Sven Lackinger is Co-Founder at Sastrify, the digital procurement platform for Software-as-a-Service products. Founded in summer 2020, the firm already supports numerous well-known digital-first companies in buying and managing their SaaS solutions. Before Sastrify, Sven Lackinger founded evopark, the market leading provider for SaaS solutions for parking operators.

In today’s world of digital-first practices, technology vendors are, in many ways, the building blocks of a company’s success – especially for those looking to scale quickly whilst keeping their costs low. While software installation and maintenance demand time and commitment from IT teams, and finding the right developers to come in-house amidst a growing global skills shortage pose further problems, many companies turn to Software-as-a-Service (SaaS) providers to access the same functionality in a more flexible and scalable way.

However, even the management of SaaS partners can create complexities and time demands that many companies struggle to deal with effectively. With the average company running over 110 SaaS applications simultaneously, vendor management to ensure that a business has the right tools and levels of service it needs has become a headache for decision-makers. Our data shows that 78% of businesses overspent on SaaS in 2022. This is often a result of a lack of visibility of contract renewals, different licence and pricing tiers, functionality overlap and under usage, and often leads to significant levels of wasted spend. 

Usually, companies realise they need to manage their SaaS applications more effectively when usage is already out of control. SaaS integrations have been growing annually by 18% in the past three years, and this trend is only going to accelerate between now and 2030. Therefore it’s essential for companies to effectively plan their vendor management strategy from the outset. 

Here we take a look at the common mistakes that many businesses make when it comes to SaaS procurement and management and how they can level up their vendor management strategy to work smarter.

Common SaaS procurement and management mistakes

Rushing in to purchase the first available software or, on the contrary, taking too long to decide which software to use are two common pitfalls for companies looking to invest successfully in SaaS solutions. Most SaaS sales reps provide too much information when selling their services, making it  easy for IT teams to get lost in details that don’t apply to their unique needs and to feel overwhelmed by options. The desire to quickly implement an application feels like an easy win but poses challenges later on, especially if the application isn’t scalable.

It’s also not uncommon for IT tools to become decentralised with today’s distributed workforces, with no clear view of which applications are being used, how, when and by whom. As a result, companies are often unaware that they have multiple contracts for the same tool or that one tool might overlap in functionality with another, leading to duplication. There may also be tools that are barely used by the team, creating inefficiencies and higher spending. 

Once the right SaaS tool is in place for your tech stack, sadly, it’s not always a given that teams are then getting the most out of the subscriptions. Failing to ensure correct user adoption and stakeholder buy-in, or not using the Customer Success Team that SaaS companies usually have in place, can mean that full functionality and usage are not optimised. 

Even after successful SaaS implementation and use, most companies don’t realise they can revisit their current term agreements. Whilst some don’t even know the dates of their renewals, others opt in for auto-renewals, overlooking the opportunity for possible price negotiations and service improvements down the line. 

Establishing effective SaaS management and procurement practices

Turning to an effective SaaS management and procurement system can troubleshoot all the above mistakes. From helping businesses choose the right tools and get the right price to assessing their compliance and security policies and successfully onboarding them, there are many benefits. Here’s a quick rundown.

Product comparisons and price checks

There are thousands of Saas tools on the market, and having the time to filter through them, attend demos and ensure stakeholder buy-in can be overwhelming. A procurement service provides access to a database of benchmarked data on available solutions and reduces the amount of time spent researching and demoing tools; this allows for a quick comparison of each application and outlining the best deals to suit business needs. Tech updates are released daily; having a system that can analyse data in real-time and cut more than 10 hours spent comparing vendors manually is useful. 

Effective and efficient buying strategies 

When it comes to negotiating contracts, most companies don’t have the time required to invest, which risks them ending up with an imperfect deal. SaaS pricing can often appear somewhat opaque to the untrained eye. You might know that you don’t need to pay the list price for a particular piece of software, but how do you know what price is right for the number of licences you need? 

Being able to lean on a procurement platform that brings visibility to often complex pricing and can offer advice on nuances such as a tailored licence mix can result in an optimised outsourcing strategy. 

However, the challenge of ensuring the right price doesn’t end with an agreed contract. Renewals need to be factored in as well. Using a unified platform to track renewals with automated early warning systems and price increase notifications can create a continuously effective SaaS buying strategy, ensuring that opportunities to renegotiate contract terms and achieve better pricing aren’t missed. By enlisting the help of a procurement partner for negotiation expertise and support, teams can save upwards of 10 hours of back-and-forth negotiations per tool. With the average business’ tech stack, including over 100 SaaS tools, the time saved is significant. 

Centralisation, visibility and rationalisation

By centralising all contracts in one place with a platform, leaders get better visibility and minimise the risk of inefficient purchasing, as well as help align SaaS tools with business KPIs. An all-in-one management and procurement platform can analyse usage, help cut redundancies, remove unnecessary apps and functionalities (thus cutting costs) and create smart workflows to ensure long-term, successful collaborations and more efficient decision-making.

New security, risk management, and compliance challenges continue to increase complexity, and businesses are desperate for cost-effective solutions. With 30-40% of technology spending hidden as additional costs within the organisation, it’s essential and time-sensitive to optimise business operations and eliminate shadow IT activities.

When it comes to SaaS strategy, choosing the tools that provide the most flexibility and agility is a must. With SaaS prices rising due to inflation and the cost of labour and as a means to push retention, a dedicated software management and procurement strategy have never been more crucial for businesses to pinpoint cost-saving opportunities. Finding a trusted partner with the technical expertise to generate real value that matches the needs of the business can free up staff to innovate in other areas, achieve growth and get ahead of the competition.