The Ultimate Guide to SaaS Vendor Management for 2025

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Managing SaaS vendors is crucial for businesses in 2025 as more companies rely on software for growth and efficiency. On average, organizations use around 300 to 400+ SaaS applications, making it harder to manage vendors effectively.

Many businesses still struggle with poor vendor management, leading to higher costs and security risks. However, a solid SaaS vendor management strategy can help control costs, improve processes, and build long-term partnerships.

Let's explore the best practices to manage vendors effectively.

Most businesses invest poor efforts in managing SaaS vendors, resulting in increased SaaS spend and security breaches.

However, some businesses and vendor managers caught wind of it and have deployed SaaS vendor management software to manage software providers, as manual SaaS vendor management is not feasible.

But before we talk about the software, let us first understand what is SaaS vendor management, its importance, best practices, and how you can approach it in this ultimate guide.

TL;DR

• The process of evaluating, selecting, and managing SaaS vendors to optimize costs and improve relationships, ensuring that the right vendors are chosen for the organization's needs.
• Effective vendor management controls SaaS spending, simplifies renewals, reduces security risks, and prevents duplicate applications that increase costs.
• To manage vendors well, use a vendor management tool for centralized monitoring, negotiate pricing, track SLAs, and ensure security compliance.
• When choosing a SaaS management platform, prioritize features like app discovery, transparent pricing, contract management, and automated workflows for ease.
• CloudEagle offers a comprehensive solution for optimizing vendor relationships, with contract tracking, procurement workflows, and detailed insights to control SaaS spending.

1. What Is SaaS Vendor Management?

SaaS vendor management is the process of researching, evaluating, selecting, and managing SaaS vendors to build a healthy relationship. It necessitates complete control over SaaS vendors, aiming to optimize SaaS spend.

The term “SaaS vendor management” is not limited to managing software vendors; it refers to a complete lifecycle. This life cycle includes:

• Understanding the requirements,
• Vendor research,
• Creating RFPs and RFQs,
• Selecting the right vendor,
• Negotiating and purchasing the product,
• Implementing the application,
• Usage and renewal tracking,
• Constant engagement
• Renegotiation.

A. Goal of SaaS Vendor Management

Managing software vendors can be cumbersome if you don't have an effective SaaS vendor management process to keep things in line.

The primary goals are to get complete visibility over SaaS vendors, track their policy changes, communicate, and maintain a good relationship to optimize your SaaS spend.

It is said that an average vendor relationship lasts less than three years; this isn't a great sign.

Vendor relationships are supposed to last longer to keep your SaaS spending under control. The key to longer relationships is effective SaaS vendor management.

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If you don’t track SaaS vendors, you'll often end up paying more during every renewal. Maintaining a healthy relationship with these vendors will open up opportunities for discounts and cost-saving plans.

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2. Why Is Managing Software Vendors Necessary?

Do we need a SaaS vendor management system to track vendors?

Business owners frequently ask us the question mentioned above, and we consistently provide the same answer:

"SaaS vendor will regularly increase their prices by 5% to 7% each year. So, it is necessary to have a SaaS vendor management system in place to keep track of vendors, pricing, benchmarks, policies, and so on, so you won't be caught off guard."

Your requirements grow as you scale your business. To maintain a seamless flow of operations, you'll start using more applications, and without a management system, it'll be challenging for the IT and security teams to track applications and vendors.

It's difficult to determine if your teams are using your apps efficiently, where your SaaS expenses are growing, or if your SaaS stack contains duplicate applications.

To prevent this, you'll require comprehensive insight into your applications, which a SaaS vendor management platform can provide.

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Losing $135,000 is not something to overlook. Thousands of applications are rolling out daily, and your employees might purchase unsanctioned apps with overlapping functionalities.

How will you identify these duplicate apps and shadow purchases if you don't have a proper SaaS vendor management solution?

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Now is the time to invest in vendor management and optimize your stack. Apart from decluttering your SaaS stack and giving you complete control, there are a few more reasons why you need vendor management.

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Before we get to the reasons, check out this exciting customer story from Iffi Wahla, the co-founder and CEO of Edge. He recalls how his team streamlined vendor management using CloudEagle.

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A. Gives Control Over SaaS Spend

Studies show that 90% of companies pay more than they use, with many overlooking their SaaS contracts. Increased spending often happens when apps are purchased without fully understanding the requirements.

SaaS vendor management software provides accurate usage insights and spending data, helping finance and procurement teams negotiate better contracts and reduce unnecessary costs.

