SaaS Procurement Management: Is it Necessary for My Business?

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April 24, 2023
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Are you looking to prevent shadow purchases and streamline your procurement process? Do you frequently face hassles in managing requests for new software tools? If this is the case, it is time to consider using a SaaS procurement management system.

While some businesses may consider procurement management to be an insignificant investment, the reality is that it has become a crucial component of businesses that utilize 100+ SaaS applications.

In this post, we'll take a look at why SaaS procurement management is essential for your company. And how it can help you streamline operations, cut expenses, and increase efficiency.

What is procurement management?

It is the activity of planning, executing, and managing the purchase of SaaS applications from vendors. Its responsibility is to ensure that all the purchasing processes for products, goods, and services run efficiently.

Different industries use different words for it; some call it “sourcing,” and others refer to it as “purchasing” or "procurement."

Procurement management is a proactive method to minimize decentralized purchasing and optimize SaaS spending. Effective management will enable SaaS buyers to maintain healthy relationships with vendors and maintain quality, compliance, and sustainability standards.

The importance of procurement management

Only focusing on cost is definitely not sufficient. Procurement management holds “a strategic position to really support the business growth from a revenue perspective," says Alex Zhong, the Supply Chain Lead at IBM Sterling.

SaaS procurement management is a critical component of running a profitable business. It helps keep overhead costs low and a business successful when done correctly. However, businesses risk excess spending, poor vendor relationships, and delayed production cycles without an efficient procurement management process.

Any business operation requires a regulated procurement process controlled by skilled managers, whether it includes screening SaaS vendors or negotiating the best deal. Businesses can gain a competitive advantage by improving their procurement processes to save money, time, and resources.

Procurement management is not only a business need; it also has an essential impact on a company's bottom line. It can help negotiate profitable production and contracts with suppliers, spearhead new techniques, and even encourage global expansion.

When does the need for SaaS procurement arise?

When a business grows, the requirement for SaaS applications increases, the need for SaaS procurement management arises. As employees rely more heavily on SaaS tools to perform their regular tasks, the risk of unapproved purchases and unauthorized spending can quickly spiral out of control.

This can result in the wastage of resources, security risks, and compliance problems. Businesses can get greater visibility and control over their SaaS expenditures by using a SaaS procurement management system. This also ensure that IT regulations and norms are followed.

How to create a SaaS procurement management process?

“Organizational procurement is a tight balancing act between “cost and quality” on one side and “time and compliance” on the other side, yet a seasoned procurement specialist keeps it evenly balanced,” says Victor Manan Nyambala.

Executing a SaaS procurement management procedure can transform a company's procurement efficiency and efforts to reduce costs.

However, building such a process can be a big endeavor, and knowing where to begin can be tricky.

Here we'll walk you through the essential steps businesses can take to set up an efficient SaaS procurement management process.

Understand your procurement objectives

Defining your procurement objectives is the cornerstone of any SaaS procurement management process. You must identify your goals for using SaaS products and how they fit into your broader business objectives.

For instance, if you wish to improve teamwork, you may require SaaS services that provide real-time communication, project management, and file sharing. If you want to cut costs, you should look into SaaS apps that provide procurement automation, scalability, and pricing clarity.

Knowing your procurement goals allows you to prioritize your demands and effectively use resources. You may also define the metrics that will be used to monitor and assess the efficacy of your procurement management process.

Perform detailed research and shortlist vendors

After identifying your buying goals, the next step is to look at suitable vendors. You might identify possible providers through web directories, industry publications, and peer reviews.

However, assessing the vendor's reputation, financial soundness, and customer service is critical. Look for providers with an established track record in the sector, solid financials, and excellent client feedback. Assess the vendor's data security practices, regulatory compliance, and capacity to provide quick assistance.

Consider the characteristics, functionality, scalability, and cost of each SaaS app as well. Choosing the SaaS app that best meets your company's needs, budget, and IT infrastructure is critical.

Submit RFP

After identifying suitable providers, you must submit a Request for Proposal (RFP). Your procurement objectives, needs, and assessment criteria should all be included in the RFP. It should also include information about the vendor selection process, pricing, and contract terms.

The RFP acts as a road map for the vendor selection process, ensuring all suppliers are evaluated using the same criteria. The RFP should be clear and simple, giving suppliers all of the information they must provide when submitting a comprehensive proposal.

Negotiate the agreement and purchase the product

Once you've decided on a vendor, it's time to negotiate a contract and buy the product. Review the contract conditions with your legal team and discuss pricing and SLAs. Include clauses and provisions that safeguard your company's data security, legal compliance, and intellectual property.

Check that the product complies with your business's IT framework and security standards before purchasing. Test the product extensively to confirm that it suits your needs and is easy to use.

Manage renewals and vendors

Managing renewals and vendors is the final step to creating an efficient SaaS procurement management process. SaaS apps often require annual or monthly subscriptions, and keeping track of renewal schedules and payment deadlines is critical.

Review your SaaS applications regularly to find redundancies in the app and license usage and ensure that they continue to satisfy your business requirements.

Also, work with your vendors after the purchase, as it is critical to maintain a healthy relationship. This includes routinely evaluating contract terms, monitoring vendor performance, and ensuring regular communication.

It’ll also open up new opportunities for renegotiation or discounts during renewal negotiations.

Businesses can avoid risks, provide timely assistance and upkeep, and maximize the value of their investment by efficiently managing relationships with SaaS vendors.

Benefits of SaaS procurement management

Direct effect on the profitability of a business

Purchasing apps and software is the third-biggest expense in a company after employee salaries and office leases, according to a CloudEagle survey.

