The SaaS procurement glossary

Procurement

A comprehensive glossary of procurement terms related to Software as a Service (SaaS), including definitions and explanations.

Vendr | SaaS Procurement Terms and Definitions
Written by
Vendr Team
Published on
May 2, 2023
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Procurement is an essential aspect of every business that acquires goods and services. With the shift towards digital solutions, Software-as-a-Service (SaaS) has become a popular choice for companies to streamline their operations and improve efficiency. SaaS procurement refers to the process of acquiring SaaS solutions to meet business needs.‍To help buyers navigate the procurement process, we've compiled a comprehensive glossary of terms specifically related to SaaS procurement.

Whether you're new to the world of procurement or a seasoned pro, this list of industry terms and definitions will provide you with a solid understanding of the terminology used in the industry.

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A

API

Application Programming Interface - it sets the protocols for building and integrating software applications.

Acquisition

The process of acquiring goods or services from external sources, either by purchasing or leasing.

Add-On

Additional software or service features that can be added to a SaaS application.

Amendment

A change or modification made to a contract or purchase order.

Approval Workflow

The process for obtaining approval for purchasing goods or services, often including multiple levels of hierarchy.

Assumption of Risk

When a buyer assumes the risk of loss or damage to goods during transportation or delivery.

Availability

The percentage of time that a SaaS application is available and functioning properly.

B

Bid

A formal offer to supply goods or services at a specified price.

Blanket Purchase Agreement (BPA)

A long-term agreement that allows a buyer to purchase a specific set of goods or services at an agreed-upon price.

Blissfully

Blissfully was a SaaS solution that helps companies manage their SaaS subscriptions, spending, and contracts. Vendr acquired Blissfully in 2022.

Bottleneck

A point in the procurement process where a delay or disruption can occur, typically due to a shortage of resources.

BPO

Business Process Outsourcing - the practice of outsourcing non-core business functions, such as accounting or customer service.

Browser Compatibility

The ability of a SaaS application to function properly in different web browsers.

Budget Variance

The difference between the actual and expected costs for a project or initiative.

Business Process Management

The practice of analyzing, designing, implementing, and monitoring business processes to improve efficiency and effectiveness.

Business Spend

The total amount of money spent by a company on goods and services.

Buyer Enablement

The process of providing buyers with the resources, tools, and information they need to make informed purchasing decisions.

Backup

A copy of data saved in case the original data is lost or corrupted.

Bandwidth

The amount of data that can be transmitted over the internet between the user and the SaaS provider.

C

Centralized Purchasing

A procurement model in which all purchasing decisions are made by a central procurement department.

Cloud Computing

The delivery of computing resources, including software and storage, over the internet.

Cloud Security

The practice of ensuring the security of cloud-based applications, data, and infrastructure.

Cloud Services

Services delivered over the internet through a cloud computing platform.

Collaboration

The ability to work together on documents, projects, or tasks in a SaaS application.

Contract

A legally binding agreement between a buyer and supplier that outlines the terms and conditions of a transaction.

Contract Management

The process of managing contracts between a buyer and supplier, including contract creation, negotiation, and execution.

Cost-Plus Contract

A contract in which a supplier is reimbursed for their actual costs plus a percentage of those costs as profit.

Cost Avoidance

The practice of identifying and avoiding unnecessary costs in the procurement process.

Cost Efficiency

The practice of optimizing procurement processes to achieve maximum value for minimum cost.

Cost Performance Index

A measure of project performance that compares the value of work completed to the actual cost of completing that work.

Cost Savings

The practice of reducing costs in the procurement process without sacrificing quality.

Counteroffer

An offer made by the seller in response to the buyer's offer or bid.

CRM

Customer Relationship Management - a technology that manages interactions with customers and prospects to improve business relationships.

D

Dashboard

A visual display of data that provides business insights and facilitates decision-making.

Data Migration

The process of moving data from one software system to another.