B. Surprise Pricing Trap

Some vendors advertise low prices, but businesses often assume this covers all features, onboarding, and support. However, after signing the contract, extra fees for implementation, support, and other services may arise, making the total cost higher than expected.

A vendor management system like CloudEagle helps you research vendors, read reviews, and talk to customers, ensuring you make the right decision before purchasing.

C. Bird’s Eye View

Businesses are more flexible now, with employees able to access browsers, install and purchase apps without consulting finance teams. However, this "shadow IT" drives up SaaS spending, as finance teams often lack full visibility into all applications in use. Vendor management platforms provide complete visibility, helping teams spot free and duplicate apps caused by shadow IT.

D. Service Level Agreements

SLAs are mandatory commitments a vendor must offer, irrespective of contract pricing.

SLA necessitates

• Services and functionality of the SaaS application.
• Scope of the contract
• Termination clauses and penalties
• Minimum software uptime guarantee
• Security promises and vendor compliance guidelines
• Minimum response time details
• General support details.

For instance, your business incurs a massive loss of revenue due to application downtime. If the vendor has yet to sign an SLA, you cannot hold them accountable for your loss, as it doesn't state so in your vendor agreements.

Poor vendor management will lead to your team accepting the vendor’s proposal without SLAs, which will be detrimental to your organization.

E. Security Risks

Shady vendors are the ones that don't sign SLAs because, most of the time, their applications won't be legitimate. We talked about shadow IT previously and how vendor management can give a bird's-eye view of all the applications.

Shadow IT, on the other hand, puts your business and all critical data at risk. This is why managing SaaS vendors is critical, as it can eliminate shadow IT and its associated security risks.

Using SaaS vendor management software will mandate that vendors comply with prevalent security regulations. This software will assist you in identifying vendors with inadequate compliance requirements, allowing you to remove them and maintain a secure stack.

F. Penalties

So, you found a duplicate app, which is excellent, but as you talk to the vendor to cut ties, they'll hand over an invoice for a penalty stating early agreement termination.

These penalties would be stated in the service level agreement. However, your team wouldn't have noticed it as they don't have a cloud-based vendor management system that would have warned you of the vendor's rules, guidelines, and termination clauses.

And yes, SaaS termination penalties do exist.

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It is essential to perform vendor research before signing a contract. The research will reveal their pricing plans and terms and conditions, saving you time and money.

G. Security Breach and Indemnity

Here's an interesting scenario: Shadow IT goes unnoticed, your teams are using a duplicate application, and a security breach occurs where sensitive customer data gets stolen.

What happens next?

Your customer will file a lawsuit against you.

A cloud-based vendor management system would have alerted you to sign an SLA with an indemnity clause to safeguard your business against civil lawsuits.

Since your team didn’t pay attention to the SLAs, you don't have indemnity and might be sued by your customers, which could cause a huge loss of reputation for your organization.

H. Vendor Renewals

SaaS vendors will not include an alert system for contract renewals because they want your contracts to be auto-renewed.

Auto-renewal is one of the major reasons why organizations overspend on SaaS. Check out this exciting customer story from Wefunder and how auto-renewals affected them.

SaaS vendor management software like CloudEagle has renewal workflows to help you stay ahead of contract renewals. You can use VMS to gather usage data, negotiate with your vendors effectively, and optimize your SaaS spend.

A comprehensive SaaS vendor management software can benefit your business in many ways, as mentioned above.

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3. SaaS Vendor Management Best Practices

We listed the importance, and now let's discuss the best practices for effective SaaS management.

A. Use A SaaS Vendor Management Tool

Manual vendor management can be tedious and time-consuming, as a business uses 150+ SaaS apps on average. Keeping track of them manually will require loads of documents and sheets that are not scalable and secure.‍

Each application generates loads of data from usage insights, contract details, spend data, renewals, etc. Documenting them on a spreadsheet is not scalable; the solution here is to automate the process using a vendor management system.

Your team must use a SaaS vendor management system to handle all the applications and vendors efficiently.

B. SaaS Negotiations

Not much emphasis is given to SaaS negotiations; businesses pay the list price of an application and later wonder why their SaaS spend is so high.

This is where a SaaS vendor management tool can help you with deeper app usage insights and spend data; your procurement team can leverage this data and ace vendor negotiations.

Getting accurate app usage insights is only possible if a vendor management system is capable of integrating with your apps and internal systems.

