Top 7 SaaS Renewal Best Practices

Are you struggling with managing growing SaaS subscriptions and high renewal costs? In this article, learn how SaaS renewal best practices help identify SaaS apps, gather user insights, and maximize the value of SaaS investment while cutting costs.

IT managers lack centralized oversight and control over SaaS renewals. Without a clear understanding of when contracts expire or how applications are being utilized across departments, organizations risk facing unexpected renewals, price hikes, or even non-compliance issues.

Such uncertainties strain financial resources and divert valuable time away from strategic IT initiatives. To address the challenges, implementing best practices for SaaS renewal management is essential.

But before we explore the SaaS renewal best practices, let's quickly go through what a SaaS renewal process is and what challenges one faces during SaaS renewal management. Understanding these aspects will help you see how implementing best practices can make a significant difference.

What Is A SaaS Renewal Process?

The SaaS renewal process involves a series of steps that lead to renewing a SaaS subscription. It involves extending the existing agreement for an additional period, potentially cutting down on licenses, or even canceling the subscription. Additionally, it often includes renegotiating terms and conditions to better align with the evolving business needs.

Now, let's understand the challenges one encounters while managing SaaS renewals.

SaaS Renewal Challenges

Listed below are some common SaaS renewal challenges faced by most organizations:

• Lack Of Visibility Into SaaS Apps In Use

IT teams often struggle to keep track of all the SaaS subscriptions present in the organization. This challenge arises because employees subscribe to SaaS apps without informing the IT department (a practice known as Shadow IT). This lack of visibility makes it difficult to understand how many SaaS apps are in use and complicates SaaS renewal management.

• Absence of Appropriate Tracking System To Monitor Subscriptions

Due to the absence of an appropriate tracking system, monitoring subscriptions can be extremely difficult. IT team may not be aware of all the SaaS apps being utilized within the organization. This oversight can result in paying for multiple SaaS apps that offer similar functionalities, increasing redundant costs. Additionally, unexpected renewals can strain budgets, especially if they are not planned for in advance.

• Missing Renewal Deadlines

When IT teams have many renewal dates to remember, they sometimes miss out on important renewal deadlines. This oversight can take away the opportunities to negotiate better terms with vendors or find more cost-effective alternatives. In the worst-case scenario, it can also lead to unexpected service interruptions if vendors suspend services due to missed payments.

• Managing Multiple Vendors Terms & Conditions Can Be Complex

Each SaaS vendor typically has its own unique clauses related to renewals, cancellations, and usage limits. For instance, one vendor might offer discounts for early renewal, while another may have penalties for late cancellations. Because of these varied terms and conditions, it becomes extremely confusing to keep track of each vendor contract.

Now that you are familiar with the challenges, let's explore how SaaS renewal best practices can mitigate them.

7 SaaS Renewal Best Practices To Mitigate Renewal Challenges

Here's the list of the top 7  SaaS renewal best practices that your IT team can follow to effectively manage SaaS renewals within your organization.

1: Plan About Your Renewals Well In Advance (Preferably 90 Days)

Always plan, and don't wait until the last moment. In this planning process, your team can set reminders and initiate discussions with your other team members well before the renewal date. Doing so gives you ample time to review your usage and decide if any changes to your subscription are needed. Proper planning ensures you are thoroughly prepared for the SaaS renewal process and have sufficient time to make informed/data-driven decisions.

• For example

Your organization's subscription to finance management software renews every year on October 1st. Instead of waiting until the end of September to consider the renewal, your team can set a reminder for August 1st.

This early reminder helps your team start discussions with other teams about how the SaaS app has been used in the last years. They can review the number of employees actively using the app, the features being utilized, and any potential issues that have occurred.

This allows them to determine whether the current subscription is still suitable or needs adjustments. By planning, they also get plenty of time to negotiate with the vendor for a better deal, switch to a better plan, or even explore alternative solutions.

2: Organize Your Subscriptions & Contracts Data In A Centralized Location

The next step is to centralize your subscriptions and contract data. This SaaS renewal best practice encourages your teams to keep all your contracts in one secure place. Having everything (detailed subscription and contract data) in a centralized location makes it easier to find the information you need, especially during internal audits or when it's time to renew a contract/subscription.

Further, your team can quickly access and review all your contract details at a glance, ensuring you don't miss any important dates or terms. Moreover, centralizing your contracts can make the renewal process much smoother and more efficient. This way, you are always prepared and can manage your SaaS contracts effectively.