Decentralized Purchasing

A procurement model in which purchasing is managed by multiple departments or locations within a company.

Delivery Date

The date by which the goods or services are expected to be delivered.

Direct Procurement

The procurement of goods or services that are directly related to a company's core business.

Disaster Recovery

A plan to restore a SaaS application in case of a catastrophic event, such as a natural disaster.

Double Sourcing

The practice of using two or more suppliers for the same goods or services to mitigate supply chain risks.

Due Diligence

The process of conducting a thorough investigation and analysis of a supplier's capabilities and reputation.

E

Economic Order Quantity (EOQ)

The optimal order quantity that minimizes total inventory costs.

Employee Offboarding

The process of transitioning employees out of a company, often involving administrative tasks such as SaaS deprovisioning, exit interviews and benefits management.

Employee Onboarding

The process of integrating new employees into a company, often involving SaaS provisioning, training and orientation.

Encryption

The process of encoding data to keep it secure from unauthorized access.

Enterprise

A large organization that has complex software needs and security requirements.

Enterprise License

A license allowing a company to use software across multiple locations, departments, or users.

Enterprise License Agreement

A contract between a software vendor and a company that outlines the terms and conditions for using the software across the organization.

EULA

End User License Agreement - a legal agreement that defines how a SaaS application can be used.

Ex Works (EXW)

An international trade term that indicates the buyer is responsible for all transportation costs and risks from the seller's premises.

E-Procurement

The use of technology, such as the internet or electronic data interchange (EDI), to streamline the procurement process.

F

Firewall

A security feature that blocks unauthorized access to a SaaS application.

Framework Agreement

A long-term contract that establishes terms and conditions for future procurement needs.

FTP

File Transfer Protocol - a method of transferring files over the internet.

Full-text Search

A content search that looks for and matches all words and phrases from a query.

Fulfillment

The process of receiving and delivering goods or services as ordered.

G

GDPR

General Data Protection Regulation - a data privacy regulation instituted by the European Union.

Global Sourcing

The practice of procuring goods or services from suppliers located anywhere in the world.

Globalization

The ability of a SaaS application to function across various geographic regions and languages.

Green Procurement

The practice of buying environmentally friendly or sustainable goods or services.

GUI

Graphical User Interface; a visual way of interacting with a SaaS application.

H

Helpdesk

A support service that assists users with questions and issues related to a SaaS application.

Hosting

The location where a SaaS application is physically stored and run.

HTML

Hypertext Markup Language - the standard language used for building web pages and applications.

I

Incoterms

International commercial terms that specify the responsibilities of the buyer and seller in international trade transactions.

Indirect Procurement

The procurement of goods or services that are not directly related to a company's core business.

Infrastructure

The hardware, software, and network components that support a SaaS application.

Integration

The process of connecting different software systems to share data and functions.

Invitation to Bid (ITB)

A formal request for suppliers to submit bids to fulfill a procurement requirement.

IT Asset Management

The process of tracking and managing a company's IT assets, including hardware and software.

IT Reseller

A company that purchases and resells hardware or software products, often providing additional services such as installation or support.

IT Reseller Agreement

A contract outlining the terms and conditions for a reseller to sell a software product.

Invoice

A document that requests payment for goods or services provided.

L

LDAP

Lightweight Directory Access Protocol- a protocol used to access and maintain directory information services.

Lead Time

The time required between placing an order and receiving the goods or services.

Letter of Intent (LOI)

A document that outlines the terms and conditions of a proposed agreement, but is non-binding.

Logistics

The process of planning, implementing, and controlling the movement of goods from supplier to buyer.

M

Material Requirement Planning (MRP)

A system that helps manufacturers plan and control the procurement of raw materials.

Maturity Model

A framework for assessing and improving the process maturity of an organization.

Maverick Buying

The practice of making purchasing decisions outside of established procurement processes.

