or forgotten subscriptions
    Usually, this issue tends to happen when there is a lack of communication between the admin of the app (typically a team leader) and the billing owner (finance department). . For example, the team leader may buy an app in 2018, discover a better tool in 2019, but the finance dept is unaware and continues to pay for the 2018 app. When an organization uses hundreds of apps, this can happen more often than you might think. Or, in some cases a team leader may sign up for a free trial with a credit card and decide not to subscribe. Meanwhile, the free trial converts automatically to a paid subscription, with the app going unused in the process.
  • 2. Underused licenses or apps
    Many teams could be spending hundreds or thousands of dollars a month on apps that aren’t used to their fullest potential. Maybe there are one or two power-users on the team, and the rest of the team isn’t using the app at all. Or, only a third of the app’s functionality is being used, meaning that the team could drop down a subscription tier or two. In some cases, a better app altogether could be found to meet more team members’ needs.
  • 3. Redundant Apps
    Sometimes, teams are using multiple paid apps that have overlapping functionality. In other cases, teams are using both free, unsanctioned apps and paid, sanctioned apps that accomplish the exact same purpose. For example, a sales manager purchases videoconferencing licenses, but the individual reps are using free apps because they’re simpler or better. As each individual app’s functionality is growing over time, and it’s common to see large SaaS suites acquire smaller competitors, it’s important to regularly evaluate your team’s SaaS stack to see if it makes sense to consolidate or move to lower cost tools.

With SaaS budgets and the cost-per-employee quickly rising, organizations need to implement an effective License Management strategy. In SaaS-first businesses, it’s difficult, if not impossible, to use a centralized decision making approach to budgeting and License Management, since team leaders often become billing owners themselves.

The most effective way to meet these budgeting challenges is for IT and finance leadership to gain further visibility into the SaaS stack and collaborate directly with team leaders to determine the organization’s needs (an approach we call Collaborative IT). There may be some cases, for example, where longer-term contracts can save the organization money over more flexible licensing options, if teams are going to use a guaranteed number of licenses.


Tracking SaaS renewals can get tricky, especially since they happen at different points throughout the year. While some vendors are great about reminding you about subscription renewals, others just come and go with little fanfare. As a result, many organizations overlook renewals as an opportunity to negotiate pricing and terms, or re-evaluate the team’s needs.

A Collaborative IT approach can help teams keep renewals in check. Consider following this checklist for SaaS vendor renewals:

  • Keep renewal records
  • Establish a timeline for the renewal
  • Confirm app is still active and needed
  • Evaluate overlapping feature sets in your tech stack
  • Evaluate alternative vendors
  • Revisit pricing and terms
  • Renew security assessment and documents
  • Record key metadata on vendor, such as contract info and billing owner


Data privacy is a crucial consideration, especially for organizations that are beholden to certain compliance regulations like GDPR or HIPAA. However, many organizations that sell to the enterprise also need to be aware of their vendors’ data privacy practices, especially if they’re pursuing compliance certifications like SOC2.

Typically, data within apps exists in three different states:

  • Created: Users create data within their apps on a daily, if not hourly or by-the-minute basis. Often this data can be sensitive intellectual property or customer information.
  • Generated: Many apps themselves generate their own data after analyzing inputs from users, or other information.
  • Delegated: Some apps delegate permissions to other apps, and feed data between them. For example, a Salesforce account may have access to a Gmail or G Suite account.

Without the proper protections in place from both a user and vendor security perspective, sensitive data could be at risk. For example, each user’s connection to an app presents a possible vulnerability, in the absence of strong passwords and/or multi-factor authentication. And in most cases, organizations will want to get documentation into each vendor’s security processes, certifications, and/or attestations during the initial contract or renewal process.

License management challenges

Considering all of the implications described above, it’s easy to understand why SaaS License Management is so difficult for many organizations to wrangle. Between the sheer volume of apps, the number of license types and the amount of decision makers in an organization, many IT teams struggle to gain visibility into exactly what’s in use in the organization, when, and why.

