SaaS Contract Management Software: What You Need to Know

Managing SaaS contracts can be an ongoing challenge as businesses scale and new applications proliferate across teams. Without a centralized approach, companies risk overspending, redundant subscriptions, and missed renewals, adding to the complexity of SaaS management. SaaS contract management software provides a streamlined way to handle these contracts, offering visibility, control, and significant savings potential. It creates a unified record for every contract, empowering organizations to optimize their software portfolio efficiently and proactively.

What Is SaaS Contract Management?

SaaS contract management is the umbrella term for monitoring and negotiating SaaS contracts to trim shadow IT and cut unnecessary costs. It can involve anything from keeping track of all contracts and assigning contract ownership to negotiating with stakeholders for terms and conditions – and anything in between. The unifying element is that they are strategies for SaaS contract management.

The Challenges of Managing Software Contracts

Managing software contracts requires constant attention as SaaS applications proliferate across organizations. As teams adopt more applications, tracking each contract’s terms, renewal dates, and user counts becomes increasingly challenging, leading to “SaaS sprawl.” Auto-renewal clauses further complicate oversight, often locking organizations into agreements without a chance to review usage or adjust terms, which can drive up costs.

Security and compliance concerns also demand vigilance, as each contract brings unique data-handling requirements that organizations must actively monitor to reduce risks. These challenges call for a centralized, organized approach that keeps all contract data accessible and manageable in one system.

Why Is SaaS Contract Management Important?

According to Zylo’s research, many organizations drastically underestimate the number of SaaS applications within their environment by 107%. They also underestimate their app spend by up to 300%. When you realize that the average large enterprise maintains more than 600 SaaS apps, it’s easy to see how this happens. That means 200 to 300 applications typically remain undiscovered as shadow IT. 

Zylo research also shows organizations experience an average of one SaaS application renewal each business day – or two for enterprises. Without a plan in place, contract management quickly becomes unmanageable.

When used in conjunction with a SaaS Management platform that serves as an official system of record—practiced proactively and regularly—SaaS contract management yields several tangible benefits, including: 

• Time savings. Storing SaaS contract information reliably in a centralized system of record reduces time spent hunting for important information like total contract value, software features and benefits, and overall number of licenses or users. 
• Financial savings. Regularly reviewing existing SaaS contracts produces significant cost savings. For example, simply examine total users as stated in contract agreements and compare them to your actual user base. If you discover excess users, rightsize the licenses upon the next renewal (or earlier if possible) to net savings. 
• Elimination of surprise renewals. Centralized SaaS contract management should include a renewal calendar to display every SaaS application’s renewal date and the planned notification period. With a SaaS Management platform like Zylo, users can schedule alerts far in advance and plan for software renewals.
• Leverage over contract negotiations. Easily accessible contract details make it easy to negotiate at renewal time, especially if you’ve proactively looked at utilization data for users and features. 
• Reduced SaaS redundancy and duplication. With contract details in place, you can quickly see which applications you currently employ in your SaaS inventory. Use the information to guide future software acquisition decisions and avoid redundant and duplicate applications.

Challenges come with the territory of SaaS. Between endless entry points and the unfettered growth of SaaS expenses—and how often those expenses are miscategorized—SaaS has many difficulties. However, the benefits above aren’t intangible; you can achieve them with SaaS contract management.

With effective SaaS contract management, you will: 

• Know when renewals will hit. By having all your renewal dates in front of you, in your SaaS Management Platform, you can build a renewal calendar to alert you 30, 60, 90, and 120 days out so you’re never caught off guard by a renewal again.
• Be in a better position to save money and time. When you can compare your actual spending and usage data with an application contract, you can leverage that data to negotiate better contracts with your vendors. Plus, you can evaluate needs and reduce waste by rightsizing licenses and eliminating redundancy in your SaaS stack. It’s all about making more data-driven decisions.
• Know who needs to be a part of the renewal process. Procurement can’t do it all alone. SaaS Management is a team sport, and you need to know who’s on that team. Cross-organizational collaboration between key stakeholders is needed to achieve the best results. A SaaS Management Platform allows you to create a system of record to track owners well ahead of renewals to help determine the best course of action for any given application.

The SaaS Contract Management Lifecycle

The SaaS contract management lifecycle covers each phase from contract creation to renewal or termination. In short, it helps organizations maintain control over their software investments. Key stages include:

1. Discovery and Procurement – Identify software needs, assess vendors, and negotiate contract terms to align with business goals.
2. Onboarding and Implementation – Ensure contract details are documented, users are appropriately licensed, and terms are met during setup.
3. Usage and Compliance Monitoring – Regularly track software usage, user access, and adherence to data and security requirements.
4. Renewal and Optimization – Review contracts ahead of renewals to decide on adjustments, rightsizing licenses, or renegotiating terms.
5. Termination or Renewal – Close out contracts efficiently or prepare for a seamless renewal process.