• For example

Your organization must have multiple subscriptions to various SaaS apps, each with a different renewal date. Keeping track of these contracts all can be challenging if they are spread across different spreadsheets or stored in different locations.

You can store all your contract details in one secure place, like a shared drive with restricted access, or use a contract management tool to centralize these documents. When an audit or renewal date approaches, your team can easily pull up the necessary information and instantly review it.

Note: This centralization allows you to see all relevant details at a glance, such as renewal dates and contract terms, making it simpler to manage renewals.

3: Review Your SaaS License Usage

Another crucial SaaS renewal best practice is evaluating your SaaS license usage. This involves identifying which features or services of your SaaS apps are not in use and which additional features or services might be required. Moreover, by understanding how your employees use your software subscriptions, you can make informed decisions and ensure you only pay for what you need.

But how do you review the usage of SaaS apps license? There are two ways to review:

1. Manual Check: Log in to each application and check its usage manually. While this method can be accurate, it is very time-consuming and labor-intensive.
2. Using a SaaS Management Tool: Utilize a tool that provides insights into real-time app usage. These tools give you detailed information about how applications are used and by whom. This method is more efficient and saves a lot of time compared to manual checks.

4: Sort Your Renewals Into Different Categorizes To Avoid Confusion

Once your team has gathered all the insights associated with SaaS app usage, the next step is to organize SaaS app renewals into different categories, such as:

1. Replacing the Application: Once the IT team understands the SaaS stack, they can evaluate if certain applications need replacing. This includes:

• Outdated or Inefficient Apps: Identifying applications that no longer meet the organization's needs.
• Redundancy: Checking if multiple applications serve similar purposes.
• Compatibility: Ensuring applications are compatible with updated operating systems and security requirements.Replacing outdated or redundant applications can reduce costs and improve security.
  
  2. Eliminating the Application: Identify unnecessary or unused applications. The IT team can pinpoint apps that are no longer actively used by employees or are redundant, freeing up resources and lowering licensing costs.
  
  3. Renewing the Application: Once the apps are distributed in the above two categories, proceed with renewals for the remaining ones. Make sure that only necessary SaaS applications are maintained.

5: Assign Priorities & Set Reminders For Renewals

Assigning priorities and setting reminders is one of the essential SaaS renewal best practices for managing application renewals effectively. Your team needs to understand that not every SaaS app is equally important. Some apps are more valuable and need more attention when renewal ends.

But how do you assign priorities and set reminders? Here's how:

Step 1: Prioritize Important Apps: Identify which apps are the most critical to your business operations.

• For example, if your organization has an app that the entire team uses every day to perform their dedicated tasks, it should be given higher priority. Your team needs to focus more on ensuring this app is renewed on time and kept up-to-date than an app that is only used occasionally. Doing this ensures that the important SaaS apps are always available and functioning well, which helps keep your operations running smoothly.

Step 2: Set Automated Reminders: Use an automated calendar to set renewal reminders. Pre-renewal reminders like this give your team enough time to decide what to do with each license.

Step 3: Evaluate Each App: Review each SaaS app when the reminders come up. Based on its current usage and value to the business, decide whether to renew, terminate, upgrade, or downgrade the license.

By doing so, you can avoid unnecessary costs and keep the most valuable tools up to date.

6: Avoid Auto-Renewals Traps  / Stay Alert Of Auto-Renewals

Most SaaS renewal contracts work on a subscription basis, where vendors expect you to renew after the initial term. They usually give a specific time frame, known as the renewal window, where you can choose to cancel or change your subscription type.

If you miss this window, the contract typically auto-renews. This means if you want to cancel but miss the renewal date, you'll have to pay for another full subscription cycle (even for the apps that you no longer need).

To avoid this, you need to turn off the auto-renewal option. Doing this allows your team to manage renewals manually. But how is this beneficial? This approach has several benefits, such as:

• When you decide to turn off the auto-renewal option, vendors feel the urgency to initiate the renewal conversion. You may forget to renew the app, which could result in them losing revenue for that renewal cycle.
• Also, this approach creates a sense of urgency within your team to prepare for upcoming renewals, ensuring that you don't lose access to critical apps needed for daily operations.

7: Communicate With Your SaaS Vendor About Changes In App’s Features & Prices

SaaS vendors frequently update their SaaS app features and sometimes change their prices. As a customer, it's easy to miss these updates, which could affect your subscription.

