As you rely more on SaaS solutions, the complexity of vendor relationships, contract management, and monitoring vendor performance can get out of hand. Managing multiple SaaS vendors, controlling SaaS spending, and ensuring service level agreements (SLAs) is stressful. The biggest risks are wasting resources and overspending on unused software licenses. That’s overwhelming.

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But there’s a way to take control. An effective SaaS vendor management system can simplify the whole vendor management process, provide a single platform to manage SaaS contracts, optimize vendor performance, and maintain strong vendor relationships.

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In this post, we’ll cover how a smooth SaaS vendor management process improves operational efficiency, reduces software costs, and minimizes security risks. We’ll go over the definitions, benefits, steps, and best practices. Also, we'll cover how a B2B revenue operations agency streamlines this process to allow you to focus on the core of your business.

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What is SaaS vendor management?

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SaaS vendor management is the process of managing and optimizing the relationships, contracts, and performance of Software as a Service (SaaS) providers that an organization uses. This includes selecting and onboarding SaaS vendors, negotiating and managing contracts, monitoring vendor performance against key performance indicators (KPIs), and ensuring service level agreements (SLAs).

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The goal of SaaS vendor management is to get the most value out of your SaaS investments, minimize risks, control costs, and maintain strong, productive vendor relationships.

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A SaaS vendor management system will include tools and processes to centralize and simplify the management of multiple SaaS vendors, some of which will include:

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Software solutions

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This involves evaluating the vast number of SaaS applications to see if they fit your company’s specific needs and operational goals. You need to consider the scalability of the software and its ability to support future growth, which is a key part of any SaaS vendor management system.

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Another part of this process is evaluating the value proposition of each SaaS solution. This involves a full vendor evaluation, considering factors such as the software’s ability to improve operational efficiency, user experience, and long-term benefits to the organization.

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Vendor research

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This involves doing full research to shortlist SaaS vendors, focusing on those that can deliver high-quality solutions that fit your organization’s goals.

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A good vendor management strategy also includes a competitive selection process to ensure only the best SaaS vendors are chosen. This involves using vendor management software to gather and analyze data on vendor performance, security practices, and customer feedback.

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Contract negotiation

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This involves negotiating service level agreements (SLAs) that outline the vendor’s responsibilities and terms around pricing, renewals, and termination.

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Beyond cost, contract management also involves negotiating terms around security risks, data privacy, and industry standards. Managing software vendors requires a close eye on these areas, as they can have a big impact on your organization’s security and legal position.

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New tool implementation

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Managing SaaS vendors during this phase involves ensuring the new software is integrated into existing systems and workflows with minimal disruption to business. User adoption is key to new tool success.

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Vendor relationship management

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Ongoing management of these relationships requires communication and collaboration with your SaaS vendors to ensure they continue to meet your business needs. A proactive approach to vendor relationship management involves regular performance reviews and feedback sessions to keep your organization’s goals aligned with the vendor’s services.

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Strong vendor relationships also mean better contract terms, better support, and the opportunity to work on new projects.

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Contract

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Contract management involves monitoring contract terms, including key dates for renewals and vendor performance against service level agreements (SLAs). As part of a broader vendor management strategy, these activities will ensure your SaaS contracts continue to offer competitive pricing and terms that fit your organization’s current needs.

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Why focus on a structured SaaS vendor management process?

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Managing SaaS vendors is key to tracking your organization’s software usage and ensuring all applications deliver maximum value. As your business grows, you’ll add more software and user licenses. A well-structured vendor management system will help you control SaaS spending, mitigate security risks, and comply with contractual obligations. A SaaS vendor management solution will give you insights into:

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• Software costs: Total cost of cloud software to manage your SaaS spend.
• Trial end dates: Track when free trials expire to avoid surprises.
• License management: Paid licenses, renewal dates, and notification deadlines to avoid downtime.
• Contractual obligations: Orders, contracts, and work summaries, ensure all are approved and signed.
• License allocation: Who has been granted licenses to optimize resource allocation.
• Active user monitoring: Number of active users to ensure software is being used.
• SaaS shelfware: underutilized software to reduce waste and reallocate resources.

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Knowing the terms and conditions of each provider will help you avoid bad contracts. Some will have clauses that are bad for your business, like onboarding fees or hidden charges.