Following this lifecycle helps organizations reduce costs, maximize software value, and maintain compliance.

How to Begin Managing Your SaaS Contracts

SaaS contract management is a component of SaaS spend management but with a more granular focus on the specific contractual details and terms. Storing these details in a SaaS Management Platform or other record-keeping system provides an easy-to-follow, holistic snapshot of cloud-based software. In turn, it enables new software management capabilities, avenues for cost containment, and leverage for improved return on investment for SaaS.

Follow these steps to jump-start the SaaS contract management process for your organization:

Discover all SaaS applications

The first step to managing SaaS contracts involves identifying all SaaS applications across your organization. A key challenge in the discovery process is employee-led SaaS purchases that typically fly under the radar of IT teams. According to Zylo data, nearly one in ten (7%) employees purchase SaaS applications by credit card and expense reimbursement. If your organization currently lacks a central repository, you must contact individual teams or business units to determine your entire SaaS inventory. 

Identify current contracts and purchase agreements

Every SaaS application includes a contract or user agreement to establish terms of use, start and end dates, license quantity, data handling conditions, and renewal information. As you identify all of your existing SaaS contracts, note each tool’s key contractual terms.

Input details into a centralized system of record

Storing contact details in a centralized SaaS Management system of record, such as Zylo, allows you to effortlessly search by vendor name or application type, quickly locate important information without reading lengthy contracts, and simultaneously compare details from multiple contracts.

Identity optimization opportunities

With a comprehensive understanding of your full SaaS inventory and contractual terms in place, look for optimization opportunities to consolidate duplicate applications, eliminate redundant or underutilized applications, and leverage better financial and security terms upon renewal.

Understanding SaaS Contract Management Software

SaaS contract management software is a specialized tool designed to simplify and centralize the administration of all SaaS contracts. It enables organizations to track every SaaS agreement, monitor key terms like renewal dates and licensing details, and maintain compliance with security and data-handling requirements. By consolidating these details into a single platform, companies can reduce waste, eliminate redundant applications, and manage renewal processes seamlessly, ensuring they gain maximum value from their SaaS investments.

The Features and Benefits of SaaS Contract Management Software

Implementing SaaS contract management software simplifies how organizations handle software agreements, from centralizing contract details to reducing security risks. Below are the key features and advantages:

Centralized Source of Truth for SaaS Contracts

Maintaining a centralized repository for all SaaS contracts is essential to efficient management. This approach saves time, offering an easily accessible, unified view of contracts with critical data, including terms, renewal dates, and license details. Zylo’s Contract Center is a prime example, acting as a single source of truth that helps teams stay informed and aligned on all contract specifics without sifting through scattered documents.

Risk Management and Compliance Monitoring

Effective SaaS contract management software ensures organizations stay compliant with contractual terms and track associated security and financial risks. For instance, Zylo’s Security Detail provides visibility into each application’s security status, while App Budgets reveal potential overages, allowing for proactive adjustments. These tools are invaluable for mitigating both security and financial risks, especially as shadow IT grows.

Automated Alerts for Renewals and Ownership

Automated alerts are vital in staying on top of SaaS renewals and avoiding unexpected costs. Alerts notify stakeholders of upcoming renewals, contracts lacking ownership, or even missing documentation, making it easier to assess usage and needs before committing to another cycle. With Zylo’s Automated Alerts, you can set reminders for essential dates, prevent auto-renewals that might otherwise go unnoticed, and ensure all necessary preparations are complete in advance.

In-Depth Analytics and Reporting

Better analytics and reporting capabilities provide powerful insights into your SaaS portfolio. Dashboards, like those available in Zylo, allow users to visualize metrics such as spending trends, renewals, and application ownership status at a glance. Customizable widgets and automated reporting further enhance visibility by sending scheduled reports to key stakeholders, allowing for data-driven decisions around contract renewals and usage optimization.

Automated Workflows for License Management

Using automated workflows makes license management seamless by helping organizations reclaim or adjust licenses proactively. Zylo’s Workflow feature allows businesses to set automated processes for reclaiming unused licenses or downgrading subscriptions well before renewals. This capability ensures you’re only paying for what you use and helps prevent license waste while aligning subscription levels with actual needs.

Choosing the Right Contract Management Software

Selecting contract management software tailored to your organization’s needs requires focusing on key capabilities and features that will ensure a seamless and effective management process. Below are the factors to consider when evaluating different options:

Identify Your Needs

Begin by outlining your organization’s specific requirements. Consider the volume of contracts you manage, the complexity of contract terms, and the current pain points in your SaaS contract management process. Understanding these factors will clarify which features are essential and help filter options that best match your goals.