Often, organizations track SaaS licenses in a very ad-hoc or disorganized way. Some individual teams may keep their own spreadsheets, which can be difficult to maintain or gain a collective view across the entire organization. Still others may have no system in place at all. Even if your organization does use spreadsheets, it can still be impossible to get data on the number of licenses available, usage of key subscriptions, and other important information that could determine the course of your budgeting strategy.

Luckily, there are solutions available to serve as a single pane of glass for visibility purposes, and help teams effectively collaborate across all key SaaS stakeholders.

Solutions: SaaS visibility and collaboration

Having the right systems and automation in place will help make some of these SaaS License Management challenges much easier. Instead of depending on ad-hoc processes, automating many rote tasks—such as checking renewals, configuring accounts, or tracking team changes—can save a lot of time and allow the IT team to focus on more strategic tasks.

Solutions like Vendr provide IT, HR, finance, and team leaders with a single pane of glass to gain visibility across all of your SaaS vendors. SaaS management can help manage key License Management workflows including employee on- and off-boarding, team changes, vendor approvals, renewals, app usage, and more.

A system of record provides consistency within ever-changing SaaS organizations, and empower simpler collaboration across stakeholders.

SaaS management solutions allows teams to input new SaaS licenses or import existing ones, and integrates with vendors such as Salesforce and Zendesk to sync key license and user metadata into the system.

When a license is up for renewal, or an employee is onboarded or offboarded, Vendr notifies key stakeholders about required changes or approvals. With Vendr, teams can easily track apps, people, and spend in one place.

Ariel Diaz

SaaS Stack Management

Employee offboarding: what it is, why it matters, and how to do it well

Ever left a job and still had access to your company email or shared drive months later? Yikes.

Each time an employee exits a business, there’s the potential for something to be left unfinished, presenting dangerous security breaches and potential leaks of company assets.

A solid employee offboarding process is vital for every organization—not only for security but also as a means of respect for each and every employee.

In this guide, we will explain why the employee offboarding process matters so much, how to streamline and improve it by taking a holistic employee lifecycle view, and the positive effects this can have for your organization, especially when it comes to compliance and security.

What is employee offboarding?

Employee offboarding is formally separating an employee from their company after resignation, termination, or retirement.

It consists of all steps and workflows that occur when an employee leaves, including:

  • Knowledge transfer
  • Removal of software and account access
  • Hardware reclamation
  • Exit Interviews
  • Payroll removal
  • Approval workflow removal
  • Updating company website
  • Reclaiming ID badges

Good offboarding ensures there are no loose ends or open access when an employee moves on. This way, there is nothing lost, and there are no opportunities for any data or security breach.

Offboarding also gives the exiting employee a chance to provide feedback about his or her role, and for the organization to better understand how to improve its culture and employee experience.

Many businesses are much more invested in onboarding than offboarding, and understandably so. The start of a relationship feels like a more fruitful point to nurture than the end of one. Yet a strong offboarding plan is just as, if not more important than onboarding for several reasons.

Offboarding is a discrete and important process. But it is also part of a larger picture—the employee lifecycle. This spans from long before an employee’s first day until long after the employee leaves.

The benefits in terms of employee productivity, organizational efficiency, and reduced risk are well worth the effort that goes into building a streamlined employee lifecycle. Understanding and planning for the entire employee lifecycle is an excellent way to improve retention, morale, and ROI on new hires.

It also reduces the likelihood that you’ll find yourself at the center of a breach or PR scandal. Having a broader picture of how offboarding fits into the employee lifecycle can help you define processes, plan, and make strategic changes that benefit your entire organization over the long run.

For more on the first part of the complete employee lifecycle, see our guide to employee onboarding. Now, let’s take a deeper look at a framework for streamlining and optimizing your offboarding process.

