How working with a SaaS procurement partner benefits all parties
Sarah Monette | MAR 29, 2023
While some executives relish the opportunity to partake in contract negotiations, the vast majority would much rather skip the process altogether. But for organizations that have to come to rely on software and are exposed to the ongoing rising costs, this simply isn’t an option.
After all, with SaaS prices increasing at a rate that is four times greater than general market inflation alone can account for, and companies overpaying for these tools by an average of 20-30% — often as a result of the industry’s overwhelming lack of pricing transparency — it’s crucial that businesses are taking all the necessary steps to minimize SaaS spend.
This includes negotiating on every possible software contract.
Something that is often easier said than done.
Beyond the mere discomfort some people may feel during the negotiation process, there’s also the fact that time constraints, conflicting priorities, and unequal access to information leave not only you as the buyer, but also the vendor at a disadvantage. Most of the time, this leads to negotiations becoming costly, in terms of both time and money, for everyone involved.
Fortunately, there is another option. One that’s often a win-win for both parties.
Working with a SaaS procurement partner.
What does a SaaS procurement partner do?
While the main purpose of any SaaS procurement partner is to negotiate with vendors on your behalf, this is by no means all they do. Those with experience will also look to refine, implement and enforce procurement processes that protect your business.
While this includes ensuring that the terms of any SaaS contract work in your favor, it also involves taking steps such as conducting security assessments and ensuring sign-off from specific stakeholders before procuring a new tool.
Procurement experts will ultimately use their experience to create a process that balances the need for security and compliance with the desire for speed. Only once they have a thorough understanding of your requirements will they begin negotiations.
Using an intermediary for SaaS negotiations vs going it alone
Buyers and sellers will have their own goals when it comes to SaaS negotiations. While your company — as the buyer — will typically be wanting to acquire the right tool at the right time and for the right price, the software providers will often be wanting to onboard a new, satisfied customer at the highest price and as quickly as possible.
As an intermediary, a SaaS procurement partner will help find the right balance between both parties. Also known as shuttle diplomacy, this negotiation tactic comes with a few key benefits:
They have a solid understanding of the market
Procurement experts are well-versed in the markets they serve, meaning they have a deeper understanding of supplier terms and pricing. For example, SaaS purchasing experts will have insight not only into how pricing models vary, but the specific pricing tactics that different vendors employ, and how they can impact your overall cost.
This familiarity also means they have a more nuanced understanding of vendors, such as their current financial status or what their priorities are for the quarter. This can simplify the process of gathering competitive quotes, while also saving you from the hassle of engaging in multiple sales conversations.
They can uncover key objectives for both parties
Achieving a true win-win situation for both your company and the vendor requires having an understanding of the needs, situations and limitations of both parties.
Rather than make assumptions, SaaS procurement partners use their familiarity with both sides to understand what the key drivers are for each.
If, for example, a vendor cares most about cashflow, a procurement partner can leverage that information to negotiate a lower price. If, on the other hand, they know that your key concern is timing or flexibility, they can balance that need with the right price.
Objectives will vary across projects and quarters so having a partner that knows the right questions to ask and how to communicate key information will help avoid miscommunications and delays.
SaaS procurement experts will leverage existing relationships
Negotiations are often fraught with conflict because, in many cases, neither party has yet established any trust. Procurement partners, however, are motivated to build positive working relationships not only with the companies they negotiate on behalf of, but also the many software vendors they negotiate with.
By working with a SaaS purchasing expert, you can ultimately benefit from these pre-existing relationships, for example your questions may be answered more quickly, and processes are often moved forward faster.
They can streamline reviews and approvals
A frustrating experience for both buyers and sellers is when a previously unknown requirement, such as a security review, pops up at the last minute and threatens to derail a deal.
As a key contributor in the process, a procurement partner can come to the negotiation well-versed in the steps that need to occur, the stakeholders that need to provide sign off, and will know how long that typically takes. Crucially, they also often have the ability to escalate it if and when needed to ensure that both you and the vendor are able to sign on the dotted line on time.
The benefits of working with a procurement partner
While we’ve touched on some of the wider benefits of using a SaaS procurement partner, let’s have a look at some of the specific advantages to both your company and the software providers you wish to renew with or buy from.
Advantages for the SaaS vendors
Timing is often a key issue with vendors. Trying to encourage a busy buyer to prioritize a contract can be frustrating. By working with procurement partners, sellers have a dedicated resource that is equally motivated to move a contract along.
Software procurement experts are also well-versed in the different needs and requirements of these providers. This allows them to pull forward some steps, such as redlining a contract or discussing implementation terms, if they know it will be important to the customer. This then reduces uncertainty for the seller and helps speed up the negotiation process.
Advantages for you as the buyer
The largest concern for any buyer is often budget. Working with a SaaS procurement partner that has access to exclusive pricing insights and benchmarks can help to ensure you’re getting a fair price for your software.
But it’s by no means the only advantage.
Experienced intermediaries will also have knowledge about the terms you need to be aware of — and how they can be removed or negotiated — such as contract length, auto-renewal clauses, price uplifts and overages.
With the average negotiation consisting of 33 emails and three meetings, the SaaS purchasing process is also incredibly time-consuming. Another advantage of working with a procurement partner is that you can save a substantial amount of time, safe in the knowledge that all the required steps are being adhered to.
In fact, with a tech-enabled SaaS purchasing solution such as Vertice, you can obtain total visibility of the negotiation process — as well as your wider software stack and renewal deadlines — at any time, while having the ability to make approvals in a single click. What’s more, you can set up custom workflows to add any internal stakeholders as owners, approvers or watchers for specific contracts, ensuring that all the right teams are kept in the loop.
Work with a partner you can trust
At Vertice, our team of experienced SaaS experts know the intricacies of the purchasing process from either side of the deal, meaning we know what to look out for in software contracts and how best to negotiate terms that will best suit your requirements.
For further insights on how Vertice can not only support your SaaS purchasing process, but also help you manage your entire software portfolio, have a read of this. Alternatively, see for yourself how much you could be saving on your annual SaaS spend with a free analysis of your SaaS stack.