How Vertice can enhance your procurement process
Aimee Manning | DEC 12, 2023
7 min read
With procurement now playing more of a strategic role within the average organization, the pressure is on for leaders to balance these priorities with their day-to-day operational demands. But with limited resources, rapid advances in technology, evolving compliance requirements and changing market dynamics, it’s no easy feat.
One such area of procurement that is increasingly adding to these complexities is software.
In addition to dealing with the rising costs of these tools, procurement leaders also have to juggle the sheer volume of applications now in use across the business, not to mention the subsequent cost – data indicates that the average annual SaaS spend per employee is now $7.9K, an increase of 27% in just one year.
And it’s not just the initial purchase they have to contend with, it’s also the renewals of these subscriptions.
With 89% of contracts containing auto-renewal clauses and 33% stipulating that the vendor can increase its pricing at the point of renewal, companies have no choice but to keep an eagle eye on their software stack, or else risk paying for unwanted applications – or licenses – at a higher rate.
But without a SaaS purchasing platform such as Vertice, this is near impossible.
Why Vertice might just be the solution to your biggest SaaS procurement challenges
The complexities of SaaS purchasing are only increasing, and with limited resources and an ever-growing software portfolio, the procurement function within most modern organizations is at risk of becoming seriously overwhelmed.
But what challenges can a software procurement solution actually seek to resolve?
- Budget constraints
The cost of just about everything is rising and software is no exception. With prices increasing by an average of 12% each year, SaaS inflation remains significantly higher than general market inflation, which currently sits at 5.2%.
This poses a huge problem to you as a procurement leader. Not only must you find ways to manage these cost increases while maintaining value for money across your SaaS stack, but you also need to remain strategic in your organization’s choice of tooling, ensuring that you’re in a position to invest in new technologies, for example generative AI.
Fortunately, a software procurement solution can help mitigate the impact of SaaS inflation and free up your budget without compromising on your preferred tools.
How?
To start with, by identifying the cost-saving opportunities that exist within your stack.
By automatically tracking SaaS license utilization across your organization and highlighting instances of duplicate and redundant applications, you stand to save as much as a third of your total SaaS spend – for companies with more than 400 employees, this can equate to more than $1.3 million per year.
Then there’s the fact that the platform’s automation capabilities allow for a streamlined SaaS procurement process, eliminating the occurrence of maverick spending. In other words, purchases that are made without the knowledge or approval of procurement, IT or finance.
In addition to the compliance and security risks associated with maverick buying, the purchasing of software at an employee level ultimately dilutes buying power, meaning that you lose the advantages of negotiating volume deals or even just leveraging intel to secure the best possible deal.
Lack of pricing transparency
Eliminating maverick spending and identifying the cost-saving opportunities that already exist within your SaaS stack isn’t the only way you stand to save on your subscriptions.
A software procurement platform such as Vertice can also help you tackle the challenge of pricing transparency, by providing you with access to the pricing benchmarks and real-time transactional data for more than 16,000 vendors worldwide.
With 90% of buyers overspending by an average of 26% – often substantially more – this intel is crucial in helping you understand if you’re getting the best possible price and providing you with much-needed leverage and buying power.
Difficulty managing hundreds of vendors and keeping on top of renewals
As SaaS stacks grow, so do the vendor relationships that need managing.
But with each tool requiring an average of five hours negotiation time, procurement teams handling an average of 130 applications would be required to spend 650 hours a year negotiating with vendors.
That’s not far off two full working days per week.
It therefore comes as little surprise that many of the tools considered as tail spend get overlooked. The problem, however, is that while these smaller contracts may not be deemed significant – at least not in terms of their individual value – collectively, they can have a substantial impact on your organization’s overall expenditure.
Which ultimately means that you could be wasting a huge amount of SaaS spend by allowing department heads or individual employees to handle and negotiate these contracts.
After all, not only do these employees often have limited time themselves, but they will typically lack the expertise and data required to secure the most favorable rates. Then there’s the fact that many will have misaligned incentives, prioritizing speed of accessing the tool over securing the best commercial outcomes.
By letting Vertice handle the procurement and renewals of these tools, leaving you to focus on your most strategic contracts, you can ensure that you’re getting the best possible price and terms on every software contract, while also reaping the benefits of working with an intermediary that has a solid understanding of the market, can uncover key objectives for both parties and can enhance existing vendor relationships further.
Those aren’t the only advantages though.
The platform itself will also alert you to upcoming renewals – even for the tools you choose to negotiate yourself – streamline workflows, provide access to pre-filled security questionnaires, and automatically benchmark the terms and conditions within the contract to ensure you’re getting a good deal compared to other customers.
Get a better idea of how Vertice’s Diligence Insights can take the legwork out of SaaS contract management, while giving you time back in your day to focus on the strategic accounts that are key to your business.
Data inaccuracies
Without an automated software management solution in place, it’s almost inevitable that mistakes will be made as your company scales and your SaaS stack grows. At an enterprise level company, the odds of data inaccuracies are even higher and more difficult to manage.
In fact, inaccurate data can lead to missed renewals, incorrect spending figures and even compliance issues. This is because manual data entry and spreadsheet management are inherently error-prone.
The bottom line is, accurate and reliable data is key to making informed decisions regarding renewals and negotiations, and these data inaccuracies can also hinder your ability to identify cost-saving opportunities, optimize license utilization and evaluate vendors.
Accelerate your SaaS procurement process with Vertice
Tasked with strategically managing budget constraints by prioritizing spending, optimizing procurement processes and seeking innovative approaches to securing cost and time savings without compromising quality or compliance, the role of a procurement leader is no walk in the park.
At least not without the support of an automated procurement process.
Which is where Vertice comes in.
See for yourself how we enabled one company to cut its SaaS procurement time in half, while also achieving 33% savings on its most strategic contracts.
