Businesses usually rely on third parties to purchase applications and are entangled in a lengthy and challenging procurement process.
The SaaS procurement process is time-consuming. To reach a successful outcome, procurement teams must undergo a cumbersome process of examining the RFPs, negotiating terms, reviewing the quotes, and procuring the products.
Without a SaaS management solution, keeping track of the entire process can be challenging. Also, you risk overspending and face difficulties in ensuring fair and ethical vendor relations.
All these complexities can be fixed using a SaaS management and procurement platform, as it will provide SaaS visibility, centralized contract and vendor management, procurement workflows, and automate the procurement process so you can focus on more strategic tasks.
Keep reading to learn about the challenges faced by procurement teams and why they need an SMP to overcome them.
Procurement teams: what do they do?
The procurement team is crucial to the success of a business since they are in charge of developing a sustainable and financially sound strategy for acquiring applications for the enterprise.
Procurement teams, in essence, serve as a strategic interface between internal stakeholders with purchasing needs and potential vendors. They are in charge of managing procurements, maximizing the value of vendor partnerships, and mitigating any third-party risks.
Typically, they manage the intake requests, follow up with the stakeholders for approval, submit the request to the vendors, collaborate with the finance team, and then procure the product.
Manually, this is a time-consuming process. This is where SaaS management software with procurement capabilities can assist the teams in automating the process.
The ideal SaaS procurement process
The procurement process is an organization's steps to purchase the SaaS applications required to meet its business goals. Each procurement stage is equally important, from the first buy request to receiving the specific product.
While the procurement process has a general outline, the specifics are modified by the requirements and objectives of each enterprise. The following factors will have an impact on the stages of the procurement process:
- The firm's size
- Business plan
- Enterprise structure and location
- Human resource management team/departmental structure
- Budget and spending requirements
- Legislation and industry-specific laws
Identify a product or service need
An explicit requirement must be identified before the procurement procedure begins. This need could be a new tool to improve the firm's workflow, or it may be more complicated, such as replacing a complete product package.
Based on the company structure, this process can be controlled by procurement specialists and procurement managers. During this phase, a budget will be established, and a thorough evaluation of spending should be assessed.
Evaluate the option and select the vendor
The next step is to evaluate several vendors before choosing one that fits critical requirements. This is where detailed research is required, and if your procurement team doesn’t have the bandwidth to look for it, you can leverage the vendor research capabilities of an SMP.
Soliciting suppliers is a procedure that can vary from simple to complex, depending on the nature of the requirement(s). Several requests for quotations (RFQs) are typically made to several vendors so the company team can find the best deals and options.
Remember that price should not be the only factor to consider when selecting a vendor.
Negotiate the contract
Contract terms should be negotiated with the chosen vendor. Once you've decided on the best vendor for the job, you can begin contract negotiations. This is by far the most crucial stage of effective procurement.
You will specify the cost and agree on other aspects like delivery timetables, particular terms and conditions, and more. It is beneficial to evaluate previous contracts frequently to identify areas for improvement, thereby allowing you to take a more intelligent approach moving forward.
SaaS contract negotiations are crucial and the first step to optimizing SaaS spending. So you seek the help of assisted-buying experts to negotiate for you and secure the best deals while your procurement team can focus on their core tasks.
Order Management and Implementation
As the services are provided, someone must be responsible, preferably the end-user, for ensuring that all requirements have been met: delivery timeframes, product volumes, quality, and so on.
During this step of the procedure, teams should assess the efficiency of the product and determine whether the value-for-money offering is worthwhile for the business.
Monitor and analyze the service
Once the product is functional, it must be monitored and analyzed. This will entail following up on the contract terms and verifying that the service meets the organization's needs. The procurement procedure must be repeated if the product undergoes significant changes or upgrades.
If the product has been active for a while and has been thoroughly examined by the team, then the team must determine whether to renew or discontinue it. This decision will be based on the service's effectiveness and the firm's budget and demands.
As previously stated, the procurement process must include a formal evaluation procedure implemented throughout the business.
