Vendor Management

  • 6 min read

SaaS Renewal Best Practice for IT and Procurement Teams

Sethu Meenakshisundaram

31st January, 2024

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Keeping track of a high number of SaaS renewals on regular bases can be time-consuming. Hence there is a need for a proper system that helps with efficient SaaS contract management and provides SaaS portfolio visibility. 

This will help in reducing shadow IT, security threats, and unnecessary SaaS spending and get the best out of every SaaS subscription. 

SaaS renewal is a crucial part of SaaS vendor management, and it comes under SaaS governance. However, manual renewals can also take weeks if renegotiation is required; hence it is necessary to be prepared. 

A proper SaaS renewal strategy helps to reduce the financial impacts of missed renewals and stop the renewal of unnecessary applications. In addition, SaaS renewal will improve with the visibility and awareness of your entire SaaS portfolio and will aid in SaaS security.

SaaS subscription and contract renewals bring about many challenges. Contracts often get saved in random places that are difficult to access. When the SaaS landscape gets more populated, it leads to more contracts. 

Sometimes, if you haven't reached out to the vendor before a specific date of the renewal contract, you can get stuck in another contract term even though it is not needed. 

Lack of visibility is one of the leading causes of SaaS wastage; SaaS contracts get auto-renewed by the vendor before being renegotiated or terminated. However, if the SaaS ownership isn't documented properly, it gets difficult to optimize or cancel SaaS renewal.

If you want to optimize your SaaS stack, you have to first run a diagnosis. See symptoms of an unoptimized SaaS stack. 

Here are 8 Ways to Manage SaaS Renewals 

1. Use Renewal Calendar

Renewal Calendar gives an insightful overview of all the coming up SaaS renewals. This will help avoid surprises and help you prioritize preparations based on the size of renewal and time and strategize the use of any particular application. If there is little information about the application, it's hard to execute a good renewal.

Zluri's renewal calendar

With renewal calendars, you get a notification of the renewal date and also an insight into rightsizing the deployment. If the date of renewals is known, then proactive renewal decisions can be made by reviewing original purchase contracts and working on negotiation strategies.

If there is an auto-renewal clause–if the client doesn't notify the SaaS vendor by a particle time, called renwal window–the contract will be auto renewed for the next term. 

The renewal window (usually 30 days to 90 days) shows the amount of time you have to deal with the contract renewal. This will help your take appropriate decisions about the renewal contracts.

Renewal calendars prevent auto-renewals. They help terminate the applications that are not in use or abandoned apps and to prepare for renegotiation of apps that are used less. It also reminds you to pay on time; hence there are no missing payments, and you get to work smoothly.

Map and Control Renewal Timelines. Mapping and managing renewal timelines can be done with a renewal calendar. Consider the ownership and utilization, and document all contract renewal dates for the organization's SaaS technology stack. 

The aim is to proactively control and strategize the renewal decisions. It is necessary to view the full details of individual apps for reviewing original contracts or purchase agreements.

If there is no proper mapping and management of renewals, opportunities to contain costs during renewal negotiations are frequently missed. With proper knowledge about upcoming renewals, sourcing teams and their counterparts can pay attention to value optimization for the SaaS footprint in the future.

Regular meetings for discussion with SaaS ownership stakeholders help to highlight and create a plan of action for any application renewal data that will be occurring in the coming months. This will help the owners to plan needed actions for coming up with application renewals.

2. Keep SaaS Contracts Available

It is beneficial to collaborate with the departmental leads before going for a renewal discussion. This will give a proper insight into contracts and help with strategizing the next negotiation. Maintain a system of records for storage of important information documents and files. 

SaaS Contracts in Zluri

It is also crucial to keep all documents readily available, as it helps to know the hidden contract terms. There may be points in the SaaS agreements that may have been overlooked initially. 

Scalability and overage fees should also be taken into consideration before every renewal.

3. Billing Management

Billing management includes managing the SaaS payments and avoiding SaaS overcharging. SaaS overcharging is when you pay more for the subscription than you expected. 

This isn't the same as forgetting to cancel a subscription. Overcharging can have many reasons, like SaaS vendors raising their prices, usage-based pricing, using premium features, or even adding another user. 

In Zluri, you can keep an eye on this by comparing costs and spend. 

• In the Cost column, you can see what is mentioned in the contract

• In the Spend column, you can see what the amount you have actually paid is

The bigger the difference is, the higher you are charged than what is mentioned in the contract. 

