The Ultimate Guide to SaaS Procurement in 2023

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min read time
June 12, 2023
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Do you find managing your procurement process difficult? Are you struggling with quotes, researching vendors, negotiating, and understanding compliance regulations?

Don't worry; you're not alone.

Managing your entire SaaS procurement process can be daunting, and organizations often overlook the opportunity to streamline it.

But on the bright side, there is an easier way to take the sting out of SaaS buying: procurement automation and procurement outsourcing are ways organizations explore in 2023.

This guide will provide an overview of SaaS procurement. And we will also cover the SaaS procurement checklist, challenges, and best practices to overcome them.

Say goodbye to SaaS procurement challenges and streamline your purchasing process with this guide.

What is SaaS procurement?

SaaS procurement is identifying and purchasing the best SaaS applications for a business. It includes conducting market research, evaluating compliance and security requirements, vendor selection, negotiating contracts, signing agreements, and tracking renewals.

SaaS procurement helps businesses purchase the right tools that fit their objectives while focusing on pricing, flexibility, security, scalability, and adaptability.

Procurement automation

Most businesses still rely on manual SaaS procurement process, and they often face procurement delays, security, and compliance issues due to poor vetting and research.

This is where businesses need procurement automation to effectively automate repetitive tasks and focus more on their strategic tasks. Various SaaS procurement solutions are available to help you automate SaaS purchasing and streamline the process.

What is the difference between procurement and purchasing

"Buying a product or a service is not procurement; that is purchasing. “Procurement” is more multifaceted! “Procurement” will assess needs, define requirements, comb the market, and onboard vendors against set criteria. - Victor Manan Nyambala

Procurement and purchasing are sometimes misunderstood as the same thing. However, they are not. The process of acquiring products or services is called procurement, including analysis of requirements, vendor research, negotiation, and contract signing.

The SaaS purchasing process is not the same as the procurement process. It is the act of buying a product, a segment of the overall procurement process.

While the two have similarities, such as negotiating and research, procurement is far more strategic and data-driven. It provides advantages such as improved quality control and management of supplier relationships, whereas purchasing is focused on short-term objectives.

Want to understand this better? Check out a detailed blog to learn more about Procurement vs. Purchasing.

Image showing the difference between procurement and purchasing

What is the ideal SaaS procurement process?

A well-defined SaaS procurement process ensures enterprises pick the correct software-as-a-service (SaaS) solutions that efficiently fit their goals. By following this process, organizations can make educated decisions, reduce risks, and enhance the value of their SaaS investments.

Here are the key steps in the ideal SaaS purchase process:

Assess the requirements of your team.

Before purchasing a SaaS application, it is necessary to analyze the specific requirements that the application will fulfill.

Conduct a detailed evaluation of the team's existing processes. Identify any areas that need improvement. Determine the essential features and capabilities the software should possess to meet those requirements.

Effectively assessing the team's requirements beforehand will enable the procurement team and negotiators to only negotiate for what is needed, preventing unwanted expenses and leading to a better ROI.

Perform a detailed market research

Once the requirements have been defined, the following step is to perform comprehensive market research. It includes looking at various SaaS vendors to pick the one that best meets those criteria. This involves analyzing their distinctive characteristics, reputation, and capabilities, as well as their price, customer service, and other aspects.

Check reviews on platforms like G2 and Capterra. Perform social listening to see what people are saying about the vendor. And engage with your peers to get more hands-on experience with the vendors.

Select the right vendor

After the research and shortlisting, the next step is to choose a vendor. This includes assessing customer service, price structure, and any unique needs for the software's purchase and/or implementation. This allows businesses to find a dependable provider who satisfies all their requirements — and enables them to get maximum value from their IT investments.

Here’s how you select the right SaaS vendor →

Negotiate the contract and SLAs

After selecting a vendor, the next step in the Saas procurement strategy is negotiating a contract with the selected vendor. This includes negotiating the pricing, payment terms, renewal clauses, indemnification, termination, data ownership, security, and many more terms and conditions.

SaaS agreements are a legally binding contract between the vendor and the buyer, so you must not overlook this process. Have a legal team to carefully review the clauses and terms before signing the contract.

An image showing the process in SaaS agreement checklist

Perhaps, check out this SaaS agreement checklist to prepare yourself for the process.

Onboard with the vendor

After finalizing the contract and Service Level Agreements (SLAs), the next critical step in the Software procurement process is to onboard with the chosen provider. This includes integrating the software into your existing systems, training your personnel, and guaranteeing a smooth transition.

The tasks include creating user accounts, ensuring that all data is moved securely, and educating employees on how to use the new system effectively. Effective communication and engagement with the vendor throughout the onboarding process are required for the SaaS solution to be adopted successfully.

Track performance

Once the service is operational, it must be regularly monitored and managed. This involves periodically backing up all data, tracking user activity, and keeping track of system performance.

It is also critical to be updated about any major upgrades or modifications to the product. By doing so, businesses can always have complete control over their IT infrastructure and avoid unanticipated difficulties affecting business operations.

Also, monitoring and maintaining the service ensures that the SaaS solution remains successful and aligned with the organization's goals.

Renewal and license expansion

After utilizing the service for a significant period of time and thoroughly reviewing its effectiveness, the choice to renew or discontinue the service must be considered. This evaluation entails criteria such as the service's efficacy, affordability, and alignment with the organization's changing demands.