Maintaining vendor relationship
Here’s another process that most software procurement teams overlook: The work isn’t done after purchasing the SaaS product. Maintaining a healthy relationship with vendors is necessary; they will only be open to discounts during renegotiations.
Also, SaaS vendors often change their policies and pricing plans, so you must monitor them constantly to avoid sudden pricing charges during contract renewals or compliance issues.
What Are the Difficulties Faced by a SaaS Procurement Department?
Poor visibility into the SaaS stack
Purchasing SaaS is straightforward; anyone with a corporate credit card can purchase an application. As a result, individual employees keep adding new products to their SaaS stack without informing the finance and procurement teams.
It is believed that approximately 56% of apps are purchased without the knowledge of IT procurement teams.
Poor visibility into the firm's existing SaaS environment leads to shadow IT, license mishandling, duplicate apps, and missed renewals, all of which add to the sprawl with each new tool introduced to the portfolio.
Furthermore, identifying underutilized or inefficient licenses is far more difficult for IT teams without using application discovery software. Lack of SaaS visibility will lead to increased SaaS spend and many security risks.
Lack of an ideal process
Lack of visibility further poses a challenge to the workflow of the procurement team. In some organizations, the SaaS buying team purchases products without input or essential data points from other teams. In that case, it will be unable to make successful decisions that benefit the business.
Procurement teams can only add the most value to the company's growth when they have all the insights, an ideal process, and complete visibility of purchases, vendors, and contracts.
Moreover, following outdated, manual procurement practices will impact the procurement team's performance, resulting in mistakes, bias, and delays.
According to a Forbes survey, firms that implemented automated processes in their business operations witnessed a 28% increase in revenue year over year.
Businesses implementing a flexible workflow management software solution can decrease manual chores and minimize errors, increasing transparency and improving workplace culture.
Poor negotiation tactics
Poor negotiation technique results in licenses not fitting the company's needs. While doing the best and most significant thing saves time, it rarely saves money.
To avoid shady spending or waste, SaaS buying teams need to pay special attention to the vendor management areas of the purchasing process and contract negotiations.
Moreover, knowing how to right-size software purchases necessitates knowledge of the current SaaS stack, price benchmarking data, details of existing vendors and contracts, and usage data.
However, procurement managers without an SMP will not have the data they need to negotiate effectively with vendors.
Missing out on SaaS renewals
The lack of visibility over SaaS spending and poor procurement negotiations are especially troublesome concerning renewals, which are common in most businesses.
Foreseeing renewals is nearly impossible if you don't know what apps your firm has bought.
It implies that you would have had to scramble more times than you'd want to admit to meet an unexpected contract renewal. The issue is that decisions are typically made reactively, without adequate time to plan for these renewals.
As a result, you're probably renewing apps you shouldn't be - or not bargaining as much as you should.
There will be no proper SaaS renewal tracking system, leading to auto-renewals, where you’ll lose some severe SaaS spending.
Another considerable difficulty procurement teams experience is the lack of contract information with the service level agreements, which hinders a smooth compliance process and check.
Often SaaS contracts are not tracked; they’re stored in a decentralized way, which is more likely to get lost in the clutter.
Due to this, the SaaS buying team will be unaware of the SLAs and may spend most of their time searching for those buried SaaS contracts. As a result, the team will miss out on the opportunity to confirm that the purchased product is compliant.
Procurement teams work to ensure the product is compliant; a mistake here will lead to data breaches and the loss of sensitive customer information.
Managing SaaS costs
Each year, big companies add an average of 30% more SaaS products to their tech stack. This demonstrates that SaaS is becoming more widespread and accounts for a sizable portion of the enterprise IT budget.
However, calculating the ROI of each SaaS is impossible because it is dependent on the level of its adoption (or usage) by staff. As a result, if you don't focus on SaaS usages, functions, and subscriptions across your organization, you'll end up paying off-the-shelf prices.
Without a unified SaaS management and procurement system, the procurement team will lack crucial data and the high-level context needed to make informed purchasing decisions, resulting in overspending and incorrect spending on SaaS.
