Software Sourcing vs Software Procurement - Similarities and Differences

Post-pandemic, there has been an increase in SaaS adoption. Due to this, the association with SaaS apps has skyrocketed in organizations. 

To get better deals in buying these SaaS apps, organizations first need to understand how sourcing and procurement are different, and their strategic use can help them.

When it comes to buying software or SaaS apps for your organization, effective sourcing and procurement are valuable processes that can save you money and time.

You might be thinking about why and how it's so. This is because procurement and sourcing work together. However, sourcing is the first step in the supply chain management process. Supply chain management relies heavily on both sourcing and procurement.

Although sometimes the terms procurement and sourcing are used interchangeably, there is a key difference between them. Now, let's discuss the key differences between sourcing and procurement.

What is Software Sourcing?

Sourcing is searching vendors and collecting information for the overall software buying process. Before the procurement process, sourcing involves steps like:

• Knowing the organization's requirement for procuring SaaS.

• Looking for potential vendors.

• Vetting vendors that suit your requirements.

• Gather information on other alternative vendors.

• Requesting for quotes.

• Defining timelines and deliverables.

• Conducting negotiations and agreements on prices.

So briefly saying, Software sourcing includes finding possible suppliers, evaluating them, and selecting the supplier/vendor who gives the best value in terms of the price and quality of the needed product.

Your purchasing of SaaS can be streamlined with strategic software sourcing, allowing you to take advantage of optimal pricing and payment conditions.

What is Software Procurement?

The term "Software Procurement" refers to a group of activities wherein software are obtained to meet an organization's requirements.

For instance, a company requires you to procure software for IT teams. You should first decide where to procure the software, then send a purchase order to the chosen supplier. Finally, you pay for the software that has been procured.

In addition, each of these tasks is a component of the larger procurement process that is carried out in your firm. This involves:

• Identifying internal needs and submitting a purchase requisition

• Market evaluation

• Shortlisting vendors and sending RFQ/RFP

• Reviewing bids and choosing suppliers

• Supplier negotiations

• Buying

• Ordering and expediting items

• Auditing delivered orders for supplier compliance

• Receiving a receipt and bill

• Paying

• Record-keeping

• Assessing supplier performance and building a long-term connection

The development of a company requires the implementation of strategic sourcing and purchasing of software. This makes it possible to negotiate the best price and quality for the purchase. As a result, it has an immediate and direct impact on the organization's profit margin and net income.

Software Sourcing vs Software Procurement: Key Differences

In the context of procurement, "sourcing" refers to evaluating, selecting, and managing suppliers to purchase the required SaaS apps from the suppliers. 

However, procurement is the whole process that includes several steps in purchasing software, from sourcing to buying and maintaining the supply chain. 

The process of locating, purchasing, and making payments for the purchased software is included in the overall procurement process. Whereas sourcing involves managing all the information about the suppliers required for software procurement. 

If you are able to differentiate between the two, it will be easier for you to coordinate the teams who are responsible for sourcing and procurement, as well as make strategies to improve both processes.

That's why we have collated a comparison table on both terms, to give you a broader idea about these two.

Comparison Table: Software sourcing vs Software procurement

Use Zluri’s SaaS buying service and make the software procurement process efficient

Zluri's SaaS buying service will procure SaaS applications and renew existing ones. We assist you in finding the most favorable pricing options. We provide SaaS procurement services that will bring your software costs down to an affordable level. We will negotiate a more favorable SaaS deal on your behalf. 

We have 1 billion SaaS transaction data and know the average price that you would pay for a SaaS app. We know the appropriate price for procuring SaaS apps and save you both time and money.

After understanding the needs and having compiled a list of the tools you need, we will then pick appropriate vendors for those SaaS apps. We negotiate the optimal price for the essential tools on your behalf.

We have data that serves as a standard for SaaS prices. We combine data-backed insights along with knowledge of fair pricing, and we will provide you with the SaaS applications of your choice at the best price possible. It is beneficial to you in maintaining the momentum of your business.

We do not charge any upfront fees, you only pay us when we save you 2x. Therefore, the amount you save is double what you pay for our service. We guarantee this for your savings.

For instance, if we guarantee and save you $50,000, you pay Zluri $25,000. If you save more than the amount we guaranteed, you continue to pay us the same amount. 

The prices of negotiations are determined by a number of parameters that are related to the requirements of the departments and the organization. These factors include things like the required licensing tier, the number of employees for whom SaaS applications are required, and so on.

We also examine the ways in which your company's SaaS setup may be hampered by the duplication of functionalities across several apps. We help you with this and advise removing the apps with identical applications to the existing ones.

Additionally, Zluri will help you discover each and every SaaS application used within your organization. Zluri's app library contains more than 2,25,000 applications. We assist you in the management of your SaaS stack by removing redundant and duplicate applications, making you proactive with auto-renewals, downgrading to license levels that are more suitable, and other similar actions. 

For more detailed information on Zluri's procurement services, you can refer to this article.