A VMS is redundant if it doesn't come with custom API integrations; be mindful of the integration aspect while choosing a VMS.

C. Don’t Miss Out on SLAs and Renewals

We stressed the SLAs previously; be sure to register all the SLAs to your VMS so you can get alerts and reminders when an application malfunctions.

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3. SaaS Vendor Management Best Practices

We listed the importance, and now let's discuss the best practices for effective SaaS management.

A. Use A SaaS Vendor Management Tool

Manual vendor management can be tedious and time-consuming, as a business uses 150+ SaaS apps on average. Keeping track of them manually will require loads of documents and sheets that are not scalable and secure.‍

Each application generates loads of data from usage insights, contract details, spend data, renewals, etc. Documenting them on a spreadsheet is not scalable; the solution here is to automate the process using a vendor management system.

Your team must use a SaaS vendor management system to handle all the applications and vendors efficiently.

B. SaaS Negotiations

Not much emphasis is given to SaaS negotiations; businesses pay the list price of an application and later wonder why their SaaS spend is so high.

This is where a SaaS vendor management tool can help you with deeper app usage insights and spend data; your procurement team can leverage this data and ace vendor negotiations.

Getting accurate app usage insights is only possible if a vendor management system is capable of integrating with your apps and internal systems.

A VMS is redundant if it doesn't come with custom API integrations; be mindful of the integration aspect while choosing a VMS.

C. Don’t Miss Out on SLAs and Renewals

We stressed the SLAs previously; be sure to register all the SLAs to your VMS so you can get alerts and reminders when an application malfunctions.

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‍You cannot always be present to keep your apps in check. If you have properly encoded the SLAs in your VMS, it will automatically alert you in the event of application downtime, saving your business from revenue losses.

Auto-renewals are a SaaS buyer's nightmare; you cannot stay updated with renewals through manual vendor management. A VMS will send renewal reminder alerts 90 days in advance.

This will help you devise a negotiation plan based on your usage, and help you renew the contract on time.

D. Centralize Your Procurement Process

The main cause of shadow IT is a lack of authority. Create a defined SaaS purchasing process that includes everything from raising and approving purchase requests to purchasing the applications.

A SaaS vendor management tool like CloudEagle can automate this process for you using procurement workflows.

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With automation, the request will be automatically allocated to the DRI for approval; once granted, the procurement team is notified, and they can negotiate with the vendor by leveraging the usage insights and purchase the application.

This will save a lot of time, and the teams will have complete visibility over the entire procurement process.

E. Ensure Security Compliance

Your business will be operating on heaps of data, and it is your responsibility to keep your business and customer data secure.

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With hundreds of third-party SaaS apps in your stack, it is more important than ever to ensure that you and all other vendors adhere to the required security compliance.

Some of the security compliance that cloud businesses must adhere to,

• GDPR
• PCI DSS
• Service organizational controls (SOC)
• AICPA
• ISO

Using applications that are not compliant with these security audits will make your stack vulnerable to cyber attacks, and you'll lose sensitive data that would gravely impact your business.

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For example, SOC 2 compliance proves that the application was built by following all the necessary security protocols and is capable of safeguarding customer data.

Likewise, each certification has its protocols, and businesses must have those certifications. Keep your business secure by not partnering with vendors that aren't compliant with security standards.

A SaaS vendor management system will have access to all your data, so it is essential to select one that meets the necessary compliance standards.

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4. SaaS Vendor Selection Checklist to Select the Right Vendors

Our customers often ask, "How do I select the right SaaS vendor?" Here's a quick vendor selection checklist for you to make the process easier.

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Once you’ve selected the right SaaS vendor, they’ll become a part of your vendor management plan, and next, we’ll show you how to select a platform for effective management.

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5. How to Select a SaaS Vendor Management Platform?

Finding the right SaaS vendor management software can be challenging with hundreds of tools on the market. To make it easier, we've listed a definitive checklist; look for these features while selecting your ideal VMS.

A. Application Discovery

Effective vendor control isn't feasible if you don't have a comprehensive view of your entire SaaS stack. You must have 100% application visibility, and more than that, look for a tool that provides detailed app usage, optimization insights, and accurate spend data.

B. Pay for What You Use & Transparent Pricing

The best way to save money is to pay only for the needed features. Be mindful of this factor while selecting SaaS vendor management software—check if the vendor has scalable pricing and is willing to negotiate with you and quote you a price based on your requirements.

You can build healthy, long-term relationships with vendors like these.