Overcharging can be avoided by keeping an eye on statements and payments. Make sure you have a proper tracker for our SaaS spend. Communicating with SaaS vendors regularly is important; you can ask if there is anything that you could get an upcharge for. 

Using virtual credit cards to manage SaaS can also be beneficial. With virtual credit cards, you can set a monthly spending limit on each card and pay for each SaaS vendor with a different card, so you will never experience an overcharge again.

Upgrades and downgrades the licenses when necessary.

4. Visibility and Tracking of Apps

Using a SaaS management platform like Zluri that provides proper visibility and tracking of apps helps eliminate unauthorized applications. 

Discovery is the foundation of any SMP. Unless you can identify all the apps in your organization, you cannot work on optimizing them. With over 2,25,000 apps in its database that keep on expanding, Zluri has the largest app library in the world.

With the five discovery methods, the Zluri discovery engine automatically discovers 100% of apps. See how the discover engine works.

You will have real-time data on who has purchased the apps, who uses them, and how frequently are they used. Identifying the idle and least used apps from the SaaS landscape guides in cutting off the excessive SaaS spend. 

Keep an eye on the number of apps purchased, the spend value, and the date of purchase. This will help in unsubscribing unnecessary applications and renewing needed applications on time.

5. SaaS Usage Insights

For negotiation with the SaaS owners, involve some functional team members who have a better grasp of the product's functionality and importance. The negotiating team will identify the problematic areas and address them during the renewal negotiation. Their knowledge about the insights is bound to help with the negotiation. 

If the applications are used regularly and are beneficial to the company, the renewal can be done accordingly. But if the applications need some changes or aren't benefiting much, then negotiation can be put forth with proper clarifications. One of the common pricing components includes usage type of adjustment.

6. Prioritize High Valued Contracts

Lots of variables can help to determine a priority contract, but it's crucial to evaluate and balance various factors and needs. 

High contract value is one common way to prioritize contracts. 

Similarly, apps with high threat levels should also be prioritized–so that if not needed, you can terminate them.

7. Expert’s Help for SaaS Buying

Buying SaaS apps is complicated, but there are apps like Zluri which provide help and make it easy. Get data intelligence to buy and renew software subscriptions. 

Zluri also offers SaaS buying and negotiation as a service. There is no upfront cost.

Zluri’s procurement team empowers you with strategic resources and benchmark data to make procurement easy and saves up to 50% of the SaaS cost.

Zluri knows the SaaS marketplace well and can guide you to get the best SaaS stack for your company on the budget you want. This application also helps you plan your SaaS buying in advance, with savings on subscriptions.

Zluri scans through the purchase history, usage needs, current market data, and the most used applications for making decisions for your renewals and buying of SaaS. It helps you to manage contracts and subscriptions. 

It guides renegotiating each app months before the renewal date.

8. Avoid Spreadsheets

Maintaining spreadsheets can be time-consuming and ineffective. SaaS management platforms like Zluri automated the whole process. No manual entry of SaaS subscriptions and associated details are required; hence, human error is eliminated.

Zluri even notifies about renewals. It keeps contracts along with vendor details so that they are never missed.

Zluri provides intelligence solutions to manage all your software application subscriptions. The direct integration with SaaS applications helps track which user holds what app license, its tier, how frequently they use it, and which features are being used. 

SaaS Ownership is the Core to Better Renewal

An important aspect of creating a SaaS renewal strategy is determining the owner for each SaaS application and even relevant metrics to demonstrate utilization. This helps to understand the usage and how important the SaaS application is, along with prioritizing its renewals. 

To assign and access this information in Zluri, you can go through the application dashboards.

Research each application's uses and functions before collaborating or engaging in any discussion with the individual unit business owners.

The admins, leaders, and employees can give crucial information that can be relevant to the renewal process. 

Ask them questions like, how did they find the SaaS tool? Who negotiated the initial contract? What would the employees wish to change about the application? 

These questions will aid in getting a broader perspective about the application and will help with the renewal discussion with the vendor.

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About the author

Sethu Meenakshisundaram

Sethu is the Co-founder of Zluri. He believes SaaS and APIs will help everyone become a builder. He frequently writes on SaaS management and workplace automation. Before Zluri, he was part of the founding team at KNOLSKAPE, one of the leading corporate learning gamification startups that he helped scale across 30 countries. Other than technology, Sethu is passionate about quizzing, board games, and photography. His retirement plan is to operate a board game bistro in one of the touristy spots of Southeast Asia.