SaaS Renewal Management: A Guide To Optimize SaaS Renewals

Rohit Rao

10th October, 2023


Managing SaaS renewals efficiently is crucial to optimizing licenses and avoiding unnecessary expenses. Unfortunately, many organizations struggle in this area due to a lack of complete visibility and proper renewal insights. However, with SaaS renewal management, these challenges can be addressed effectively. But how? In this article, we'll explore these concepts in depth. 

As organizations grow, they expand their SaaS stacks (acquire more SaaS apps) to meet evolving operational needs. However, later, the real challenge arises when managing renewals of these SaaS apps. 

But why? With numerous apps to track and renew, it becomes extremely difficult for IT teams to manage each app's renewal individually. The worst part is that even the slightest mismanagement or oversight during the SaaS renewal process can significantly drain the company's dollars and dollars. 

So, to make managing renewals easier and mitigate the oversight pitfalls, SaaS renewal management is a solution. But what is SaaS renewal management? Let's find out. 

What Is SaaS Renewal Management?

SaaS renewal management involves a series of processes and strategies that are put together to effectively manage the continuation, cancellation, and renegotiation of SaaS contract terms/subscription terms. 

Furthermore, it plays an important role in helping your teams minimize SaaS expenditures by implementing SaaS renewal management strategies.

Also, SaaS renewal management aims to ensure that companies are well-prepared to take the necessary steps when the renewal date approaches rather than being caught off guard by renewal dates. 

That’s not all; there are other benefits of SaaS renewal Management, which we have discussed below.

Benefits of SaaS Renewal Management  

Here are some advantages that you will avail if you effectively manage SaaS renewals: 

  • Cost Optimization: SaaS renewal management is crucial in helping your team optimize the organization's software spend. 

    By tracking and managing renewals effectively, businesses can avoid unnecessary renewals, eliminate redundant subscriptions, and negotiate better pricing or terms with vendors, ultimately saving money.

  • License Compliance: It ensures that an organization maintains compliance with its software licenses. This prevents unintentional overuse or underuse of licenses, which can lead to legal issues or wasted resources.

  • Reduces The Risk of Interruption In Flow Of Work: SaaS renewal management reduces the risk of service interruptions. 

    By ensuring that subscriptions are renewed on time, your team can avoid disruptions to critical software services, which can impact productivity and operations.

  • Optimized Software Stack: It allows your team to reassess the organization's software stack regularly. They can evaluate the effectiveness of existing SaaS apps and make informed renewal decisions about whether to renew, replace, or add new apps to the stack to meet evolving needs.

    But what are some ways to manage SaaS renewals? There are different ways, and some of them are outlined below.

3 Main Methods To Manage SaaS Renewals     

Listed below are three main methods that your team can use to manage SaaS renewal: 

1: Manual Method 

By Utilizing Spreadsheet 

A spreadsheet is a manual way to manage the SaaS app renewals. However, maintaining spreadsheets is time-consuming and ineffective. 

Managing renewals on spreadsheets is fine for smaller organizations with a few SaaS apps. However, managing the SaaS renewals becomes difficult and time-consuming as the number of apps increases.

Considering the easy accessibility of SaaS apps, users sign in for new apps almost regularly. Therefore, the spreadsheet must be updated regularly to be proactive with the SaaS renewals. 

If the spreadsheets are updated monthly or quarterly, you need to wait patiently for the complete period for the update. Still, the data may not be accurate, leading to unmanaged SaaS renewals and unnecessary SaaS spending.

2: Automated Method 

By Utilizing Software Asset Management Tools

Software asset management (SAM) tools help manage applications within the organization but mainly focus on on-premise software. They manage traditional licenses installed on a computer.

Through SAM tools, your team can manage the on-premise software licenses and their renewals within the organization. 

Most SAM tools focus on traditional on-premise software licenses and not SaaS apps. 

By Utilizing the SaaS Management Platform 

A SaaS management platform streamlines SaaS renewals by centralizing all subscription data, providing visibility into usage and costs across the organization, and automating renewal workflows. 

These platforms offer features such as renewal alerts, contract tracking, and vendor negotiation support. This further helps your team to efficiently track renewals, identify opportunities for cost savings, and make data-driven decisions about organizations' SaaS portfolios.

3: Outsourced Renewal

You can even outsource/hire external service providers who offer you a team of skilled professionals and advanced technologies to handle the renewal management process on your behalf. Outsourcing this service reduces the likelihood of errors occurring during the renewal process, especially if you choose reputable partners with a proven track record. 

So basically, you can delegate the task to a dedicated team of experts who can manage it more efficiently while your team can focus on your core business activities.

