Table of Contents
Table of Contents
Reflecting on 2023, it was a year of political and economic uncertainty, tightening budgets, and vendor price increases. The latter two made the year especially hard for Procurement leaders. Likewise, it elevated their responsibility within the company. That’s why I’m optimistic 2024 will be a big turning point for Procurement, especially regarding software and SaaS management.
Before I get into what priorities Procurement should focus on in 2024, let’s break down the trends we’re seeing.
- Companies that add SaaS into the software management equation combat market trends. Even as software prices increase, companies practicing SaaS management are bucking this trend. In fact, SaaS spending dropped an average of $5M to $45M annual. And companies reduced their stacks by an average of 20 apps to 271 apps.
- How teams buy software is changing from direct purchases to marketplaces like AWS, Azure, and Google. Tackle’s 2023 State of Cloud Marketplaces reported $15B in marketplace spending in 2023, with an estimation of $100B by 2026.
- Corporate and individual interest in generative AI is going to continue rising. IDC expects AI to comprise 10-20% of IT budgets by 2028.
With all this in mind, what should Procurement focus on in 2024 regarding software management? Listen to the podcast episode or read more below.
Top 5 Priorities for Procurement in 2024
1. Rationalize Your Applications
Your first priority should be to rationalize – or consolidate – the applications you have in your SaaS stack. Believe it or not, consolidation is also at the top of CIOs’ lists in 2024. This creates an excellent opportunity for you to partner with them and drive optimization.
Rationalization is a critical lever to trim down your SaaS footprint and save money. By reducing redundancies and consolidating duplicate contracts, you can drive savings and efficiency.
The most important thing is to ensure it’s an ongoing initiative. Rationalization is a heavy lift, and you need to do it steadily for the long term. Don’t try to boil the ocean, but take it one step at a time.
2. Prioritize SaaS Governance
In this day and age, governance is a must-have to eliminate shadow IT, reduce unnecessary spending, and increase purchasing efficiency. And that’s not changing in 2024.
A critical piece of the SaaS governance puzzle is executive sponsorship and alignment with company directives. When you have this, an effective governance practice will allow you to:
- Avoid redundancy and duplication of SaaS tools in your environment.
- Guide your app rationalization decisions.
- Support demand management by having processes and mechanisms in place for employees to request new tools and engage Procurement in the buying process.
Evolving Your SaaS Governance Framework for the Digital WorkplaceLearn More
3. Ensure Procurement Is Part of Intake Process
Intake isn’t just about budget. It should also be integrated within your governance framework. Build demand management and Procurement vetting into the early half of the end user request. As new requests are being made, integrating Procurement into the process early on helps you make sure governance is being followed.
It’s also important from a value standpoint. You can ask important questions like, “Are we buying through the right channel? Do we already have similar tools?” This gives you an opportunity to be an advisor to stakeholders in the purchasing process, rather than a gatekeeper.
4. Forecast Renewals Quarterly
You need to establish operating processes around your renewals. This is foundational to your success, both in the short and long term. You want to be able to forecast and plan for renewals, after all.
Consistent forecasting will help you manage renewals more proactively. Ahead of each quarter, make sure you:
- Examine every renewal, auto-renewal, and termination notification period.
- See what’s up ahead and prioritize your renewals.
- Create an action plan to address each specific renewal. This means evaluating redundancies, getting benchmarks on pricing, etc.
- Understand the impacts on your cash flow, budget, and overall spend.
The Ultimate Guide for Wildly Effective SaaS RenewalsLearn More
5. Collaborate with IT and Software Asset Management Teams
SaaS management is a team sport. IT and software asset management teams often both have cost-saving goals, and you’re a key player in making them successful.
Renewals are your biggest opportunity to do that. At renewal, you can take a central role in license clawbacks and enable both IT and SAM to do their jobs more effectively and efficiently.
Work with your IT and SAM teams to gather information on your SaaS stack. Ensure you know the correct licensing needs to inform renewals and collaborate with IT and SAM to achieve that knowledge.
Unlock Procurement’s Potential in 2024
Procurement has huge potential in 2024. You can be an important partner and value driver within the business. Start this year off right by prioritizing:
- App rationalization
- Governance to enable SaaS optimization
- New purchase vetting early in the intake process
- Quarterly renewal forecasts
- Collaboration with IT and Software Asset Management teams
I’ve talked about most of these in-depth in other SaaSMe Anything episodes. Find those episodes on our podcast feed here for more guidance.