5 Best Practices for Effective SaaS Renewal Management

In 2025, Zylo data shows that line of business owners are responsible for buying 51% of SaaS apps. That equates to 70% of total SaaS spend. In addition, the average organization experiences 247 renewals annually—or nearly 1 per business day. Without oversight into these applications, it’s difficult for IT and Finance to effectively manage software renewals. 

Following SaaS renewal management best practices is the key to being proactive, driving efficiency, and making informed decisions that save money. In this guide, we’ll explain:

• The importance of renewals for driving cost savings
• Questions you should ask yourself at every renewal
• Five best practices for your SaaS renewals

Prioritize SaaS Renewals to Drive Cost Savings

When your CFO or CIO comes to you with a $1M savings goal for the year, what do you do? To help you be the hero at your organization, we’ll give you the answer: focus on software renewals.

Why? The renewal is the only time you can make changes to your contract and reduce your spending.

The key is knowing when renewals are coming up over the next 12 months. With this approach, we’ve seen an average of 5-10% savings per application. That is your runway for cost savings and hitting—and even exceeding—your goal.

With the average company experiencing hundreds of renewals a year, there are many opportunities to save money. 

3 Questions to Ask Yourself at Renewal

As you prepare for each renewal, always answer these three questions.

1. Should this application be renewed at all?
2. How many licenses should we renew?
3. Are we paying a fair price?

By doing this, you’ll remove unnecessary applications, reduce license waste, and avoid overspending—funneling all the cost savings to your bottom line or critical business initiatives.

“Staying on top of a schedule and knowing what renews when is not an easy thing to do. [Renewing with] intelligence is to know what’s coming, what you’re using, and if what you’re paying is a reasonable price.”

— Keith Sarbaugh, CIO at Zoetis

Question #1: Should This Application Be Renewed At All?

To kick off the renewal conversation, determine if you need to renew the application. This evaluation should occur 120 days before your renewal date. 

Ask yourself:

• How well is the application being used?
• Are there other apps in our stack that perform a similar function?
• What value has the tool delivered to our business?

Review License Utilization

Our data shows that only half of licenses are used on average, though a healthy benchmark is 90% utilization. Understand what “good” usage looks like for the application and weigh that against actual usage. 

Check for Redundancies

Redundancy is everywhere—especially in categories like online training classes, project management, and team collaboration. 

1. Review a list of similar applications to the one you’re renewing. 
2. Compare usage across tools and where users overlap among them.
3. Evaluate whether an existing tool could be used instead.

Collaborate with Business Stakeholders

Lines of business leaders and their teams have intimate knowledge of the applications they use every day. Engage them at this stage in the renewal process to understand use cases and the value they’re getting from it.

Deprecate and Offboard Applications

If the application is rarely used and/or a similar tool already exists in your inventory, you may want to cancel the app. In your system of record, note that the app will be deprecated to ensure visibility of that decision to stakeholders. When the renewal date arrives, officially cancel the app in your system and tally your savings. 

Question #2: How Many Licenses Should We Renew?

If you decide to keep an app, the next step is to understand whether you have the right user count. Determining the appropriate license quantity should occur 90 days ahead of renewal.

Follow these steps:

1. Review usage data for the application to understand inactive vs active users.
2. Run a reclamation workflow to pull back any unused licenses.
3. Compare the list of active licenses to business needs and future growth plans to determine an appropriate quantity. 

The risk here is twofold: not purchasing enough licenses or purchasing too many. On one side, you risk overage or true-up costs. On the other hand, you end up with waste—money you could have invested elsewhere.

Reclaim Unused Licenses

Reclaiming licenses ahead of renewal gives you a more accurate view of the licenses you need. Automated workflows help you do this with ease. 

1. Build the workflow in your SaaS Management Platform (SMP).
2. Send a survey to inactive users—usually those with no activity in the last 90 days.
3. Obtain the list of users to deprovision.
4. Automatically deprovision licenses via your SMP or SSO provider. 

Forecast Future Needs

Forecasting business needs and growth is critical to getting the right number of licenses. 

• No team growth: keep licenses as is or scale back based on usage rates
• Hiring: keep licenses as is depending on usage or increase license quantities

Question #3: Are We Paying a Fair Price?

Through 2027, Gartner predicts organizations will overspend on SaaS by at least 25%. To avoid overspending, start by understanding whether you’re paying a fair price with benchmark data—60 days ahead of renewal.

1. Using a tool like Zylo Benchmarks, input the license quantity you decided on and the proposed rate from your vendor.
2. Review the data to understand whether you’re overpaying or getting a better price than companies similar to you.
3. If overpaying, bring that data point to your renewal conversation. 