Now that you know the methods, let’s proceed further and prepare your team for the SaaS renewal process.

How To Prepare Your Team For SaaS Renewal Process 

Modern enterprises use a variety of SaaS applications, each with its own renewal date, terms, and conditions. So, managing renewals of multiple SaaS tools can be a challenging task. However, by following the key renewal strategy outlined below, your team will be well-prepared to effectively manage the SaaS renewal:

1: By Providing Them With Complete Visibility Into the SaaS Stack

Without proper visibility into the existing SaaS stack, automatic renewals may occur even for applications that are not actively used or not used at all. This also removes the opportunity to rightsize to a suitable plan or cancellation. 

So, to avoid missing out on such opportunities, the first step is to gain full visibility of the SaaS stack. 

Note: This can be achieved through the use of automated tools equipped with discovery functionalities. 

This visibility will help your team see who uses what software across your organization (which departments and individual employees use which apps). 

Furthermore, by gaining this visibility, your team can strike a balance between IT-driven software needs, line-of-business requirements (LOB), and individual user preferences. Also, this will help ensure you are getting the most out of your software investments, minimizing wastage, and aligning software usage with strategic objectives and budgetary considerations.

2: By Letting Them Use the Renewal Calendar & Set Alerts To Stay Up-To-Date On Renewals

SaaS contracts may have different renewal dates, making coordinating and managing renewals challenging. Use the automated renewal calendar to ensure your team is notified about upcoming renewals in advance. 

This renewal reminder calendar helps your team automatically receive alerts about renewal updates or upcoming renewals well in advance. 

This leaves your team with plenty of time to make informed decisions on renewals, including which licenses to continue with, whether to upgrade or downgrade the plan, and more. This will also help you make cost-saving decisions and optimize the licenses as best as possible. 

3: Prioritize Important Renewals

  • Prioritization is a key element of a proactive renewal process. Your IT team needs to understand that not every SaaS application is equally important to the business. When dealing with numerous renewals, it's essential to prioritize those with higher value and greater optimization potential. 

  • So, to help your team understand which renewals need to be prioritized, you can provide them with insights into contract value and the proximity of the renewal date (you can use SMP to gather this data). With the help of these data, your team can effectively prioritize the renewals. For example, the closer the renewal is, the more urgent the action is required.

Now that you know how your IT team can effectively manage SaaS renewals, let's explore ways to optimize and simplify the process. 

Best Practices To Streamline SaaS Renewals Management

Listed below are the SaaS renewal best practices that your IT team can implement to streamline the management of renewals:

1: Categorize Your SaaS Renewals To Avoid Any Confusion 

Your team can categorize renewals into predefined groups to efficiently manage SaaS renewals. At first, your team needs to detect all the apps in use and gather information regarding app usage, redundant and duplicate apps, and more. 

With the help of these granular data points, your team can decide which license will fall under which category, for example:

  • Replacing the application- Once your IT team has a clear view of the SaaS stack landscape, they can assess whether certain applications need to be replaced. This evaluation involves considering factors such as:

  • Outdated or inefficient apps: Identifying applications that are outdated or no longer meet your organization's requirements.

  • Redundancy: Determining if multiple applications serve similar purposes, leading to potential consolidation.

  • Compatibility: Assessing whether applications are compatible with the updated operating systems and security requirements.

So, by replacing these outdated or redundant applications, your team can reduce costs and enhance security.

  • Eliminating the application- Your IT team needs to identify applications that are no longer actively used by employees or are redundant and remove them from the SaaS stack. Eliminating such applications can free up resources and reduce licensing costs.

2: Look For The Auto-Renewal Clause

Since most SaaS renewal contracts operate on a subscription basis, vendors expect you to renew the contract after the first renewal cycle. In most cases, vendors provide a specific renewal window during which you can decide whether to cancel or switch to a different license type. However, if this renewal window is missed, the SaaS contract usually auto-renews

So, if you intend to discontinue a particular app subscription but miss the renewal date, it will automatically renew, and you'll be obligated to pay for another full subscription cycle. 

To tackle this situation effectively and gain better control over SaaS subscriptions, your IT team needs to eliminate the auto-renewal option. Once you discontinue auto-renewals, your IT team will be able to manage renewals manually. 

But what benefit will you avail from doing so? 

  • When you specify that your contract cannot auto-renew, it places more importance on both parties to initiate renewal conversations.

  • By disabling auto-renewals, you prompt your vendor to contact you days in advance to discuss the contract renewal. And they also ensure that you renew because failing to do so means a loss of revenue for them.