A formal review procedure must be implemented into the procurement process to enable an organization-wide evaluation. Based on this evaluation, informed choices on the continuation or termination of the service can be made during the renewal negotiations.

Saas Procurement Challenges That Procurement Teams Face

Procurement teams face numerous challenges when it comes to SaaS procurement. These issues can harm the company's IT infrastructure's efficiency, security, and compliance. Understanding and overcoming these challenges is critical for effective SaaS procurement.

The following are some of the significant challenges that procurement teams confront throughout the SaaS purchase process:

Choosing the right SaaS vendor

Finding an appropriate vendor who satisfies the organization's needs/ goals and aligns with its principles and goals might be difficult. Making an informed selection requires extensive assessment, comparing features, cost, support, and vendor reputation.

One small step can lead to selecting a subpar vendor, leading to poor communication, collaboration, low-quality product, and outcomes. The right approach is to conduct a detailed vendor research before selecting the SaaS vendor.

Data security and compliance issues

83% of enterprises report that their employees store clients’ sensitive data on third-party cloud services without permission.

SaaS applications store sensitive information such as customer details, financial data, passwords, etc. These can be readily compromised in the event of a data breach or during a malware attack.

Purchasing the right SaaS application that adheres to all necessary security audits and rules is a major challenge. To overcome this issue, a SaaS management platform can be used. This platform will automatically detect any suspicious apps. It will also help you make the right choice.

Decentralized purchasing or shadow purchases

On average, companies spend 15% more than they could on cloud SaaS services because of using apps they don’t need.

Decentralized purchasing, or Shadow IT, is a key concern in SaaS procurement and management. It refers to the purchase of SaaS applications without the authority of the IT, finance, or legal divisions. It not only increases SaaS spending but also causes various challenges like data breaches, the rise of duplicate applications, and compliance issues.

Here’s why you should be concerned about shadow IT:

  • Shadow IT costs enterprises $3.4 million on average per year.
  • 60% of enterprises have no visibility into shadow IT spending.
  • 40% of enterprises have experienced a security breach because of shadow IT.

The key is to use a centralized SaaS procurement platform to streamline SaaS buying is key. This automatically prevents employees from going behind your back and purchasing apps independently.

Integration and user adoption

Purchased applications should seamlessly integrate with your existing systems. If not, there is no point in using the application. The same goes for user adoption, too; if your users are finding it hard to get used to the new application, they’re not going it use it, resulting in application redundancy.

Application redundancies aren’t something to overlook. Here’s how you can overcome them →

Non-transparency in the process

Transparency is another reason why manual procurement processes fail. It lowers the chance of accountability and delays the purchasing process. This, in turn, will frustrate the user who raised the purchase request, and they will proceed to purchase the app without IT approval. Shadow IT increases.

Procurement automation eliminates these hassles, and since you’ll be using software, it increases transparency and accountability. Also, a SaaS buying platform will accelerate the purchasing process.

Time constraint

Time is one of the major challenges for procurement teams, especially for a lean team. They’ll have too many strategic tasks, and this repetitive process will only take up their valuable time.

Organizations can outsource their procurement process and let the vendor handle the SaaS purchasing and negotiation for you, giving you enough time for your team to complete their strategic tasks.

CloudEagle - the ultimate SaaS procurement solution for your organization

CloudEagle is a SaaS management platform that helps organizations automate and improve their SaaS buying process with its procurement workflow. CloudEagle, with its extensive set of features and benefits, transforms how businesses handle their SaaS purchasing strategy.

An image of CloudEagle dashboard

Streamlined Procurement Workflows: Automate repetitive request approval activities to speed up the purchase process. CloudEagle's procurement processes guarantee that all stakeholders are involved in making it quick and efficient.

An image of CloudEagle's procurement workflows

Improved Transparency and visibility: Gain comprehensive insight into the SaaS procurement process, including who initiated the request and the status of particular activities. Teams can stay informed and communicate efficiently with real-time tracking.

Assisted buying: You can leverage CloudEagle’s SaaS buying experts to negotiate with your vendors. These experts guarantee that the right product is purchased at the best price, saving the time and effort of your procurement team.

Quick Vendor Research: Use CloudEagle's vendor recommendation engine to speed up vendor research. This tool streamlines the selection process, allowing you to locate the best providers rapidly.

An image of CloudEagle's vendor research

Customizable intake forms: Customize intake forms specific to your software or hardware procurement needs. Configure a workflow relevant to the form, which’ll be triggered automatically when a relevant request is submitted.

Slack for procurement: Users can raise purchase requests from Slack. Once the workflow is triggered, stakeholders will be alerted via Slack. A private Slack group will be created automatically to collaborate. This will help to make informed decisions.

You can outsource your procurement process, and our experts will handle the negotiations and secure the best deals for the applications.

CloudEagle enables enterprises to overcome the hurdles of SaaS procurement by providing a comprehensive, user-friendly platform. Prefer to improve your in-house procurement staff or outsource to CloudEagle? The platform guarantees streamlined operations, cost-effective purchasing, and higher productivity.

Book a free trial with CloudEagle today to enjoy stress-free SaaS procurement while maximizing savings.

Written by
Prasanna Naik
Co-founder, CloudEagle
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