What is a SaaS Purchasing Management Platform?
Aimee Manning | JUL 10, 2023
7 min read
When it comes to not only running but scaling a business, companies have become increasingly reliant on SaaS. So much so that the average organization is now using as many as 130 tools – a number that is growing by an average of 18% year-on-year, according to our own data.
For many though, the management of these software applications is nothing short of challenging.
Why?
Well, aside from organizations having to keep on top of renewal deadlines to ensure they’re not resubscribing to software they no longer require – and typically at a more expensive price point – the sheer size of the modern-day SaaS stack also puts them at risk of hemorrhaging money.
This is because many consist of duplicate tools, redundant software and underutilized licenses – all often contributing to a vast amount of wasted spend. And that’s before you consider that 90% of companies have overpaid for these tools by an average of 26% in the first place – in many cases, substantially more.
So, what’s the solution?
In short, both visibility and a more streamlined approach to purchasing software.
In other words, a SaaS purchasing management platform (SPMP), otherwise known as a procurement management platform.
Here’s everything you need to know.
What is a SaaS purchasing management platform?
According to Lionfish Tech Advisors, SaaS procurement management platforms (SPMP) allow companies to streamline their procurement processes, automate manual tasks, and centralize data and vendor management in a scalable, accessible manner.
While SaaS management and SaaS purchasing platforms have up until now largely operated in silo, the increasing adoption of software applications, the need for businesses to automate and optimize their procurement processes, and the increasing demand for real-time data has ultimately contributed to an industry convergence of both.
And it’s an industry that’s set to grow.
In a recently published industry report, it is estimated that more than half of all organizations using multiple SaaS applications will centralize the management of these tools through the use of an SPMP by 2028.
The question is, why?
What are the benefits of SaaS purchasing management?
So, why is SaaS purchasing management software a must-have for the modern-day organization?
Enhanced visibility
Perhaps one of the biggest advantages to using an SPMP is that it provides organizations – and more specifically, finance, procurement and IT leaders – with a 360 view of the software applications being subscribed to across the business, along with crucial information such as the cost of each subscription, the terms of each contract and even how utilized each tool is.
With this level of real-time visibility into your entire SaaS stack, you’re not only in a position to make more informed purchasing decisions, but you also stand to reduce the possibility of compliance issues, security risks and wasted spend.
Gaining total SaaS visibility is about more than just consolidating your tools in one place though. It also relies on discovering the tools that may have been purchased outside of approved procurement processes – something that the right SaaS purchasing management platform will be able to support with.
Renewal management
With 89% of SaaS contracts now including auto-renewal clauses, it’s crucial that you have a system in place to track the renewal dates and notice periods of every tool within your stack.
The unfortunate reality is that keeping on top of the multitude of different renewal deadlines and billing periods is both challenging and time-consuming, and can cause major headaches for both finance and procurement leaders alike.
Fortunately, a SaaS purchasing management platform tackles this head on by not only providing automated contract tracking and visibility of approaching renewals, but by also handling these renewals on your behalf, saving your team a substantial amount of time and energy.
Maximized return on SaaS investments
SaaS utilization is another huge challenge for organizations, with 30% of all licenses either barely used or not used at all by the intended employees. In departments such as sales, it’s as high as 49%.
Unsurprisingly, this is contributing to a huge amount of wasted spend – especially when you consider the fact that companies are spending $4,680 on SaaS for the average employee, and as much as $9,000 for those in sales.
By using a platform that not only provides you with visibility of your spend, but also an understanding of your usage analytics, you can identify the licenses going to waste and either cancel them or provide the employee with adequate training.
What’s more, the visibility that a SaaS purchasing management platform provides can also uncover instances of feature overlap and duplicate tools, enabling you to rightsize your stack, make more informed SaaS procurement decisions, and drive more ROI from each individual tool.
Less unsanctioned SaaS usage
As SaaS has become more accessible, department heads and even employees are increasingly bypassing procurement processes to subscribe to the tools they need themselves. Something known as maverick spending.
But this has huge implications for not only finance teams, but also procurement and IT. Implications such as:
- Loss of buying power
- The risk of duplicate or redundant apps, resulting in companies paying for either two of the same subscription, or multiple tools with overlapping functionality
- Security and compliance risks as a result of shadow IT
With a SaaS purchasing management system, you can regain full control of your organization’s software portfolio and streamline the way in which these tools are both procured and managed.
Reduced burden on stakeholders
Maverick spending and shadow IT may pose huge challenges for organizations, but there’s also a potential challenge associated with a centralized SaaS purchasing process – navigating the various internal stakeholders that are typically involved.
With influence often sitting across several departments, for example finance leaders managing budget requirements, IT teams assessing systems and compliance considerations, and department leads choosing based on functionality, it can easily become a complex web of decision making.
The right SPMP will effectively streamline this process, reducing the burden on everyone involved. As an example, it should allow you to not only set approvals, but also assign both contract owners and contract watchers, so that key stakeholders can be notified about progress on the buying cycles they care about.
In addition to this, a platform of this kind should also simplify the process of dealing with legal and contracting, as well as security and compliance. This involves:
- Rapidly reviewing the most important contract terms, thanks to the automatic codification and summarization of vendor contracts
- Comparing the terms of any contract with industry benchmarks, allowing you to make data-backed decisions when it comes to your negotiation strategy
- Quickly accessing security and compliance information
- Instantly obtaining pre-filled security questionnaires from each vendor, or uploading custom requirements to send for completion
Learn more about Vertice’s diligence insights.
Streamline your SaaS purchasing process with Vertice
Organizations are under increasing pressure to keep costs to a minimum and develop a more productive workforce, making the benefits of using a SaaS purchasing management platform difficult to ignore.
By working with Vertice, you get access to more than just our platform though.
You’ll also be partnering with one of our experienced SaaS purchasers who will work closely with you to understand your business and requirements, and negotiate on your behalf, leveraging the pricing and discounting data for more than 16,000 vendors worldwide in order to secure you the best possible deal and the most favorable terms on any contract.
Learn more about how Vertice can streamline your SaaS procurement process here, or if you’re still on the fence, take a look at Lionfish Tech Advisors’ latest industry report for a more detailed analysis of the SaaS purchasing and management platforms on the market.