Hidden pricing is a major red flag to watch out for when selecting a VMS to manage SaaS vendors. 55% of SaaS vendors keep their pricing hidden; you'll have to talk to their sales team to know their pricing.

Save time by choosing a vendor with transparent pricing plans and good value per feature.

C. Contract Management and Renewal Reminders

Contracts and vendor invoices will likely get lost in your inbox or spreadsheets. It won’t help you make the right decisions during renewals. You need a tool that offers dynamic contract management functionality and can hold all necessary vendor documents in one place.

Do you think sending renewal reminders is enough? What if the reminders get lost in your inbox or go directly to spam? You'll miss the deadline, and the contract will be automatically renewed.

Although most platforms provide renewal reminders, only a handful of software goes the extra mile to ensure you renew on time.

D. Vendor Research

Why waste time searching for vendors through Google? Vendor research must be easier and not take most of your time. Now, platforms allow you to look into the specifics of a vendor, such as their name, customers, reviews, testimonials, and so on.

A platform with vendor research functionality will help you quickly shortlist the right vendors without breaking a sweat. You can also leverage the price benchmarking data to find the most cost-effective vendor.

E. Procurement Workflow

Shadow IT can be eliminated only if you have a centralized SaaS procurement process.

Procurement workflows will automatically assign intake requests to approvers and help the procurement team purchase the product in no time.

Choose a platform that saves the time of your procurement team, so they can focus on managing software vendors and not chasing approvals.

F. Outsourced Procurement

Maintaining good vendor and supplier relationships is necessary. To do that, you need to ace your negotiations, but what if your team lacks the bandwidth to negotiate?

This is where you need the help of SaaS buying experts, who can perform detailed vendor analysis and negotiate on your behalf to purchase the right product at the right price.

Select a SaaS vendor management platform that offers on-demand SaaS buying services to save on SaaS spend and build a healthy relationship with the vendor.

G. Onboarding & Offboarding

How will you track app usage insights if you haven't provisioned apps for the users? This is a crucial functionality to be aware of and a SaaS vendor management best practice.

Effective employee onboarding is necessary for seamless SaaS application management. Or your IT team wouldn’t know who is using the app and how much they’re using it, leading to redundancies in your SaaS stack.

Likewise, if you don’t effectively deprovision users after they quit, you risk the chance of your data being used by others. So, select a VMS that offers automated onboarding and offboarding functionality.

H. ‍Integration with Existing Systems

When choosing a SaaS vendor management platform, it must work well with the apps your company already uses. You don’t want to change your current systems too much. The platform should connect easily with your existing software, like your CRM or finance tools, so everything works smoothly together.

The platform should let data flow automatically between systems, which saves time and reduces mistakes. Look for a VMS that has easy connections with other tools you already use, making everything run more efficiently without extra effort.

I. User Experience and Ease of Use for Teams

It’s important to pick a SaaS vendor management platform that’s easy for your team to use. The platform should be simple and user-friendly so everyone can quickly understand how to use it. This will save time on training and help your team focus on managing vendors, not figuring out how to use the software.

A good VMS should have a clear design and easy-to-follow steps. Your team should be able to submit requests, track contracts, and check vendor info with no hassle. A platform that’s easy to use keeps things running smoothly and makes everyone’s job easier.

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6. CloudEagle.ai: The All-in-one SaaS Vendor Management Platform

Managing SaaS vendors won't be complex if you use the right SaaS vendor management software, like CloudEagle. Let’s have a quick rundown of its features:

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A. Real-Time Application Usage Monitoring

CloudEagle.ai allows you to monitor your SaaS applications in real time. It tracks which applications are being used and how often, giving you clear insights into your SaaS usage patterns. This data helps you make informed decisions about your SaaS portfolio.

With this feature, you can quickly identify underutilized tools and make changes to optimize usage. Whether it’s eliminating redundant subscriptions or adjusting licenses, real-time monitoring helps you avoid wasted spending.

B. Complete SaaS Spend Visibility

CloudEagle.ai provides complete visibility into your SaaS spending. The platform aggregates your SaaS costs across teams and departments, offering a clear view of where money is being spent. With these insights, you can identify areas of overspending, such as redundant subscriptions or unused apps.

C. AI-Powered Contract Management

CloudEagle.ai leverages AI to streamline contract management by automatically scanning and analyzing contracts. It highlights important dates, price changes, and renewal clauses, ensuring you never miss a deadline. This approach simplifies reviewing and managing vendor agreements, reducing the risk of costly oversights.