The benefits of doing employee offboarding right

Effectively offboarding departing employees helps build a culture of security and compliance, and it protects you from liability. But that’s only the beginning of a long list of benefits the offboarding process brings once you part ways with an employee.

More employee confidence

People are your company. Employees who stay on board will notice how the offboarding process is handled—and word-of-mouth travels. It can color views of your organization and skew it in a positive or negative direction.

Some of your employees will inevitably be in charge of helping to offboard employees. Developing clear processes will make their jobs easier while emphasizing that you take security and compliance seriously. Research shows that 70% of job candidates look to company reviews before making career decisions. More employee confidence ensures that your reviews showcase a healthy work environment worth joining. To do that, your offboarding process must be both human and empathetic.

Greater productivity

Taking a people-first approach has the added benefit of improving your organization’s productivity. A good offboarding process will simplify life for your HR, IT, and leadership teams, and will also protect the company from negative perceptions.

Increased security

Customer data leaks or security breaches aren’t worth risking—and one of the best ways to avoid this is to develop tightly controlled offboarding processes. According to a recent IBM report, the average cost of a data breach is over $3 million.

A proper offboarding process dramatically decreases the odds that your company will be vulnerable to this type of attack.

Easier compliance

You may also need to meet relevant guidelines and regulations for your industry and organization type. For many SaaS-based organizations, SOC 2 must be adhered to at all times. This and many other compliance frameworks require tight controls around access—specifically around offboarding.

Strong adherence to compliance is an important way to win customer trust and show that your business takes its security seriously. Good offboarding is integral to that.

Should you automate employee offboarding?

A large part of the employee offboarding process can be automated. However, offboarding still requires a human touch. So parts of the process like exit interviews and gathering feedback are better handled with real-time human interaction.

Yet, for example, the process of access revocation to company data can be automated so it runs in the background while you finalize other aspects of the offboarding workflow.

Employee offboarding best practices

Here are some key factors to keep in mind when refining your offboarding process. It starts with setting a positive foundation.

Make the experience positive

Whatever the reasons for the termination of employment, offboarding should always be a positive experience as part of the company’s last impression. You should put in the same effort as you would during onboarding.

Acknowledge your employee’s contributions, and interact positively about their time in the company.

Get insight and data

An exit interview is an indispensable part of the employee offboarding process. Many employees may be hesitant to express their unguarded opinion while they’re still with the company to avoid conflict. An exit interview is a moment to get honest feedback.

Incorporate knowledge transfer efficiently.

Don’t wait until team members depart to start the knowledge transfer process. Instead, make it part of their ongoing work responsibilities. That way, they aren’t crunched for time as they finalize their last days with the company.

Stay in touch

The single best way to show your existing employees your appreciation is to stay in touch and support them. This might mean asking their permission to contact them through either email or a preferred phone number. If they decline, take note of their decision and proceed accordingly.

Consider a remote setup

With the onset of the great resignation and about a quarter of US employees working from home, remote employee offboarding is necessary. This will look like creating a preliminary setup along with a checklist that includes the revocation of access to sensitive data, monitoring the last few days of employee activity if the departure isn’t on good terms, and conducting virtual exit interviews.

The remote offboarding process stands to gain a lot from a predetermined removal process. Generally, the same steps to removing an in-house employee still apply.

How to do employee offboarding the right way [Checklist]

As soon as a departure is finalized, the process should begin in earnest. We’ve created this checklist as a template for your processes. You can personalize it so it fully covers the specific needs of your company.

1. First steps

  • Communicate with employees: Gossip travels. By communicating with employees quickly, you can ensure that people receive correct information and head off any chatter. If the employee is resigning, ask for and receive a letter of resignation. In any case, you’ll want to inform human resources and current employees.
  • Prepare final documentation: As part of a smooth offboarding process, you should begin to gather any documentation needed for an exit. This may include non-disclosure agreements, benefits and tax documents, final payroll, and any feedback requested.
  • Notify network administrator: Part of offboarding will be the de-provisioning of email accounts, software tools, shared drives, and more. Inform your IT department so they can prepare.