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5 steps to a SaaS vendor management system

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1. Contract and inventory

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Audits are part of this process. Auditing thoroughly will help you identify any gaps in your SaaS portfolio, unused software licenses, or overlooked renewal dates. Working with the finance team is key to tracking every dollar spent on SaaS solutions to get the most value out of your investment.

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As mentioned before, a B2B revenue operations agency can assist in conducting these audits and collaborating with your finance team to optimize SaaS spending.

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2. SaaS centralization

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A SaaS management platform is a tool that allows you to bring all vendor contracts, usage data and compliance requirements into one place. This will simplify managing multiple SaaS vendors by giving you a single view of your SaaS stack and reducing vendor complexity.

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With all SaaS contracts and usage data in one place, you can track and manage SaaS subscriptions, monitor vendor performance, and ensure your organization is following best practice SaaS vendor management. Centralization will also help you manage vendor relationships better.

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3. Vendor relationships

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Good relationships with SaaS vendors will get you better pricing, improved service levels and support, and all that will get you more value out of your SaaS investments. To optimize these relationships, you need to maintain regular communication with your vendors to ensure both parties are aligned and working towards the same goals.

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In addition to communication, actively managing vendor relationships means setting clear performance expectations and providing feedback to your vendors. This will help you manage multiple SaaS vendors by ensuring each vendor knows how their services impact your business. Vendor management software will help you identify areas for improvement and create a more collaborative environment through regular reviews and vendor assessments.

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4. Vendor performance monitoring

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Regularly reviewing vendor performance against key performance indicators (KPIs) will ensure your SaaS vendors are meeting your business needs. This means evaluating different aspects of vendor performance, service uptime, support responsiveness, and compliance with service level agreements (SLAs).

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Using a SaaS vendor management tool will help you monitor vendor performance even more. These tools will give you real-time data and analytics so you can track performance over time and compare vendors to industry benchmarks. This level of insight will help you make informed decisions on vendor renewals, contract renegotiations, and potential vendor replacements.

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5. Risk management

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This means identifying and mitigating risks in your SaaS vendor relationships, financial stability, data security, and vendor compliance. Ensuring your vendors adhere to strict data security standards will help protect your organization from potential breaches and security risks, which are common in SaaS management.

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Having contingency plans in place for vendor failures is also part of risk management. This means having backup vendors, backing up critical data regularly, and having clear processes for transitioning services if a vendor can’t meet their obligations. A vendor management platform will help automate risk assessments and alert you to potential issues so your organization can respond quickly to emerging threats.

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Vendor management best practices

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Use SaaS vendor management tools

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Excel spreadsheets can manage a few SaaS vendors but they will quickly become inadequate for managing multiple vendor relationships. SaaS vendor management platforms like Productiv will automate the tracking of key data, user logins, license utilization, and subscription renewals. They will also identify unused software so you can optimize your SaaS budget and comply with vendor contracts.

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Monitoring vendor performance is another key part of good SaaS vendor management. Regularly review if vendors are meeting service levels and quality expectations and create a collaborative vendor relationship.

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Purchasing authority

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Form a purchasing committee with representatives from IT security, finance, legal, and an executive sponsor if available. This committee will oversee large SaaS purchases to ensure they align with company objectives. Create a policy that requires the IT vendor manager to log all new purchases, no matter the size, to track expiration dates and usage.

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Security compliance

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Security should be top of mind in your SaaS vendor management strategy. Ensure your vendors comply with global security standards to protect your company’s data and reputation. Be particularly careful with liability and indemnity clauses, data privacy restrictions, and the information you share with vendors so their software works correctly.

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Renewals strategy

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Work with your vendor account executive to build a win-win partnership. Their role is to keep your business and ensure you get value from their products. They often will discuss discounts and new agreements as contract renewal dates approach.

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Need expert advice on SaaS vendor management?

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While this article is comprehensive, it may be overwhelming for you when thinking about a strategic implementation for your B2B tech company.

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If you want to improve your SaaS vendor management or need guidance on how to manage SaaS vendors better, expert advice will make all the difference. Schedule a free strategy call with our ABM agency CEO, Alex Hollander, to explore tailored solutions for your business. Or visit our homepage for more information on how we can help you excel in B2B SaaS and Tech Growth Operations.