To maintain profitability, getting the best potential value from these purchases is critical. A streamlined procurement process can ensure that the required apps are secured at the right price. Also, with respect to the pricing benchmarks.

If a company lacks an organized and effective procurement process, even minor expenses can soon add up, leading to unsustainable spending levels. In the long run, this might lead to lower profitability and, perhaps, financial instability.

As a result, organizations must adopt an effective procurement process to reduce expenses and increase the profitability of their businesses.

Improved supplier relationships

SaaS procurement management opens the door for enhanced supplier communication and more effective administration of supplier contracts and performance.

This results in improved trust and stronger relationships with suppliers. All of which contribute to higher-quality products, reduced expenses, and greater business performance.

Better relationships will result in better discounts and easier negotiations with SaaS vendors.

Reduced Supply Chain Risks

A well-planned procurement management strategy can assist businesses in reducing supply chain risks by recognizing and solving possible impediments early on.

Suppliers are vetted, qualified, and continuously managed in a dependable procurement process. Businesses can minimize supply chain interruptions and mitigate risks related to quality, delivery, and pricing risks by engaging with reliable suppliers.

Simplify and standardize the contract lifespan

A modern procurement management system lets you gain control over the contract management process. This will allow you to get visibility into agreements, reduce cycle times, and keep track of compliance.

With predetermined language, templates, and workflows, contract authoring is completed faster and with fewer risks. Contract reviewers can swiftly identify suggested variations from standard norms during discussions to draw attention to risks, make necessary adjustments, and get the necessary permissions before finalization.

Following contract execution, the system allows digital storage and retrieval. Managers receive notification of events, such as contract expirations, to ensure timely action and avoid renewal delays.

Enhanced Productivity and Efficiency

A streamlined procurement process can contribute to enhanced business efficiency and production. Workers can focus on other important tasks when procurement time and resources are reduced, resulting in greater performance and quicker turnaround times.

With an automated procurement management system, businesses can save time and reduce errors by automating manual procedures involved in procurement management. This included purchase order preparation and vendor management.

Challenges procurement managers face while managing the procurement process

Procurement managers are responsible for ensuring that the company gets the most value for its investment in tools. Along with office supplies, raw materials, and other necessary goods. However, they encountered several challenges while handling the procurement process.

Here, we will look at some of the most common issues procurement managers deal with and how they can be managed.

Lack of visibility

This is one of the most significant difficulties that procurement managers come across. Without application visibility, procurement teams cannot verify the purchase request against the existing SaaS stack. And they may purchase an application with overlapping functionality.

Using procurement software that delivers real-time data and analytics, enabling managers to have visibility into all areas of the procurement process, can help overcome this problem.

Decentralized purchasing

Decentralized purchasing is another issue that procurement managers experience. This happens when different organizational divisions buy applications independently, leading to a lack of control and greater spending. This difficulty can be overcome by centralizing the purchasing process using a procurement system.

Poor negotiation skills

Procurement managers are in charge of negotiating with suppliers to secure the best prices and superior apps and services. However, sometimes the procurement teams might lack the bandwidth to negotiate constantly.

To address this issue, businesses can adopt procurement management software like CloudEagle, which comes with an assisted buying feature. The SaaS buying experts will negotiate for you and secure the best product at the right price.

Risk mitigation

SaaS procurement managers face the challenge of reducing procurement-related risks such as supplier bankruptcy, compliance, and quality issues.

Procurement managers can handle this difficulty by using procurement software that helps in implementing risk management measures such as building plans for emergencies, diversifying suppliers, and performing regular supplier assessments.

CloudEagle is the ideal procurement management software

CloudEagle is a comprehensive SaaS spend management platform with SaaS procurement module. The platform offers businesses an extensive array of procurement features to help them streamline their procurement process.

It is a perfect solution for businesses looking to streamline their procurement activities and enhance their productivity. Thanks to its sophisticated procurement workflows, vendor research, and assisted buying capabilities.

An image of CloudEagle background

Procurement workflows: This one of the notable features of CloudEagle. It is intended to automate the procurement process, allowing enterprises to swiftly raise purchase orders, track order status, and keep track of approvals.

As the processes are configurable, organizations can adjust them to their individual needs, ensuring their procurement process is managed smoothly from beginning to end.

It has multiple intake forms for various products, including software and hardware. And you can create cross-team workflows to make the process seamless and centralized.

Vendor research: CloudEagle also comes with an AI-powered vendor recommendation engine. Businesses can use these tools to swiftly and conveniently research vendors, compare costs, and assess vendor performance.

This enables businesses to make more well-versed procurement decisions, ensuring they choose the most suitable vendors to match their specific requirements.

Assisted buying: Another important aspect of CloudEagle is its assisted buying feature. They possess a team of SaaS buying experts who can help businesses simplify the purchasing and negotiation processes.

These experts leverage the price benchmarks, analyze your requirements and budget, and handle vendors you don't have time for. If negotiating with vendors is your issue, then the SaaS buying experts at CloudEagle can take care of it for you so you can focus on more strategic tasks.


The procurement process includes multiple steps and necessitates meticulous attention to detail. Its direct effect on a business's bottom line and success should not be overlooked.

This article went into detail to discuss the importance of procurement management and how to create the process. You might be facing some of the challenges we discussed in the article, but once you overcome them, effective procurement management will benefit your team.

CloudEagle is an automated SaaS procurement management platform to streamline the SaaS buying process, minimize risks, increase compliance, and enhance teams' productivity.

Our team of experts will walk you through the features and functions of our software and answer any questions you may have.

Written by
Nidhi Jain
CEO and Founder, CloudEagle
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