Procuring SaaS: The Right Way

TABLE OF CONTENTS

If your business still relies on on-prem software, most probably you should be following the old procurement process, which consists of plenty of paperwork. 

Recently, the SaaS delivery model has changed how software is bought and sold. If you are still following the old procurement model, there is a high possibility that it's slow and inefficient.


As the cloud is dominating the software era, it's clear that the procurement process is hereafter going to take place in the SaaS way. 

SaaS procurement is the process of choosing the right SaaS vendors who offer compliant and secure solutions, vetting them to check whether they meet the compliance standards, and implementing it in the organization.  

How has SaaS Changed the Procurement Process?

There used to be a single buyer (centralized IT team) in on-prem software, who does all the transactions. With SaaS, every employee is a buyer. Purchasing SaaS is so simple that it just requires a credit card swipe, and you are ready to start using the application.

With this ease of purchasing, everyone in an organization signs up for plenty of apps without taking the consent of the IT department, which leads to the risk of shadow IT

When the procurement process is in the hands of IT, it checks for the best applications in the market, verifies whether it is safe to implement, follows the compliance regulations, and finally implements the right number of licenses required. Though it is not as long as purchasing on-prem, you need to be careful while dealing with SaaS due to the added cons it may bring to your organization.

The procurement team has got its prominence. In the early stages, sourcing apps and devices belonged to the IT department, but soon procurement became a strategic asset of its own, which has made it influential. 

So the IT budget is constantly re-evaluated to identify areas for cost savings and potential consolidations. The procurement process for IT products has its own dedicated team.

The procurement team can develop their expertise. While purchasing a SaaS solution, there are several things to consider. You need to ensure whether the new technology is compatible with your systems, meets every department's requirements, and functions seamlessly. 

If the procurement team is involved in the SaaS purchasing process, they can strengthen their ties with IT as well as get the knowledge required to make decisions in the future.

The procurement team can now save more and create value. For the procurement team to remain a strategic asset among enterprises and IT, they should focus on getting value for the organization instead of purchasing. 

Procurement teams should get their hands on eliminating the unused licenses, shadow IT and ensure that the systems integrate well and are valuable for the organization.

The Saas Procurement Process

The long and tiring usual software procurement process

  1. Identifying the requirements (software/hardware). Usually, it begins with a business unit, employee, or department submitting a request to the IT/procurement department. 

  2. The procurement department verifies and accepts/rejects the request. 

  3. If it is accepted, the next step is to get the budget approval from the finance department. Subsequently, vendors are shortlisted and asked for a quote. 

  4. During the agreement negotiation, the legal team vets the terms and conditions and raises concerns if legal issues can arise out of the contract. If there are no legal concerns, one of the software providers is selected, a purchase order is made, and is forwarded to the finance department, asking for budget approval.

  5. The negotiations between the vendor and the procurement team take place, and the contract is finalized. Finally, the vendor delivers the requested hardware/software. 

  6. A 3-way match is done using the purchase order, packaging slips, and vendor invoices to check if there are any discrepancies.

  7. If it's perfect, it is sent to the finance department to make the payments. And finally, after the transaction is done, the finance makes the record of the transaction. 

If you look at this, you can see how tedious and time-consuming this process could be. It requires constant and real-time collaboration between businesses, finance, procurement, and legal teams and has too many emails that need to be sent. You may need to make your employees fill out forms, scan them, and then send them to the relevant departments. 

Even a small mistake in any of the steps can make this process inefficient. For example, even someone missing an email can make you juggle between departments. Or a delayed purchasing order can make the whole process slow.

Therefore, it makes sense to reach out to specialists, such as Zluri's SaaS buying, that can not only save money but makes the whole process faster.

You can also use Zluri to automate your procurement process. The IT department no longer needs to bang their heads about selecting the right SaaS application as Zluri suggests the best, cost-friendly, and secure applications. 

Also, it helps you eliminate all those risky applications lying in your SaaS stack by alerting you. This way, you can make sure your SaaS purchases are safe, better, and easy. 

Best Practices of SaaS Procurement

Set goals for innovations and security. If you are dependent on spreadsheets, it will only stifle your growth. As the complexity around procurement is increasing, more and more organizations are using the software for procurement. For SaaS apps, investing in a SaaS management platform, like Zluri, that offers full visibility of all your SaaS spend can bring good returns. 

Gartner predicts that 55% of enterprises will have moved to all-cloud SaaS strategies by 2025. However, this shift in strategy can be tricky to balance security with innovation.

Normally an enterprise would never sacrifice security when adopting services that increase employee productivity. But today, the security often gets bypassed due to the unmanageable number of SaaS applications and shadow IT. As a result, companies have nearly lost control of their software ecosystem due to SaaS.

Before focusing on visibility, compliance, threat prevention, and data security that spans your SaaS stack, leaders must first create security policies.

Meanwhile, these processes should not impede their business functions' ability to acquire solutions that drive value across the enterprise.

Develop a standard process for SaaS procurement. To maintain the security standards in place, any enterprise needs to create and maintain an intake standard, whether it is a process or a master service agreement.

While sourcing SaaS applications is an important task, so is vetting them. Therefore, business units should be educated about the best practices, the steps to follow, and the questions to ask on whether the software meets enterprise security standards.

Discover the SaaS apps in your environment. Unfortunately, shadow IT is an unsolved crisis for many enterprises. It is because the relationships between IT and the business units are not solidified. 

Discovering software

Suppose business units, departments, and employees are given the freedom to procure SaaS software solutions as they wish. In that case, it results in shadow IT expenses, and accounts payable can contain millions of data points, curbing an IT leader's ability to scrub the data, pull all the SaaS, and provide a complete view of the SaaS investment.

When you have full visibility on the SaaS purchases made by employees,  then you can identify the overlapping applications, excess spends, and the value-driven through the software purchased.

Build healthy ties with business units and departments. A healthy relationship between IT and the business units, departments, and individual employees ensures standard intake processes are respected, renewals are strategic, implementation is successful, and ROI is driven.

Driving ROI for sourcing and IT departments means more than strictly cost savings. Rewards that aren't quantifiable can provide the most value to the enterprise. People trust that sourcing and IT professionals have their best interests at heart.

Regular communications between teams, stakeholder meetings, and one-off service requests can enable IT and sourcing professionals to be more proactive than reactive.

Establish centralized governance. Though most organizations don't prefer centralized governance, it can at least determine which of the SaaS applications can be governed by IT and procurement. 

In many organizations, the hierarchy is determined by cost and user count without considering visibility and risk. In these cases, sourcing and IT will naturally spend the most time on high-dollar investments with a large cross-functional user base.

However, low-cost software with high-security risks can take a long time to vet.

Compliance without security standards and privacy rules is non-negotiable. We have to ensure that all of our vendors meet the criteria that we set in our service agreement. Resources are a reason that limits enterprises from setting up centralized governance.

Automating SaaS Procurement with Zluri

Zluri can automate your SaaS procurement and make informed 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. 

Zluri's SaaS buying helps companies to 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. 

After discussing with many IT departments, the founders—Sethu, Ritish, and Chaithanya—found that the procurement process is a big pain for companies. Negotiating prices is complicated, takes months, and gives the IT, procurement, and finance department a headache.

Zluri is a SaaS management platform that captures all the apps used in the company. Then, it thoroughly analyzes the company's SaaS stack. Based on the data and intelligence from the usage and utilization, the team is able to negotiate lower prices with SaaS vendors. For companies, it also saves 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. 

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