Find out how CloudEagle.ai helped Oyster HR eliminate spreadsheets with centralized contract management.

D. Automated Procurement and Approval Workflows

CloudEagle.ai automates your procurement and approval workflows. By routing requests automatically to the right people, it eliminates bottlenecks and paperwork, saving time and reducing errors. This automation allows your team to focus on strategic decisions instead of administrative tasks.

Discover how RingCentral consolidates SaaS management and procurement with CloudEagle.ai.

E. Renewal Reminders and Expert Negotiation Assistance

CloudEagle.ai sends timely renewal reminders to ensure you don’t miss important contract dates. This proactive approach helps you evaluate your vendors, decide if a renewal is the best option, and negotiate better deals.

CloudEagle.ai also offers expert negotiation assistance. Their team of experienced professionals helps you get the best deal with your SaaS vendors, ensuring you avoid auto-renewals and expensive terms. This way, you always get the most value from your software.

F. Compliance Tracking for Security Standards

CloudEagle.ai makes compliance tracking easy by automatically verifying that your SaaS vendors meet essential security standards, such as GDPR, SOC 2, and ISO 27001.

This helps reduce the risk of data breaches and ensures your vendors comply with industry regulations, especially for businesses managing sensitive data.

G. Vendor Performance Analytics

CloudEagle.ai helps track vendor performance with important metrics like uptime, response time, and user satisfaction. This makes it easy to see if vendors meet your needs and helps you make decisions based on data to ensure you're getting the value you expect.

With performance analytics, CloudEagle.ai enables you to proactively manage your vendor relationships and improve the quality of service.

H. Smart Vendor Risk Assessment

CloudEagle.ai helps assess the risks associated with each vendor. It analyzes factors like financial stability, cybersecurity practices, and overall reliability so you can make informed decisions about vendor partnerships. 

It ensures your vendor choices align with your company’s values and security needs, keeping your business safe.

I. Cross-Department Collaboration via Slack

CloudEagle.ai integrates with Slack to enable seamless cross-department collaboration. Teams from IT, procurement, finance, and legal can work together in real time, ensuring everyone is aligned and informed. 

It boosts collaboration by ensuring everyone stays informed and involved in decision-making.

J. Outsourced Procurement

CloudEagle.ai offers outsourced procurement services where experts handle the heavy lifting of vendor selection, contract negotiations, and purchase management. This frees up time for your team to focus on core business activities.

This service is ideal for businesses that want to simplify procurement processes while maintaining control over their strategy and budget.

K. Dynamic Price Benchmarking

CloudEagle.ai’s price benchmarking feature helps you compare pricing across different SaaS vendors. It gives you real-time insights into market rates, ensuring you’re not overpaying for SaaS. By using dynamic benchmarking, CloudEagle.ai helps you negotiate better deals and secure more favorable pricing.

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7. Wrapping Up

SaaS vendor management has become a necessity for organizations in 2025. Because of inflation and the recession, organizations have finally paid attention to their rising SaaS spending and decided to take action.

That's why we created this ultimate guide to help business owners learn more about vendor management and find the right software for managing software vendors. In this blog, you learned about

• The importance of vendor management software.
• How to select software to manage software vendors?
• SaaS Vendor management best practices.

CloudEagle is the only platform that offers comprehensive SaaS vendor management, application management, contract and renewal tracking, license management, outsourced procurement services, procurement workflows, and cost optimization insights all in one place.

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"CloudEagle’s team keeps delivering results of actual cost savings, both in time and money!" My vendor management team uses CloudEagle daily and every month for our internal review, and for quarterly board meetings, I use CloudEagle actively to pull out reports."

- Troy Otillio, CEO, Aira‍

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‍Frequently asked questions

1. What is the role of the vendor manager?

The vendor manager oversees the entire vendor lifecycle and creates a roadmap or plan to improve the process without bottlenecks. The vendor manager will constantly connect with the vendor to maintain strong vendor and supplier relationships.

2. What does a vendor management system do?

A vendor management system is SaaS or cloud-based software that helps the team manage the entire vendor lifecycle and automates repetitive processes within the cycle. It helps the team search for vendors, engage them, manage them, and track all their contracts in one place.

3. What makes a good vendor manager?

Vendors are more like your business partners, and it is necessary to maintain a healthy relationship with those partners. A good vendor manager builds that relationship by engaging with vendors regularly and maintaining a good working relationship by sharing ideas and strategies, accepting feedback, and more.

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