Continuous Transformation Blog

SaaS Contract Management: 5 benefits for IT procurement

Written by Neil Sheppard | June 15, 2023

SaaS contract management can empower IT procurement teams to cut 30% on SaaS spend. Let's explore five key benefits of contract management for procurement leaders.

SaaS contract management is becoming essential for IT procurement teams. As global economic turmoil tightens budgets, the money you can save by getting a handle on your cloud application spend is key.

In this environment, it's easy to think of cloud applications as sinister "Shadow IT". However, these tools are often more useful, less expensive, and have better subscription and renewal models than on-premise alternatives.

The downside for IT procurement teams is that empowering employees to use third-party cloud applications can lead to a loss of oversight on application spend and contract renewal. This is why SaaS contract management is so important.

What is SaaS Contract Management?

Software-as-a-service (SaaS) contract management is the discipline of administering, monitoring, and negotiating contracts with providers to streamline expenditures and optimize value for money.

SaaS contract management ensures an organization has visibility on all the cloud-based applications being used across its estate. This means procurement teams can have clarity and oversight on SaaS contracts without having to restrict employees from leveraging important tools.

With the advantages that cloud applications provide, this is vital to keep your business competitive. Let's look at the five key benefits that SaaS contract management can have for IT procurement:

1 Increase Visibility On SaaS Application Portfolio

Knowing what software-as-a-service (SaaS) applications are in use across your organization will allow you to make better decisions regarding SaaS contract management. This includes shining a light on so-called Shadow IT, so it simply becomes another legitimate channel for procurement.

Not to mention, understanding your overall spend and the contractual terms you must adhere to is essential for controlling IT procurement. It's vital to know what you're spending and why.

Advanced SaaS contract management tools like the LeanIX SaaS Management Platform (SMP) can automate SaaS discovery through APIs. Our SMP can connect to your procurement systems, single sign-on, and any API throughout your IT landscape to find all the applications you're paying for and offer instant clarity on SaaS use.

2 Optimize SaaS Contract Spend

The most-obvious benefit of visibility on your software-as-a-service (SaaS) portfolio is that you can identify overlap and redundancy. A Gartner report suggests most organizations could save up to 30% on SaaS spend with better license management.

SaaS contract management tools will empower you to find all your cloud applications and also confirm the features and capabilities of each one. It will also inform you how many users in your organization each application has.

This means you can transition your colleagues to using a single application for each business capability. Cloud applications that now have no users can be retired and their contracts canceled.

Yet, SaaS contract management isn't just about cutting spend. Upgrading to premium contracts for popular applications can offer advanced features and even economies of scale.

Using the LeanIX SMP, you can automate the removal of duplicate licenses and cancellation of unused subscriptions, and upgrade essential applications to premium options. Get the most value out of your application portfolio at the lowest cost.

3 Negotiate SaaS Contract Renewal

Rationalizing your software-as-a-service (SaaS) spend isn't the only way that the LeanIX SMP can cut your costs. It also empowers you in negotiating contracts.

Entering contract renewal negotiations with complete information on the application's usage, performance, and functional fit puts you in a position of power to discuss terms. Conversely, it can highlight when contracts are essential and renewal doesn't need negotiation - saving you time.

The LeanIX SaaS Management Platform (SMP) gives you complete oversight of your cloud application portfolio, including collated, detailed data for each application. This lets you go into negotiations armed with information.

4 Improve SaaS Contract Budgeting

Once you've optimized your software-as-a-service (SaaS) portfolio and started automating SaaS contract management, you can start looking to the future. Full oversight of your contracts will make strategic planning far easier.

Knowing what you're spending, on what, and why will enable you to look at what you'll need to change in the future and work out a roadmap to get there. This means you can plan out your budget years in advance.

At a time when leaders across all industries are asking their teams to do more with less, strategic budget planning is absolutely key. This is why the LeanIX SaaS Management Platform (SMP) is so valuable.

Our SMP lets you track changes to committed spend in real time as contracts are added. You can also visualize the impact of prospective and anticipated future contracts.

5 Get SaaS Contract Renewal Notifications

The biggest pitfall in software-as-a-service (SaaS) contract management is the surprise contract renewal. If you don't have complete visibility of your cloud application portfolio, it's inevitable that you'll find yourself missing renewal payments, or finding a sudden need to spend on an auto-renewal.

The LeanIX SaaS Management Platform (SMP) will send you notifications in advance of contracts ending and auto-renewals kicking in. This means you can assess contracts for their desirability and functional fit before they auto-renew.

It's a simple and straightforward feature, but we also find it's the most essential for our customers. Sign up for the LeanIX SMP and never miss another contract renewal.