If you’re not, that becomes helpful leverage in negotiating down the price with your software vendors. 

Need a place to get started with your SaaS renewals?

👉 Guide to SaaS Renewals

👉 Renewals Checklist

👉 SaaS Renewal Management Resource Center

Top 5 SaaS Renewal Best Practices

Following these SaaS renewal best practices helps operationalize your renewal process:

• Assign application owners
• Get visibility into all SaaS spend
• Add contracts to your system of record
• Create a renewal calendar
• Establish an intake process for new software purchases

Renewal Best Practice #1: Assign an Owner to Each SaaS Application

Assigning an owner to each application ensures you have a point of contact to work with on renewal preparation. When owners are not assigned, you risk making renewal decisions without stakeholder input.

To find an owner, start by looking at the business unit or the individual expense record. Track owners in a SaaS Management Platform (SMP) like Zylo and set alerts to audit and update them at least once a year.

Renewal Best Practice #2: Get Visibility into All SaaS Spend

According to the 2025 SaaS Management Index, the average organization spends $49M on SaaS annually. When you have visibility into all of your SaaS spend, it helps you:

• Identify high-dollar value applications
• Prioritize the most impactful renewals
• Find contract and spend consolidation opportunities

AI-powered SaaS discovery is the secret to uncovering all of your software spend—even those miscategorized and hidden in expense reports. Zylo’s SaaS Discovery connects to your finance and expense systems, providing insights such as:

• Spend channel: accounts payable, expense, purchase order
• Spend source: supplier, reseller
• Purchaser: the department and/or individual who bought it

Renewal Best Practice #3: Add Contracts Into a System of Record

Getting all of your SaaS contracts into a system of record is essential for:

• Creating a centralized repository for cross-departmental visibility
• Building your renewal calendar
• Tracking terms like auto-renewal clauses

To begin, work with business owners to obtain final contract records. Similar to the first best practice, you can find contracts by going to the business unit or individual who purchased the app.

Renewal Best Practice #4: Create a Renewal Calendar

Another SaaS renewal best practice is to create a renewal calendar with all of your contract end dates. This helps you:

• Know when renewals are coming up
• Prioritize renewals by cost-saving opportunity
• Centralize visibility for all stakeholders

Take the manual work out of building a renewal calendar with an SMP. For example, in Zylo, once a contract is added, it will automatically plot the end date on the calendar. 

Based on your renewal calendar, develop a quarterly, monthly, and weekly plan. At Zylo, we recommend taking a 120/90/60/30-day phased approach. 

Renewal Best Practice #5: Establish an Intake Process for New Software Purchases

When you buy new software, it should be onboarded into your system of record. Establishing this intake process ensures:

• An up-to-date system of record
• All contracts are added
• Usage data is connected
• Application, business, and IT owners are assigned

To do this effectively:

• Document the process
• Educate app owners on how to keep the system up to date
• Set up automated alerts in your SMP to notify stakeholders when new applications enter your environment

Benefits of Following SaaS Renewal Best Practices

When you follow these SaaS renewal best practices, IT and Finance can:

• Proactively plan for upcoming renewals
• Share enterprise-wide recommendations
• Improve budget forecasting

Think about a world in which you don’t have to waste time chasing the data. Instead, you can spend time optimizing your SaaS inventory and advise the business on how to implement innovative solutions and save money.

Proactively Plan for Renewals

By preparing for renewals well in advance, you can:

• Determine whether to keep or deprecate an application
• Ensure appropriate license quantity
• Benchmark vendor pricing
• Negotiate more effectively
• Secure better pricing and terms

Share Enterprise-Wide Recommendations

As a procurement leader, following these best practices helps you become a strategic advisor to the business. It enables you to:

• Guide users to adopt standardized software via an enterprise app store
• Advise stakeholders in the acquisition of new software
• Support the renewal process to ensure favorable terms

This helps you:

• Avoid unapproved software purchases
• Cut down on apps with redundant functionality
• Keep SaaS portfolio growth at bay
• Streamline inventory, license, and renewal management

Improve Budgeting & Forecasting

When you know your renewal dates and what you’re renewing, it creates a pathway to building your technology budgets. More importantly, forecasting future spending becomes easier due to having centralized historical data.

Implement SaaS Renewal Best Practices with Zylo

Asking the right questions and taking a proactive approach will ensure your renewals are managed effectively and drive business results. With nearly 10 years of experience leading SaaS Management, Zylo has a proven approach to operationalize renewals and help clients achieve meaningful cost savings. Take a look at our SaaS Renewal and Spend Management solution to learn more, or schedule time with our team.