• For example — You are using a spend management tool. The vendor releases a new version with updated features, and the price also increases. If you're unaware of these changes, you might miss out on valuable updates or be surprised by higher costs during renewal.
  
  To manage this well, regularly communicating with the SaaS vendor is a good practice. By doing so, you can stay informed about any new features or changes in pricing. This one of the vital SaaS renewal best practices helps you make better decisions when renewing your subscription fee, ensuring you get the most value from your SaaS investment.
• After going through the best practices, you may have noticed that many of these tasks can become quite complex if handled manually. So, the easy solution is to have an automated solution in place. But again, deploying multiple automated solutions to manage different tasks won't be feasible. Instead, you can implement an all-in-one automated solution like Zluri. What is Zluri? How is it beneficial? Here's a quick read-through.

Opt For Zluri To Manage Your SaaS Renewals Effectively

Zluri offers an intelligent SaaS management solution designed to help your team effectively manage your SaaS renewals. But how does it do that? It offers a wide range of advanced features that enable your team to handle every aspect of SaaS renewals. What are these features?

Here are some key capabilities offered by Zluri's SaaS management solution:

• Provides Visibility Into Your SaaS App Usage With The Help Of Discovery Engine

Zluri's SMP uses 9 discovery methods—MDMs, IDPs & SSO, direct integration with apps, finance & expense management systems, CASBs, HRMS, directories, desktop agents (optional), and browser extension (optional), to provide complete visibility into SaaS app usage.

Zluri’s nine discovery methods

But what insights does it offer, and how does it help?

It provides insights like how many apps are actively being used, which apps are unused or underutilized, how many employees are using those apps, and more, all in a centralized dashboard. These valuable insights help IT teams understand each app's usage pattern. This further enables them to decide whether they need more licenses for those apps, upgrade or downgrade to a suitable tier, or eliminate them altogether.

This saves SaaS costs and helps ensure everyone has the tools they need to work efficiently. Zluri’s discovery feature will also help enforce SaaS renewal best practices (organize SaaS contracts/subscription data in one place).

• Send Real-Time Alerts Prior To Renewal Dates For Better Decision Making

Zluri's SMP offers a renewal calendar that clearly lists upcoming renewal dates of payments and subscriptions sorted by every month. This feature ensures you're always aware of when renewals are approaching, preventing surprises.

Zluri’s renewal calendar

That's not all. It also automatically notifies 30 days, 15 days, and one day in advance for contract renewals, and for payments, you get 7-day and 1-day alerts prior to renewal.

Your team can even customize these alerts at their convenience. For example, they can set alerts to notify customers about critical renewals, such as those involving large investments or apps requiring daily operations, before notifying them about other renewals.

Additionally, this automated reminder gives them more time to evaluate whether to renew, upgrade, downgrade, or discontinue licenses. Zluri's renewal calendar will further help implement SaaS renewal best practices (assign priorities and set reminders for renewals).

In addition, Zluri's SMP provides an optimization summary and detailed insights into how to optimize spending and save costs. Analyzing historical user usage data reveals valuable information that helps your team make smarter decisions and identify areas where you can cut unnecessary expenses. This way, you can maximize the value you get from your SaaS investments.

To learn more about Zluri's SaaS management platform, book a demo now.

Follow SaaS Renewal Best Practices To Properly Manage Renewals

Following these 9 SaaS renewal best practices can turn the renewal process from a last-minute rush into a strategic advantage. You'll gain control over your SaaS usage, cut unnecessary costs, and ensure your organization gets the most value from its cloud-based applications. You can also use Zluri's SaaS management solution to simplify and further automate the SaaS renewal management task.

Frequently Asked Questions (FAQs)

Why is it important to plan SaaS renewals in advance?

Planning renewals in advance gives you ample time to review your usage. It helps avoid last-minute decisions and ensures you are not locked into unwanted subscriptions.

What is the risk associated with auto-renewal clauses in SaaS contracts?

Auto-renewal clauses in SaaS contracts automatically extend your subscription for another term without requiring explicit confirmation from you. If you miss the renewal window or fail to cancel on time, this can result in unexpected renewals and costs.

Why is it important to review SaaS license usage before renewal?

Reviewing SaaS license usage helps IT teams identify underutilized, unused, or duplicate apps, which in turn helps remove unnecessary apps from the SaaS stack. This ensures organizations pay only for what they need.