Vendor Management Best Practices to Get the Most out of Your SaaS Partners

Your team relies on SaaS daily, but are you sure you’re getting the most out of your applications and your vendor partners? When there’s a tool for everything and everyone, managing all of your vendor contracts and functionality becomes complicated, to say the least. In this article, we’ll share our top vendor management best practices so you can take control of your SaaS vendor landscape and get ahead of your SaaS renewals. 

What is IT Vendor Management?

IT vendor management lets you monitor a growing list of SaaS vendors in order to find the best solution for business problems, while also controlling costs and mitigating any risk. 

Most organizations are seeing a big increase in the number of software applications their teams use, in no small part because of how easy it is to purchase them online with just a credit card. 

The decentralization of SaaS purchases results in small, often hidden, costs that are sprinkled across teams in your organization. Zylo research shows that some large organizations utilize, on average, 609 SaaS applications. 

Vendor Management Best Practices: Hire a SaaS Manager

By hiring a SaaS Manager to oversee your SaaS vendors and tools, you’ll have the expertise needed to ensure your technology stack is in compliance with privacy and security protocols. You’ll also have dedicated resources to manage vendor contracts, partnerships, and renewals.

SaaS Managers oversee everything from micro SaaS tools (like Grammarly for spelling and grammar checking) to system wide and mission critical tools (like Salesforce or Jira), plus take care of varying subscription or consumption based billing plans. Taken altogether, the work can be overwhelming without a proper vendor plan in place. 

Every team in your organization, including legal, procurement, finance, and IT, must work together to control costs and mitigate risk through an effective vendor management plan. With proper visibility, companies can consolidate subscriptions, plan ahead for renewals, and get rid of under-used licenses. 

Vendor Management Best Practices: Build Strong Relationships

It’s always worth asking vendors what they can do to make their products more sticky within your organization. Most SaaS providers are happy to help and offer multi-year discounting, bulk pricing rates, and can even grandfather you into ideal pricing and feature sets.

Research from ProfitWell shows that 70% of SaaS companies believe in using discounts to close deals. Having a relationship with your assigned sales rep can also have a huge effect, with 80% of salespeople saying that a 25% discount is appropriate.

For those vendors that create tools that we absolutely love and have no intention of removing from our technology stack, nurturing those relationships can result in win-win contracts. 

Vendors want to help you solve your problems. If you’re not committed to partnering with them, you’re missing out. 

Vendor Management Best Practices: Leverage Data

We just launched our 2023 SaaS Management Index, which gives granular insight into how much companies are spending on SaaS—and how they’re managing their vendors. If you’re short on time, here’s a sneak peak at the most surprising statistics included in the report.

You need to optimize and reduce waste

For many organizations, the ease of purchasing SaaS licenses with just a company credit card results in decentralized procurement, increased risk, and even duplicate functionality across multiple software tools. 

In fact, an average organization only utilizes 56% of their provisioned licenses. This means that 44% of their overall licenses are unused, wasted, and ready for optimization. 

You’re spending a lot of money

A typical organization manages hundreds of technology tools, averaging about 291 SaaS applications in total. And they’re spending a lot of money, nearly $50 million each year. 

While large enterprise companies manage about 664 applications, with a spend of $224 million each year, smaller companies are also investing heavily. For a company under 2,500 employees, most average 255 applications and spend around $29 million annually.

By following these vendor management best practices, you can get more out of your SaaS partners and create a thriving digital workplace for your employees and company culture.