The Right Way To Procuring SaaS in 2023


If your business still relies on on-prem software, you might follow the old procurement process, which involves plenty of paperwork. The SaaS delivery model has recently changed how software is bought and sold. If you are still following the old procurement model, there is a high possibility that it's likely slow and inefficient.

Key Takeaways

Managing the SaaS procurement process with a dedicated SaaS procurement platform helps 

  • Manage and study all application spending from one place.

  • Negotiate contracts for applications.

  • Update license renewals and cancellations in real time.

  • Analyse if the applications achieve the ROI.

What is SaaS procurement?

SaaS procurement is the process of selecting, acquiring, and managing SaaS (Software as a Service) solutions for an organization. This includes identifying the need for SaaS, evaluating different vendors, negotiating contracts, and implementing and managing the solution.

What’s the difference between procurement and purchasing?

Procurement: The process of identifying, sourcing, and acquiring services for an organization. This can involve identifying needs, researching suppliers, negotiating contracts, and managing supplier relationships.

Purchasing: The process of ordering, receiving, and paying for goods and services. This is typically a more transactional process and may not involve as much research or strategic planning as procurement.

Why do you need software for SaaS procurement?

Procurement processes can often be inefficient and opaque. The requester may need to know who to direct their request to, and the procurement team may need to know who should approve the requests. SaaS procurement software can make the process more transparent and efficient by providing a single platform for managing all aspects of the procurement process.

Here are some specific examples of how SaaS procurement software can streamline the process:

  • It can help to identify and manage shadow IT: Shadow IT is the use of unauthorized or unapproved SaaS applications by employees. SaaS procurement software can help spot shadow IT by providing an organization with a central repository of all SaaS applications.

  • It can help to negotiate better deals with vendors: SaaS procurement software can help to negotiate better deals with vendors by providing insights into market prices and vendor performance.

  • It can help to track and manage SaaS spending: SaaS procurement software can help to track and manage SaaS spending by providing reports on usage, costs, and renewals.

Overall, SaaS procurement software can help to streamline the process of buying SaaS applications, making it more efficient and transparent. This can lead to cost savings, improved security, and better decision-making.

A SaaS Procurement Process involves

SaaS procurement process
  1. Identifying the requirements: This is the first step in the procurement process. It involves understanding the needs of the business unit, employee, or department that is requesting the software or hardware. The request is then submitted to the IT/procurement department.

  2. Verifying and accepting/rejecting the request: The IT/procurement department reviews the request to ensure that it is valid and that the organization has the budget. If the request is approved, the next step is to get budget approval from the finance department.

  3. Shortlisting vendors and asking for quotes: Once budget approval is received, the IT/procurement department can start shortlisting vendors and asking for quotes. The quotations should be evaluated based on price, features, and functionality.

  4. Negotiating the agreement and vetting the terms and conditions: The legal team reviews the terms and conditions of the agreement to ensure there are no legal issues. If there are no legal concerns, one of the software providers is selected, and a purchase order is created.

  5. Finalizing the contract and delivering the hardware/software: The vendor and the IT/procurement team negotiate the contract and finalize the terms. The vendor then delivers the hardware or software to the organization.

  6. Performing a 3-way match: A 3-way match ensures that the purchase order, packaging slips, and vendor invoices match. This helps to prevent any discrepancies.

  7. Making the payments and recording the transaction: The finance department makes the payments to the vendor and records the transaction.

This is tedious and time-consuming. It requires diligent collaboration between businesses, finance, procurement, and legal teams. You may need to make your employees fill out forms, scan them, and send them to the relevant departments. On the whole, they create 

The Shift in the SaaS Procurement Process

In the past, a single buyer (the IT team) handled all software purchases. With SaaS, however, every employee can become a buyer. This is because SaaS applications can be purchased with department-allocated credit cards, and there is no need to go through the IT department. This has led to the rise of shadow IT, where employees purchase SaaS applications without the IT department's knowledge or approval.

