Most of us have gotten caught by an auto-renewal at some point in our lives — whether it was forgetting to switch off LinkedIn Premium months after landing a new job, or allowing that seldomly used gym membership to auto-renew for another year.
It’s a minor annoyance, but the relatively low cost of these services can make them easy to forget about and leave us liable to getting caught by the dreaded auto-renewal (and maybe an extra payment). While auto-renewals can plague us in our personal lives, the same problem exists for businesses as well — just on a much larger, more costly scale.
In fact, Zylo research shows the average organization maintains an inventory of about 600 software-as-a-service (SaaS) applications. That’s a lot of subscriptions and renewal terms to manage. Even more, the same organizations experience an average of three SaaS application renewals every business day.
But it’s not only the sheer abundance of SaaS that causes so many organizations to overlook renewal terms. Zylo research shows individual employees and business units now account for 58% of all software purchases, mainly due to the ease of adoption, inexpensive acquisition costs, and product-led growth marketing strategies that target employees over IT departments.
Decentralized SaaS management leads to an unregulated scenario where multiple SaaS tools exist as shadow IT, meaning employees purchase the same or multiple tools that serve a similar function, and software remains unused or underutilized. Most importantly, you miss the opportunity to rightsize licenses, lower costs by removing or downgrading licenses, and the ability to leverage better contractual terms upon renewal.
To stay on top of your ever-increasing SaaS inventory, consider practicing proactive SaaS renewal management strategies. As you begin, think about SaaS renewals in three stages:
- Pre-Renewal: Identify and catalog all SaaS tools and their renewal dates, so you can make informed, data-driven decisions before renewal.
- At Renewal: Execute renewal plans to rightsize licenses, eliminate redundant applications, and leverage discounts and feature upgrades.
- Post-Renewal: Update and maintain renewal calendar, ensure continual discovery and management of new SaaS.
Use this SaaS renewal playbook to eliminate surprises—and unplanned auto-renewal costs.
SaaS Renewal Playbook: Pre-Renewal
The first step to proactive SaaS renewal management involves discovering all SaaS applications across your entire organization. Remember, many of these tools may be unknown to your IT department, so full discovery requires you to reach out to every team and business unit.
Attribute ownership of each application, and determine cost and support accountability by business unit, team, or employee. Then, measure end-user utilization, adoption, and user sentiment to help guide your renewal planning strategy. Make sure and record all of the findings in a centralized system of record, such as a SaaS management platform.
Using your data, collaborate with internal stakeholders — including IT, procurement, and business units — to define renewal goals. Evaluate costs, spending, and total cost of ownership, and also note employee-led versus direct-supplier purchases to understand overall value and cost of ownership.
Establish a company-wide renewal calendar to document each tool’s renewal date, notification period, and other key details, including license quantity, cost, and utilization data.
Finally, use your comprehensive SaaS data to create a proactive renewal plan for each application and tool.
SaaS Renewal Playbook: At Renewal
With a constant eye on your dedicated SaaS renewal calendar, activate your renewal plan based on each license’s recorded renewal terms. Consider the following tips as you re-evaluate contract terms with each SaaS vendor.
- Project license growth: Forecast future needs and consider pre-purchasing additional licenses or features at discounted rates to support business growth.
- Compare alternative applications: Take advantage of the renewal period to vet similar applications, and look for cost savings or feature upgrades.
- Remove duplicative licenses: Eliminate redundant applications to lower operational burdens and lessen software costs.
- Optimize contracts and agreements: Standardize widely deployed application types to leverage buying power and create custom contract terms.
- Leverage pricing, features, and discounts: Negotiate discounts with multi-year agreements and contract terms that limit price increases for subsequent renewals.
SaaS Renewal Playbook: Post-Renewal
After renewing a SaaS license, your core focus becomes keeping your renewal calendar up to date, ensuring continuous contract management, and accounting for new software purchases.
Follow these proactive SaaS renewal management strategies to ensure contract terms remain discoverable, transparent, and easily accessible in a centralized system of record:
- Update contract details: Take note of any changes or updates, including key contractual details on features, pricing, usage metrics, and other important information.
- Update renewal calendar: Document any changes to renewal date or notification periods in your SaaS renewal calendar. Also, make sure the renewal calendar is easily accessible in your SaaS management system of record.
- Maintain reporting and collaboration with key stakeholders: Inform necessary stakeholders, teams, and business units regularly on utilization data, and other important metrics to support proactive SaaS renewal planning.
- Ensure continuous discovery and proactive renewal management: Practice continuous discovery at a minimum of every 30 days to capture new software applications, and ensure they meet your predetermined renewal planning criteria.
The ultimate goal of proactive SaaS renewal management is to create a repeatable process, communicate roles and responsibilities, and get buy-in from all key stakeholders across your organization. Empower each department and business unit with important information about their SaaS tools, and educate them on best practices and protocols to keep the SaaS renewal calendar and system of record up to date with each new purchase.
Ready to discover how Zylo helps organizations of all sizes proactively manage SaaS contract renewals? Reach out to schedule a personalized demo.