How to ensure you never miss a software renewal deadline
Leon Brown | SEP 05, 2023
8 min read
The shift to cloud-based software has paid dividends for companies big and small. After all, not only does SaaS streamline digital collaboration and bolster productivity, but it’s also incredibly scalable. And with the average organization subsequently using as many as 130 of these tools, it’s a market now worth a staggering $237 billion.
The challenge is, as new technology comes to market and software portfolios grow by an average of 18% year-on-year, many are experiencing software sprawl – in other words, a situation that occurs when a company’s SaaS stack consists of a large and frankly unmanageable number of applications.
It’s also a situation that often leads to forgotten notice periods and renewal deadlines, and therefore costly – and even unwanted – auto-renewals.
Even for the most experienced of procurement managers, having to manually keep on top of an ever-growing stack is near-on impossible.
So, what’s the solution? How can you ensure that you aren’t missing any software renewal deadlines?
Here’s everything you need to know.
The cost of unwanted auto-renewals
While a key business priority for any procurement manager is to track spending and uncover cost-saving opportunities across the company’s tech portfolio, it’s a task that has become particularly challenging given the rapid proliferation of SaaS tools – a problem exacerbated by inefficient software renewal management.
The reality is, a poor or all-out non-existent renewal management process causes issues for more than just your financial team.
With up to 89% of software vendors including auto-renewal clauses in their contracts, it’s easy to be lulled into a false sense of security thinking that it’s no issue if a renewal deadline is missed. After all, when a tool’s contract rolls over, you’ll just be able to continue using the tool. However, this can incur costly implications for both your procurement budgets and operations.
Let’s take a closer look at the consequences of missed software renewal deadlines.
Price uplifts
With each passing billing period, auto-renewing SaaS contract prices increase by an average of 9%.
This is based on the average per unit price — meaning that even without any changes to your plan, like purchasing a higher seat count or any add-ons, you’ll pay significantly more each year that you subscribe to a SaaS product. This is due to rapidly increasing SaaS prices.
On average, SaaS vendors tend to adjust their pricing at least once per year. So, with so many different vendors on your books, it’s easy to be unwittingly dragged into a price increase as part of an auto-renewing contract. These hikes can quickly accumulate, and could potentially drain your procurement budget before you’ve even taken on any new tools.
Missed opportunities for negotiation
There’s usually a window of opportunity to renegotiate or terminate your contract in the approach to each software renewal deadline. In order to retain your business, software vendors are often willing to negotiate the terms of your contract in this critical window. As a result, they may offer more competitive rates or additional features if asked. When software renewal deadlines are missed, the opportunity for potential cost savings is lost.
It’s during this period that many procurement managers also choose to adjust their contract terms based on changes to budgets or usage needs.
And if the software renewal deadline is missed, you may void the opportunity to switch terms or entirely terminate an unused license. For example, if you want to downsize the subscription’s seat count or negotiate for more flexible usage terms, a missed renewal deadline may find you locked into your existing plan for another year, or subject to costly fees for in-contract adjustments.
How to ensure you’re keeping on top of software renewal deadlines
To ensure an optimally performing procurement process, as well as the financial and productivity benefits it entails, you’ll need to exercise diligence over software renewals. An efficient software renewal management strategy minimizes the time lost to non-efficient processes and ensures that each tool in your SaaS stack is correctly governed. Other key benefits include:
- Minimizing the risk of overspending
- Rightsizing instances of over-provisioning
- Supporting accurate budgeting and cost projections
- Reducing instances of disrupted service
So, how can you ensure that you’re tracking every SaaS renewal? These are our top recommendations.
Request the removal of auto-renewal clauses
As we’ve mentioned, auto-renewal clauses can quickly shift from convenient a time-saving measure to a costly procurement burden. One proactive way to get ahead of the risks is to request the removal of an auto-renewal clause when negotiating your software contract. This is an effective technique to restore your power over the renewal process, ensuring that no renewals happen without your consideration.
This way, you can assess whether your software subscription still provides value while carrying its current terms, and verify whether any adjustments to pricing will take place upon renewal. This also allows you the time to renegotiate or terminate the contract if necessary, supplying greater purchasing power than if the renewal passed through without your knowledge.
According to Vertice’s Head of Buying, Nick Riley, many SaaS buyers aren’t aware that this is even an option. “In almost all cases, vendors will remove auto renewal clauses when asked to do so during negotiations. Where possible, we would always recommend that organizations do this to maximize their buying power at the end of their contracts”.
Should they refuse, however, have them add it to the contract that they will contact you, in writing, at least 90 days prior to the renewal deadline to remind you.
Create a central knowledge base
Developing a source of truth where all your software contract details are organized and accessible will help to maintain total visibility into your important contract details. In turn, this will assist with tracking any pending renewals or notice periods that are on the horizon, ensuring that you get ahead of the curve.
The best way to do this is by creating a SaaS system of record. These repositories store important data about each SaaS tool in use across the organization, past and present. Some companies choose to create a collaborative spreadsheet – which does run the risk of quickly becoming outdated – while others implement a dedicated piece of software to automatically track and document each tool being subscribed to.
Vertice’s SaaS management platform, for example, helps companies maintain total visibility of their entire SaaS stack, while also helping them understand how licenses are utilized across the organization. With this insight, procurement managers can make strategic decisions regarding the continuation, termination, or renegotiation of their licenses. This removes the room for human error and the chance that your knowledge base will become outdated — ensuring that you never miss another software renewal deadline.
Centralize your software procurement and governance
While an accessible source of truth can help to support your SaaS strategy by aligning the procurement, finance and IT departments, new software procurement and governance should ideally flow through one central channel. This is key to ensuring a clear chain of accountability and supporting efficient software renewal management.
With this approach, organizations can ensure that all software subscriptions are monitored, tracked, and renewed on time, or assessed well in advance for their business value. It also streamlines vendor communication, making interactions more consistent and organized, while facilitating the development of vendor relationships.
A solid vendor rapport can aid in managing renewal deadlines by establishing an open line of communication and keeping your software providers informed of evolving organizational needs. This kind of proactive communication will help all parties to align their objectives and ensure timely, cooperative negotiations.
Partner with Vertice to support SaaS renewal management
Missing your software renewal deadlines can be costly for the business, but with the right procurement partner, you can ensure that new and renewed software purchases pass through on time and provide maximum value.
But it’s vital to consider how you approach your SaaS renewal management — a manual approach is no longer effective.
With so many different software tools in use across the average organization, Vertice provides support with an automated software management solution. Our platform helps procurement managers free up their time wasted on inefficient procurement and tail spend management. By implementing the necessary tools to track the full software cycle, we ensure that you’ll never again miss a renewal deadline.
You can assign watchers, receive notifications as a deal progresses, and even leave your negotiations to our expert SaaS buyers. Using our exclusive vendor insights, we can support you with the necessary data to leverage in negotiations yourself, or act as an intermediary to manage all vendor communications.
Whatever your procurement process, take the stress out of software renewal deadlines and start saving today by partnering with Vertice.
