Best SaaS Contract Management Practices

Discover best practices that let you manage SaaS contracts before or after SaaS implementation, with much more ease.

► Find out how to manage your SaaS portfolio!

As your business evolves, your business will keep adopting SaaS solutions over time. This is why knowing the best SaaS contract practices will save you from future headaches.

However, these best practices can vary from organization to organization. It is up to you to establish the best way to document important contract details and empower SaaS management.

Aim to set up a record-keeping system, which offers you a holistic view of applications that your company owns.

Below are our best practices that let you manage SaaS contracts with much more ease.


1. Collaborate with stakeholders

By collaborating with stakeholders early in the process, you can ensure that the final agreement aligns with the needs and goals of the business.

Start by identifying all stakeholders who may be impacted by the SaaS contract, including IT, legal, finance, procurement, and business teams. Discuss the company's requirements, such as any compliance or regulatory requirements that need to be met, and the budget available for the project.

Once you have a clear understanding of the company's needs, involve stakeholders in either vendor selection or renewal process. Solicit input from IT on technical requirements, legal on contract terms, and finance on pricing.

Business teams can provide valuable insight into user experience and functionality.


2. Keep all your contracts in a system of record

One of the fundamental best practices for effective SaaS contract management is to keep all your contracts in a system of record. This means having a centralized repository where all contracts can be stored and easily accessed.

This system of record can be manually collected in a spreadsheet or automatically with tools such as LeanIX SMP. It should contain at least the following SaaS contract details:

  • Vendor name
  • Start and end date
  • Renewal date (with notification length)
  • Spend
  • Usage
  • Application owner

Having a centralized repository for your contracts makes it easier to manage and monitor your SaaS stack. It helps to ensure that all stakeholders have access to the same information, reducing the risk of miscommunication or errors.

Adding owners, spend, and utilization information to all contracts enables you to easily identify opportunities for cost savings and renegotiation.

📚 Related: How to build an application inventory?


3. Uncover existing SaaS contracts

Not only is it important to follow best practices when it comes to new SaaS agreements. You should also look at your existing SaaS applications and review their respective agreements to bring hidden details to the surface.

Once you create much-needed visibility, you can properly manage SaaS contracts with the goal to maximize value for your business.


4. Evaluate SaaS contract details

While the general evaluation of applications helps to assess vendors before the implementation, it is a great starting point. We suggest you add the items from the SaaS contract checklist, as well as the list below:

  • Category and function of an application
  • Application ownership
  • Length of term
  • Total contract value
  • Billable consumption metrics
  • Amount of total licenses
  • Details in regard to data and privacy regulations

📚 Related: SaaS Agreement Checklist


5. Consolidate into multi-year contracts

SaaS vendors prefer consistent cash flow, and they want to keep their customers from churning. That's why they often offer attractive discounts for longer-term contracts.

By identifying the essential applications that your organization needs, you can consolidate multiple SaaS contracts and propose a longer-term service extension. This approach not only saves costs but also helps you streamline your SaaS portfolio.



6. Set up renewal alerts

Contract renewals are a vital source of revenue for SaaS vendors. The ability to manage them effectively is essential for companies looking to optimize their SaaS contracts.

Renewals can be a complex and time-consuming process, requiring careful attention to detail. They require a proactive approach to ensure that contracts are renewed on time and on the right terms.

One of the most effective ways to manage contract renewals is through setting up contract renewal alerts. These alerts should be set up well in advance of the renewal date, ideally 90 days and 30 days prior.

This provides sufficient time to review the contract, renegotiate terms, or cancel the contract if necessary.

📚 Related: Build your SaaS Renewal Strategy


7. Set up usage alerts

Setting up usage alerts is another important practice when managing SaaS contracts. These alerts notify you when the usage of a particular SaaS application exceeds the agreed-upon limits.

This is particularly important for applications that are charged based on usage or for those with variable costs that can quickly rise.

By setting up usage alerts, you can identify any potential issues early on and take corrective measures before it's too late. This not only helps you stay within your budget but also ensures that you are getting the most value out of your SaaS applications.

Additionally, usage alerts can help you identify which applications are underutilized and whether it's worth renewing or canceling them.


8. Prioritize high-value contracts

Put priority focus on high-value contracts that are critical to your business operations. This means focusing on the contracts that have the highest impact on your business.

You should start by identifying SaaS applications that have high contract value and the greatest impact on your business operations and goals. These could be applications that support key business processes, drive revenue growth, or improve customer engagement.

It's important to regularly review them to ensure they are still providing value to your business. Consider monitoring adoption to assess whether the SaaS application is meeting your business needs.

By prioritizing high-value contracts, you can ensure that you are investing your time and resources where they are most needed. At the same time avoiding the risk of losing key applications due to poor contract management.

📚 Related: Best SaaS Renewal Practices


9. Invest in relationships

Investing in strong vendor relationships is crucial in SaaS contract management. 
By collaborating with vendors and understanding their pricing rationale and business goals, you can negotiate more favorable terms.

Additionally, leveraging your company's logo, testimonials, and co-marketing efforts can result in better rates for critical infrastructure and valuable apps. Building long-term partnerships based on trust and mutual benefit can lead to cost savings, more reliable service, and better product development.

Don't underestimate the importance of supplier relationships in your SaaS contract management strategy.

📚 Related: Negotiate SaaS Contract Terms


10. Automate SaaS contract management

Companies gain the most value from their SaaS applications if they automate SaaS contract and renewal management with SaaS management solutions.

These platforms not only deal with SaaS contracts. They also uncover contract utilization and spend, help you identify redundant SaaS contracts, duplicate licenses, and shadow IT.

With LeanIX SMP, you maintain real-time SaaS visibility and organize your entire SaaS stack in a way that increases productivity and minimizes cost.

📚 Related: SaaS Contract Management in LeanIX SMP

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Frequently asked questions on SaaS contract best practices

What are the best SaaS contract management practices?

In the world of SaaS, the following are the best SaaS contract management practices:
1. Collaborate with stakeholders
2. Keep all your contracts in a system of a record
3. Uncover existing SaaS contracts
4. Evaluate SaaS contract details
5. Consolidate into multi-year contracts
6. Set up renewal alerts
7. Set up usage alerts
8. Invest in relationships
10. Automate SaaS contract management

What is the essential step when managing SaaS contracts?

The essential step to successfully manage SaaS contracts is to build an inventory of all SaaS applications and respective contracts your company owns.


Free White Paper

A Guide to SaaS Management