When the IT team was responsible for software purchases, they used a checklist of evaluation criteria for every application. These criteria ensured that the new technology was compatible with the organization's systems, met the needs of all departments, and was affordable. 

However, with employees now being able to purchase SaaS applications independently, they need to set these procurement standards. This is the modern-day challenge of SaaS procurement that only a modern-day SaaS procurement platform could solve.

The ideal SaaS Procurement checklist

SaaS procurement checklist

SaaS procurement is a complex process that requires a balance between efficiency and security. On the one hand, organizations need to be able to adopt new SaaS applications quickly to stay ahead of the competition. Still, they should also ensure these applications are secure and compliant with their policies.

  • Set goals for innovation and security: What are your organization's goals for innovation? What are your security requirements? Once you know your goals, you can start to develop a procurement process that meets them.

  • Use software to manage procurement: Many SaaS procurement software solutions are available to help you manage your process more effectively. These solutions can help you track your spending, identify shadow IT, and ensure all your vendors meet security standards.

  • Discover all the SaaS apps in your environment: Knowing what applications are already used in your organization is essential. This will help you identify shadow IT and manage your SaaS applications effectively.

  • Develop a standard process for SaaS procurement: This process should include steps for identifying, vetting and approving SaaS applications. The process should also be documented so that everyone in the organization knows what to do.

  • Educate business units on best practices: Business units must understand the importance of security and compliance regarding SaaS procurement. They should be educated on the best practices for vetting SaaS applications and ensuring they meet the organization's security standards.

  • Build healthy ties with business units and departments: IT and business units must work together to ensure that SaaS procurement is secure and compliant. This includes establishing a collaborative relationship where both parties share information and work towards common goals.

  • Establish centralized governance: Centralized governance can help ensure all your SaaS vendors meet security standards. This can be a challenge, but it's essential for ensuring the security of your organization's data.

What are the benefits of SaaS Procurement?

  • Cost savings: Strategic SaaS procurement can help organizations save money by gathering requirements, evaluating the dozens of products available for each use case, right-sizing the licenses, and negotiating pricing from a position of strength.

  • Scalability: Strategic SaaS procurement can help organizations scale up or down their SaaS usage as needed, without incurring unnecessary costs, by staying on top of expenses, even if they need to scale up or down from time to time.

  • Flexibility: Strategic SaaS procurement can help organizations avoid vendor lock-in and choose the right tools for their specific needs by making space for future needs and being adaptable to the ebb and flow of the market.

  • Security: Strategic SaaS procurement can help organizations protect their data and comply with industry regulations by building their own policies and risk mitigation strategies and proactively protecting against these risks.

  • Ongoing optimization: Strategic SaaS procurement can help organizations optimize their SaaS usage and renew contracts on time by staying on top of upcoming renewals and optimizing usage-based licenses appropriately.

Automating SaaS Procurement with Zluri

Zluri can automate your SaaS procurement and help make insight-led purchase decisions.  Setting up the procurement process with Zluri is simple, as it only needs to be done once, and then you can continue making SaaS purchases whenever you want. 

SaaS buying helps companies procure SaaS apps without undergoing complex negotiations. The service includes buying and renewing SaaS applications with saving up to 50% on SaaS. Moreover, customers don't need to pay any upfront costs.

Zluri is a SaaS management platform that captures all the apps used in the company. Then, it thoroughly analyzes the company's SaaS stack. The team can negotiate lower prices with SaaS vendors based on the data and intelligence of the system. For companies, it saves money and their precious time spent in buying new SaaS applications.

Zluri's platform functions on simplicity, automation, and efficiency, making the whole SaaS procurement process a breeze. Book a Personalized Demo to understand more about procurement.


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Mastering SaaS Vendor Management: A Comprehensive Guide-2023

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In this post, you'll learn about shadow IT due to SaaS apps. You'll also learn the most common types of shadow apps categories, shadow IT risks, and shadow IT benefits.

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SaaS Operations (SaaS Ops) - The Complete Guide

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