Why should a procurement team use a SaaS management solution?
SaaS management services make the procuring process quick, smooth, and short. Here are some top reasons why a SaaS buying team must use it;
Better app visibility and control
Making smart, strategic SaaS buying decisions to guide your firm can be challenging without data. However, with complete visibility of the SaaS stack, the procurement team can make empowered decisions with accurate app usage insights and data.
Armed with visibility and usage data, the SaaS buying team can renegotiate clearly and pay only for what is being used. Better yet, combine ad-hoc payments into a single master agreement to make sure no money is lost.
SaaS management services like CloudEagle provide complete visibility into your SaaS stack, and your procurement teams can leverage the data to improve their contract negotiations.
Workflow automation transforms operations by enabling businesses to save time and increase staff productivity. Moreover, issues in the procurement process can be eased with appropriate tools and technology.
The automated procurement workflows free professionals from repetitive work and enable them to concentrate on strategic matters.
Automated workflows remove manual processes, reduce human error, and improve total procurement efficiency, so organizations can ensure that the buying team adds value and a robust bottom line.
From raising intake requests using customizable intake forms and getting them approved to submitting them to the vendors and purchasing the product, all the activity can be streamlined using procurement workflows.
Take The Right Decisions With Vendor Research
SMPs can put an end to wasting time performing software research. They simplify the software search process with the help of an AI-powered vendor recommendation engine.
These solutions help you surface the best software for your needs using the power of machine learning and AI, so you may maximize your software expenditures and expedite your purchasing process.
Here are some features of a SaaS platform that make your vendor search process a breeze;
Discover New Vendors And Products
With ever-changing business needs, procurement managers may find it challenging to find new and emerging vendors with excellent products, cutting-edge features, and excellent customer service. However, you can find them instantly through an SMP.
Most Genuine Reviews
CloudEagle and other SMPs use the most recent machine learning algorithms to generate the essential evaluations with benefits and drawbacks for each SaaS vendor, allowing the procurement team to focus on studying the data and taking away insights rather than finding the data.
Side By Side Comparison
A SaaS management software features a systematic and repeatable strategy to improve your SaaS vendor selection and research.
Procurement managers can compare and analyze SaaS vendors, including pricing, impartially and comprehensively using various criteria and side-by-side comparisons, thereby speeding up the purchase process.
Determines the Most Important Features for Your Industry
Rather than reviewing the feature sheets supplied by SaaS vendors, SMPs help narrow down the relevant features for your industry. This flexibility enables the procurement team to stay on top of procurement trends and choose the best software for the industry and the size of the business.
Improved contract negotiations
Contract negotiation is one of the most effective strategies to keep costs low while getting the highest ROI on your SaaS investments.
The SMPs provide complete assistance in getting the best deal after you've chosen a vendor. With app usage statistics, they help the procurement team negotiate their way to cost savings.
With real-time insights such as internal usage data and peer price information, procurement teams can better manage finances and get the most value for the company's investment.
Also, there are platforms with assisted-buying features, where you’ll be assigned a team of negotiation experts who’ll perform the vendor research for you, negotiate on your behalf, and secure the best deals.
Let your procurement team focus on their tasks while the assisted buyers do the heavy lifting for you.
Pay renewals on time
Never forget a renewal again with SaaS management solutions. SaaS renewals can catch you off guard if you don't have a unified database! SMPs, with renewal reminders and dedicated guidance, can keep you one step ahead of your renewal.
They’ll start the renewal workflows 90 days in advance and escalate them to the stakeholders until the contract is renewed.
Streamline the SaaS procurement process
Raising intake requests and getting them approved for purchasing the product can be cumbersome manually. With an SMP like CloudEagle, you can simplify the entire procurement process within seconds.
Requesters can use customizable intake forms to raise purchase requests based on the type of purchase. And it’ll be automatically assigned to the right stakeholder for approval, so the procurement team can quickly purchase the product.
Also, platforms like CloudEagle let you integrate with Slack, so the requesters can raise purchase requests right from Slack and initiate the procurement process.
