What is SaaS Vendor Management? Process, Benefits & Best Practices

As the number of digital initiatives increases among businesses, dependency on cloud-based applications has been growing to unprecedented levels. From marketing automation systems and CRMs to design applications, HR software, and many other solutions, all these tools are now being provided through subscriptions. 

The use of dozens, and even hundreds, of subscriptions may become a serious problem for any company. Without proper management, the firm faces escalating expenses, duplication, and hidden risks.

However, with the implementation of a structured approach to SaaS vendor management, a company can get full benefit from its applications and keep operational complexity at a minimum.

Basic Concepts of SaaS Vendor Management

It is the structured process of evaluating, onboarding, controlling, and optimizing third-party providers of Software as a Service. Unlike on-premises software solutions, which were bought once and required installation on the server, SaaS tools work according to the subscription principle and require permanent monitoring.

Software vendor management makes sure that an organization acquires only the software it needs, gets a good contract, and keeps close control over the security of the system and application usage.

The Step-by-Step SaaS Vendor Management Cycle

Efficient SaaS subscription management calls for an efficient process throughout the cycle covering the following five steps:

• Discovery and Inventory: Documenting all SaaS applications being utilized within the organization at present, including any ‘shadow IT’ applications that are being procured by individuals via their personal credit cards.
• Complete SaaS Vendor Evaluation: Conducting the assessment of potential vendors based on the functionality, pricing structure, flexibility of the contract, and SLA.
• Contract Negotiation and Procurement: Matching the terms in order to secure fair pricing, user seats, renewal timeline, and no surprises from the vendor with respect to auto-renewals.
• User Onboarding and Integration: Assigning the permissions to users, setting up the accounts, enabling SSO, and training employees.
• Monitoring and Renewal: Monitoring user adoption, vendor uptime, conducting security assessments, and making decisions regarding renewal, renegotiations, or cancellations.

Primary Advantages of Overseeing Your Software Vendors

Adopting an effective oversight strategy has the following benefits for expanding companies:

• Cost Savings

  Through monitoring of active license users and reducing the number of inactive licenses, plus removal of unnecessary software applications that are carrying out the same functions, there is an opportunity to reduce costs.

• Vendor Risk Management

  When third-party software application is connected to company data, there arises a threat of cybersecurity issues. Vendor risk management will ensure that all vendors adhere to stringent data protection policies and regulations.

• Contract Renewal

  It prevents unexpected automatic renewals of unwanted software applications, hence giving the procurement team time to review or negotiate for renewal or migrate to other software.

Effective Practices of SaaS Vendors Management

To maximize ROI from cloud solutions, it is important to apply the following tips. 

Carefully align software licenses with actual team usage, negotiate flexible enterprise contracts, continuously audit active subscriptions, and consolidate redundant tools into unified platform solutions.

• Consolidate Software Portfolio: Develop one comprehensive database which would cover all contracts, stakeholders, number of licenses, costs, and expiration dates of all active contracts.
• Establish Stringent Vendor Compliance Criteria: Make sure that all applications meet all IT security criteria concerning data protection, SOC 2 compliance, and other regulations.
• Appoint Clear Internal Application Owners: Assign the responsible team leader for each SaaS product to assess the daily application usage and its real value for business.
• Perform Usage Reviews Quarterly: Evaluate users’ activity statistics to detect unproductive accounts, reduce costs by downgrading premium licenses, and avoid any wasted costs.

Also Read: What is SaaS Authentication Token? API Security Explained

Conclusion

Effective management of SaaS vendors is not a choice anymore for businesses trying to stay flexible, safe, and affordable. With the help of a systematic approach to SaaS vendor assessment and management, including contract management and vendor compliance verification, it is possible to regain full control over your software stack.

FAQ (Frequently Asked Questions)