2. Permissions/knowledge

  • Knowledge transfer: Minimize disruption by creating a list of key tasks and knowledge that must be transferred, and prepare existing employees or any replacements. Will the exiting employee do any replacement training? Do backups of email accounts/documents need to be performed?
  • Close/delete user accounts: Be sure to de-provision access to email accounts, company databases, shared drives, and software/SaaS tools. Each of these touchpoints is a potential security breach. Being thorough with this step will minimize your exposure.
  • Recover company hardware: This can include credit cards, keys, phones, laptops, tools, or badges. Be sure to document these items and their return.

3. Final documentation

  • Closeout employee benefits: Check with your insurance provider that you comply with COBRA requirements. Request and receive a benefits status letter from the HR department.
  • Issue final paycheck: This can include outstanding wages, unpaid commission, unpaid business expenses, severance pay, unused vacation pay, and health spending account balances.
  • Review all signed agreements: Have team leads and legal review documentation. Work with an approval process if this makes this easier.
  • Clean and prepare the workstation for any new arrival: It’s essential to give a sense of progress and closure to the business, employee, and any coworkers.
  • Update the company directory: To ensure accuracy. This might also include updating the company website if it has a public-facing page showcasing team members.

4. Exit communications

  • Complete the exit interview questions: Use this interview to gather information regarding the working environment in your organization. When notified that an employee is terminating employment, your HR office will schedule an exit interview; record the date of this interview using the form field below.
  • Maintain an employee file: Everything above and all documents, including receipts for returned items and termination letters, need to go into the employee’s file.
  • Reach out afterward: If the separation was on friendly terms, then encourage your outgoing employee to stay in touch.

Using SaaS Management for comprehensive employee offboarding

SaaS management is unique in how it connects all aspects of the offboarding process. Many tools cover one or some aspects of the process—yet SaaS management is built to manage the entire offboarding workflow across all teams and tasks. SaaS management helps you:

Define a clear offboarding plan per team

Our workflow engine gives businesses a ready-made offboarding checklist, plus a platform to customize and formalize the particular process for the organization, able to be repeated whenever necessary.

When you begin an offboarding process, whether it starts in your HR tool, or email client, your solution generates a list of steps to ensure a complete offboarding, as well as assigning the task to who is responsible. Each team can easily define its own steps, tools, and processes.

Workflows are also automatically recorded and can be easily audited. This means easy documentation for compliance audits, as well as an easy way to investigate any issues by going back and seeing if all steps were successfully completed.

Your system-of-record provides a holistic view of what tools are being used by which department, at what level and through which license. This central source helps teams select and provision those tools to make sure your new hires have everything they need to be productive from day one.

Automatically lockout key accounts

Your SaaS management tool automatically freezes any accounts associated with the offboarded employee, preventing unauthorized data transfer. This can be done through your email or SSO provider, such as Okta.

Leverage IT automation

Your SaaS management solution integrates with your email or SSO provider to allow an offboarding to be initiated in any tool, and it manages the de-provisioning of tools through those platforms as it maintains consistency across all tools in an organization. When using other tools, your SaaS management solution will still track third-party completion.

Backup emails and files

Your SaaS management solution stores a backup of the offboarded account, along with any associated emails and shared files. This ensures there’s no data loss in the handover and enables you to delete the account to stop paying for the license and keep data to archive long-term.

Transfer SaaS billing ownership

Your SaaS management solution automatically transfers ownership of SaaS tools and billing, making vendor management more consistent, and ensuring that someone is monitoring spending on tools.

Employee offboarding: Bringing it all together

The employee offboarding approach outlined in this guide, when executed with a central platform in place, will make your organization a better place to work as it protects your valuable assets and keeps you from potentially fatal security breaches.