Minimum Order Quantity (MOQ)

The lowest amount of goods or services that a supplier is willing to sell.

Mobile Compatibility

The ability of a SaaS application to function properly on mobile devices.

Multitenancy

The ability of a SaaS application to serve multiple customers or tenants from a single instance of the software.

Master Service Agreement

A contract that outlines the general terms and conditions for a long-term relationship between a buyer and supplier.

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O

Operational Procurement

The procurement of goods or services to support the day-to-day needs of a business.

Open Purchase Order

A purchase order that allows for multiple deliveries within a specified timeframe.

Outsourced Vendor Management

The practice of outsourcing vendor management functions, such as contract negotiation or performance management.

Outsourcing

The practice of hiring an external supplier to provide goods or services.

P

PaaS

Platform as a Service- a cloud computing model that provides a complete platform for building and deploying applications.

Payment Terms

The agreed-upon terms and conditions for payment, such as the timeframe and method of payment.

Platform

A set of tools and software that form the foundation for building and deploying SaaS applications.

Privacy Policy

A statement that outlines how user data is collected and used in a SaaS application.

Procurement

The process of acquiring goods or services from suppliers.

Procurement Audit

An evaluation of a company's procurement processes to identify opportunities for improvement.

Procurement Contract

A legally binding agreement between a buyer and supplier that outlines the terms and conditions of a procurement transaction.

Procurement Cycle

The series of steps involved in the procurement process, from identifying a need to payment to the supplier.

Purchase Order (PO)

A document that outlines the details of a transaction, including the goods or services to be purchased, the price, and the delivery date.

Purchase Requisition

A document that requests approval to purchase goods or services.

Purchasing Power

The ability of a buyer to influence the price of goods or services by purchasing in large quantities.

Provisioning

The process of setting up and configuring a SaaS application for use.

Q

Quality Assurance (QA)

The process of ensuring that goods or services meet established quality standards.

Quotation

A document provided by a supplier that outlines the price and terms of a potential sale.

R

Reliability

The ability of a SaaS application to consistently function without errors or interruptions.

Request for Proposal (RFP)

A formal request for suppliers to propose solutions to a procurement need.

ROI

Return on Investment- a measure of the financial benefits gained from using a SaaS application.

S

SaaS

Software as a Service- a cloud computing model in which software is delivered over the internet.

Scalability

The ability of a SaaS application to grow or expand in response to changing business needs.

Security

The measures taken to protect a SaaS application from unauthorized access, data breaches, and other threats.

SLA

Service Level Agreement - a contract that defines the level of service a user can expect when using a SaaS application.

Subscription

A payment model for SaaS applications, in which users pay a recurring fee for access to the software.

Subdomain

A domain that is part of a larger domain, used to separate multiple SaaS applications running on the same domain.

T

Terms and Conditions

The agreement that outlines the legal terms of use for a SaaS application, including payment, data privacy, and service level agreements.

Third-Party Providers

Companies that provide SaaS-related services, such as cloud infrastructure, customer support, and payment processing.

Trial Period

A predefined period of time during which a user can use a SaaS application for free to evaluate its features and functionality.

U

Uptime

The amount of time a SaaS application is up and running and available to users.

User Management

The process of managing access to software applications by authorized users.

V

Vendor Management

The process of managing relationships with SaaS vendors, from acquisition to performance measurement.

W

Web-Based Application

A software application that is accessed through a web browser and hosted over the internet.

Workflow Automation

The use of technology to automate specific tasks and processes in a SaaS application, including document approvals and notifications.

X

XML

Extensible Markup Language- a markup language used to encode documents in a format that can be read by both human and machine.

Y

YAML

YAML Ain't Markup Language - a human-readable data serialization standard used for configuration files in SaaS applications.

Z

Zero-Downtime Deployment

A deployment strategy in which a SaaS application is updated or maintained without any downtime or disruption to user experience.

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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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