Scalability

Ensure the software can scale with your organization’s growth. A solution that handles an expanding volume of contracts, users, and workflows will prevent the need for frequent upgrades or replacements. Scalability also allows the software to adapt to future expansions in your SaaS stack, providing a long-term solution.

Ease of Use

Adoption is critical, so look for a platform with an intuitive interface that simplifies tasks like tracking renewals, accessing contract details, and collaborating with stakeholders. A user-friendly design minimizes the learning curve, increases efficiency, and promotes regular use across teams.

Integration With Other Tools

Effective contract management software should integrate seamlessly with your existing tech stack. Check for compatibility with expense management systems, ERP, or CRM software, allowing for smoother data transfer and consolidated insights. For instance, Zylo integrates with various platforms, enabling cohesive software and contract management.

Security and Compliance

Security is paramount, as contract data often includes sensitive information. Look for management software that enforces robust security protocols, such as encryption, access controls, and compliance with GDPR or SOC 2 standards. Zylo’s Security Detail, for instance, includes features that identify and assess security risks within your SaaS portfolio, helping to maintain compliance across applications.

Automation and AI Features

Automation reduces your manual workload, allowing your team to focus on higher-value activities. Seek out software with AI capabilities for intelligent insights, such as usage analysis and predictive spend forecasting. While not directly tied to contract management, don’t discount features like automated workflows, which streamline related processes like license reclamation and renewals.

Customer Support and Reviews

Robust customer support can significantly ease the transition and ongoing use of new software. Evaluate the available support options and read reviews to understand how the software performs in real-world scenarios. Responsive support teams and positive customer feedback indicate a reliable, user-centric platform.

Frequently Asked Questions about Managing SaaS Contracts

Here are some essential insights on managing SaaS contracts effectively, from optimizing vendor relationships to controlling costs.

What Is Usually Included in SaaS Contracts?

SaaS contracts generally include terms for subscription duration, pricing, user access, security requirements, and renewal conditions. Comprehensive terms help set clear expectations and minimize compliance risks.

What Should I Look Out for in SaaS Contracts?

Auto-renewal clauses, pricing adjustments, and licensing terms deserve close attention. Auto-renewals, in particular, can lead to unplanned expenses, so note any cancellation deadlines and set reminders well in advance.

How Can I Take a Proactive Approach to Vendor Management?

Proactive vendor management involves routine evaluations of vendor performance, cost-effectiveness, and alignment with your needs. Reviewing usage metrics and industry standards ensures your vendor relationships remain beneficial.

Why Is It Important to Maintain Accurate, Detailed Records?

Centralized records simplify contract tracking, license management, and renewal processes. This detailed data supports more informed decisions and quick access to accurate details during negotiations or audits.

How Should I Manage User-Based Pricing in SaaS Contracts?

User-based pricing models benefit from regular license audits to prevent overspending. Track active users and adjust licenses as needed, particularly before renewals, to ensure alignment with actual usage.

What Is the Difference Between CRM and Contract Management?

CRM systems focus on customer relationships and sales, while contract management software is tailored to handle contract creation, storage, and compliance tracking.

What Is the Goal or Purpose of Contract Management Software?

The primary purpose is to simplify and organize contract handling, ensure compliance, manage renewals effectively, and control costs.

What Features Does SaaS Contract Management Software Offer?

Key features include a centralized contract repository, automated alerts, analytics, compliance tracking, and integration options. Together, these tools streamline SaaS Management across the organization.

How Secure Is the Data Stored in SaaS Contract Management Systems?

These systems generally implement encryption and access controls while complying with standards like SOC 2 or GDPR, keeping contract data secure.

Can the Software Integrate With Other Tools?

Yes, most platforms integrate with ERP, CRM, and expense management systems, allowing data sharing and reducing manual data entry.

What Kind of Support and Training Are Available?

Most providers offer onboarding and user training, with ongoing support options such as tutorials, documentation, and custom support programs.

How Is Pricing Structured?

Pricing often varies based on user count, features, and integrations, with many platforms offering tiered models or custom quotes based on organizational needs.

Streamline SaaS Contract Management with Zylo

SaaS will continue to grow in the coming years, with end-user spending predicted to surpass $138 billion by 2024. 

With a robust SaaS contract management process, your organization can reap considerable financial and time savings, reduce duplicative spending and redundant software, leverage better contractual terms, and, most importantly—avoid the dreaded automatic renewal. Zylo’s Contract Center allows you to revolutionize your SaaS contract management and get your SaaS and renewal sprawl under control. It drives savings and unifies your management strategies.

Learn more about Zylo Contract Center here. Check out a demo to see it in action.