Price benchmarking data
For procurement teams, price benchmarking is a game changer. It enables them to make well-informed buying decisions. It validates a supplier's cost-based pricing methodology compared to industry best practices and other prices.
Procurement teams can use SMPs to compare pricing benchmarks, SaaS portfolios, and apps and analyze SaaS app pricing and consumption metrics with other organizations. As a result, people are less likely to overpay for what they use.
Price benchmarking will also reveal what your competitors are paying for the potential application and help you negotiate accordingly.
How can CloudEagle assist a SaaS procurement team here?
Irrefutably, the procurement procedure is time-consuming and complicated to perform manually.
However, solutions such as CloudEagle can help you streamline procurement processes using automated workflows that can handle repetitive tasks independently.
With application discovery, procurement workflows, assisted buying, and vendor management features, it can significantly minimize the SaaS procurement challenges the teams face.
- It streamlines your SaaS stack to be more optimized and affordable by centralizing your purchase and contract negotiations.
- It differentiates SaaS from non-SaaS stack automatically, with no expert assistance needed.
- Reduce upfront costs and maintain a tight check on your savings with cost optimization and negotiation assistance.
- Get regular reminders about future renewals, deadlines, and other important events.
- CloudEagle manages and automates the entire SaaS purchasing process using workflows.
- From price benchmarking through intelligent vendor relationship management and contract negotiations. Your business can save money and time using CloudEagle.
CloudEagle is the only comprehensive SaaS management and procurement platform that does more than discover apps.
Leverage the workflows to streamline your procurement process and increase your procurement team’s productivity by letting them focus on more strategic tasks. CloudEagle’s automation will do all the heavy lifting for your SaaS buying team.
Users can quickly raise intake requests, irrespective of the purchased product; the request will be automatically assigned to the stakeholder and approved.
No effort from the procurement team is required; they just have to collect approved requests, compare them, submit them to the vendor, and purchase the product.
CloudEagle helps businesses manage their technology stack, optimize spending, and streamline SaaS procurement for a competitive advantage.
As Thomas S. Monson states, “The journey of a thousand miles begins with a single step." "Watch your step.”
Take the right step today! Optimize your procurement process with CloudEagle.
Traditional procurement procedures are no longer compatible. By transitioning from outmoded, unregulated procurement to digitized procurement, forward-thinking organizations may fully leverage the greatest proactive and predictive technologies.
After all, we live with limitless SaaS management products and tools with enormous growth and problem-solving possibilities. It is time for the procurement team to catch up with the latest procurement trends.
Procurement teams are responsible for delivering results and making a genuine financial impact throughout their organizations. With solutions like CloudEagle, you can revamp your procurement process and revitalize the team.
Frequently asked questions
1. What Makes A Good Procurement Team?
A great procurement team assesses user demands and business needs and chooses the best procurement strategy to satisfy those needs.
Also, good procurement departments work towards building relationships with internal stakeholders and vendors based on trust, mutual advantages, and inventiveness. Lastly, providing value is a crucial demand for the procurement team.
2. What is SaaS-managed procurement? or SaaS procurement software?
Procurement software is the suite that helps a company automate the operations of procuring materials, licensing, and stockpiling commodities.
Through company policies, controls, and approvals, modern procurement management software guarantees that negotiated savings are implemented. Off-contract spending can be cut by giving staff a self-service, consumer-like purchasing experience.
3. What Are Some Best Practices for SaaS Procurement Teams?
Here are some essential practices and procurement skills that procurement departments follow to make the procurement process smooth;
- Set business objectives.
- Aligning your procurement strategy with your business goals. This paves the way for effective risk management.
- Take licenses and subscriptions that are the right size.
- Negotiate right
- Avoiding paying for unused apps as paying for something you don't need is harmful to the financial health of any firm.
- Take a trial test of the app.
- Understand contracts and their terms and conditions to evaluate their ROI.
- Expert Vendor management
- Plan and forecast app license and termination based on data insights and ROI.