  • Similarly, you gain a sense of urgency to prepare for upcoming/future renewals. Failing to organize software renewals in advance can result in your team losing access to essential apps crucial for your daily business operations. 

Therefore, disabling auto-renewal clauses ensures that both parties actively engage in the renewal process, fostering better communication and preparation.

3: Evaluate SaaS usage To Reduce Unnecessary Expenses

Paying for unused SaaS app licenses is a situation every organization wants to avoid. But, with the increase in SaaS adoption, shadow IT (employees using unauthorized software) is rising. Because managing a large number of SaaS applications can be daunting, and it's easy to lose track of who is using which app and whether it's being utilized at all.

This is precisely why, before committing to the renewal of any SaaS application, it's crucial to identify all the apps in the SaaS stack, evaluate their actual usage patterns, and then compare them to what you're spending. By doing so, your team will not only streamline the SaaS renewal management process but can simultaneously halt unnecessary expenses related to unused app licenses.

  • Example of challenge: Your team subscribes to a project management tool, and you've been renewing the license annually without much thought. Your team initially used the tool actively but started using it less frequently over time. 

    Without regular evaluation, it can be difficult to recognize this decline in usage. You will continue renewing the license at full cost, even though only a fraction of your team is actively using the tool.

  • Solution to prevent the challenge: Before the renewal date arrives, your team can evaluate the actual usage of the project management tool. This will give your team insights, such as which employees are no longer using the application and how long they have not actively engaged with it. 

    Armed with this information, your IT team can adjust the subscription by reducing the number of licenses to match the actual user base at the time of renewal. 

    As a result, you can cut down on unnecessary expenses, ensuring that you're only paying for apps that are actively used by your employees and add value to your organization.

4: Use Price Benchmarking As A Key Point During  Contract Renewal Discussion With Vendor

Don't proceed with SaaS contract renewals without conducting a thorough competitive landscape analysis.

Your procurement team may have analyzed this market during the initial vendor selection. However, it's crucial to recognize that pricing standards may have changed considerably during the duration of your contract.

Naturally, you wouldn't want to invest months gathering competitor pricing data, particularly if your primary objective is renewal rather than changing providers. 

So, instead, you can use price benchmarking information to gain insight into what other organizations are paying for the same product. 

This approach allows you to make informed decisions regarding contract renewals. Also, helps ensure that you secure the best possible terms and pricing without investing excessive time and resources in a full-scale market analysis.

After going through the best practices, you may have realized that managing them can be quite challenging without a proper tool. So, the best solution is to opt for a tool that offers dedicated features to streamline the renewal process, such as SMPs. 

Though several tools are available in the market, Zluri's SMP stands out the most. Why Zluri? Let's quickly review it.

Effectively Manage SaaS Renewal With The Right Solution

Opting for different tools to manage different parts of SaaS renewals can overwhelm your team. For example, using SMP to track licenses and another procurement platform to negotiate renewals can confuse everyone involved.

You may think manual management can be better than juggling different tools, but you shouldn’t neglect that it often introduces errors and consumes ample time. 

However, hiring an external team is also an option and could solve the problem, but it’s quite expensive, especially if your organization has a tight budget. 

So, rather than investing in multiple tools and outsourcing teams, you can consider implementing an all-in-one solution like Zluri’s SaaS management platform.  

Zluri’s SMP is designed to simplify managing and optimizing SaaS renewals for your team. How does it do that? It offers many advanced features that help you stay on top of your renewals. 

Your team can use its discovery features to gain full visibility into your SaaS stack and understand its usage, which helps them understand what apps they need and what they don't. Zluri’s SMP also gives you a handy renewal calendar that reminds you when to renew each subscription so you never miss a deadline.

But that's not all! Zluri even helps you negotiate better deals with your SaaS providers using negotiation tactics like ZOPA and BATNA. So you can save money and get the best possible terms for your renewals.

In short, Zluri’s SMP helps you make informed decisions on renewals, minimize SaaS expenditure, and enhance financial health.

SaaS Renewal Management: A Strategy To Optimize SaaS App Investment & Minimize Expenses

In conclusion, SaaS renewal management includes a series of processes and strategies that help effectively manage the continuation, cancellation, and renegotiation of SaaS contracts or subscriptions. With a main focus on minimizing SaaS expenditures, optimizing SaaS license investment, and ensuring preparedness for renewal dates. 

Furthermore, to manage SaaS renewals effectively, you can use different methods, including manual methods, automated tools like Software Asset Management (SAM) tools, or dedicated SaaS management platforms. Each method has its own benefits and considerations. So you can choose the most suitable approach that aligns with your organization's unique requirements.

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