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SaaS contract management is a process of administering, monitoring, and negotiating contracts with SaaS providers to streamline expenditures and optimize value for money.
► Find out how to optimize SaaS Contract Management now!
With the growing adoption of cloud-first environments, companies also accumulate a growing amount of SaaS contracts. If these important documents aren’t properly reviewed, stored, and managed it can have a negative impact on an enterprise.
It can increase wasted spend, and security risks, and slows down the discoverability of contract details before negotiating renewal terms.
That's where our SaaS Contract Management Hub comes in. This Hub is a definitive guide including a curated collection of guides, articles, posters, whitepapers, and other resources that provide a wealth of information.
Whether you're just getting started or you're a seasoned pro, you'll find valuable insights and practical advice that will ensure fluid SaaS contract management.
📚 Related: SaaS Management Hub
SaaS contract management is a process of administering, monitoring, and negotiating contracts with SaaS providers to streamline expenditures and optimize value for money.
This may include tasks such as keeping track of all contracts, assigning ownership, and delegating contract handling. It also includes aligning with stakeholders for negotiating terms and conditions, tracking contract end dates, and ensuring compliance with the terms of the contracts.
The ultimate goal is to get the most out of your SaaS solutions while keeping costs under control and ensuring compliance.
A SaaS contract is a legally binding agreement between a SaaS provider and a customer. It outlines the terms and conditions of using the provider's software as a service.
It typically covers issues such as the pricing model, usage limitations, data privacy and security, service level agreements, and termination conditions.
SaaS contracts are essential for protecting both parties' interests and ensuring a smooth business relationship.
📚 Related: SaaS Agreement Checklist
The SaaS contract lifecycle consists of multiple stages that organizations must consider when managing and negotiating contracts. These stages include:
Understanding these stages allows organizations to better manage their SaaS contracts and reduce the risks associated with potential contract misunderstandings or disputes.
Most companies use contract lifecycle management systems for contract creation, storage, and tracking of contracts and vendor data.
But they usually don’t provide spend and usage information or budgeting capabilities for strategic planning and forecasting.
This is where SaaS management tools come into play. They automatically build application inventory and provide contract details, current and forecast spend, renewal alerts, and usage information for each application.
With the rapid growth of SaaS expenditure, it becomes more and more challenging for companies to get control of their IT landscape and costs.
Some of the pain points companies without a SaaS contract management system face are:
Effective SaaS contract management practices unlock huge potential for IT, Procurement, and Finance departments. Keeping one system-of-a-record allows you to have complete visibility over all SaaS contracts and brings plenty of other benefits, such as:
📚 Related: SaaS Agreement Checklist
Due to the amount of new SaaS contracts created, businesses come across many challenges which weren't present when the software was purchased as on-prem.
Most do overlap with SaaS renewal challenges but we will add a few overall ones.
To overcome these challenges, organizations need to develop an effective SaaS contract management strategy.
It includes implementing centralized procurement processes, developing policies and procedures, and investing in technology solutions to automate contract management and tracking.
How? Just follow along.
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The SaaS Management Buyer's GuideBy following a structured approach and implementing best practices, businesses can effectively manage their SaaS contracts.
You can use a manual spreadsheet or automate it with a SaaS management solution that streamlines the process and reduces the effort required.
Here are the five key steps to managing SaaS contracts.
SaaS inventory (SaaS stack) is a list of all the SaaS applications that are currently deployed in an organization. It includes all applications and their contracts, costs, licenses, owners, usage, and other relevant details.
Automate inventory collection by implementing SaaS management tools, such as LeanIX SMP.
📚 Related: How to Build an Application Inventory?
If you don't keep track of who owns a SaaS application, it can be hard to cancel or renew it when needed. Sometimes, nobody knows who owns it, or the owner has already left the company. This can cause you to miss the negotiation deadline.
To avoid this problem, assign someone to be the owner of each application from the beginning. This information should be kept with the other contract details.
If your policies allow, the owner of the application is responsible for renewing it when needed. If the owner leaves the company, someone else needs to be assigned to take over the role.
📚 Related: SaaS Contract Negotiation
Setting up contract renewal alerts is an essential step in the SaaS contract management process. It helps you to stay ahead of renewal dates and avoid unnecessary auto-renewals.
Set up alerts:
The renewal alerts will remind you of upcoming contract renewal dates, so you'll have sufficient time to renegotiate terms or cancel the contract.
Contract renewals are an important revenue stream and success factor for SaaS vendors.
Most often, SaaS vendors allow changing contracts within 90 days before the renewal date.
📚 Related: Microsoft EA and true-Up Renewal
In this step, you will determine if the specific contract is valuable to your business to be kept. Begin with a basic assessment:
If any of the contracts after this assessment don't pass your criteria, feel free to terminate them. For all other contracts, you can move forward and analyze the application's consumption.
This will help you determine if the cost can be optimized based on the actual usage of the application in question.
Some of the insights you should look into are:
With this analysis completed you're now able to define the contract volume and licenses which can help you project future budget change.
📚 Related: Best Practices for SaaS Renewals
SaaS contracts can be a challenge without a clear strategy in place especially when the owner of the application and renewal process are unclear.
This can lead to unnecessary cloud spend and a cluttered IT environment. To avoid this, it is important to define a strategy beforehand and communicate it to application owners.
This strategy should include a timeline for each step of the contract management process, as well as guidelines for internal and external outreach procedures.
The SaaS contract strategy should be a written document that is easily accessible to all current and future employees.
📚 Related: SaaS Renewal Strategy
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Green Tech Leader Persefoni Uses LeanIX For SaaS Contract ManagementManaging SaaS contracts and agreements is a complex task that not only requires negotiation skills, but the visibility of your SaaS application landscape and a clear understanding of your leverage, your company’s needs, and how these needs can be protected.
SaaS management platforms are the most efficient way to streamline and manage your SaaS contracts, optimize your cloud spend, and stay in control of your data.
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What do you need for effective SaaS contract management? Hint: It’s not spreadsheets or CLMs.
What is SaaS contract management?
SaaS contract management is a process of administering, monitoring, and negotiating contracts with SaaS providers to streamline expenditures and optimize value for money.
What is a SaaS contract?
A SaaS contract is a legally binding agreement between a SaaS provider and a customer. It outlines the terms and conditions of using the provider's software as a service.
Why do you need to manage SaaS contracts?
With the rapid growth of SaaS expenditure, it becomes more and more challenging for companies to get control of their IT landscape and costs.
What are the SaaS contract management benefits?
Effective SaaS contract management practices unlock huge potential for IT, Procurement, and Finance departments. Keeping one system-of-a-record allows you to have complete visibility over all SaaS contracts, their owner, costs, renewals, and utilization.
How to manage SaaS contracts?
To effectively manage SaaS contracts, it's essential to follow the next steps:
1. Build your application inventory
2. Assign application owners
3. Set up contract renewal alerts
4. Analyze and optimize
5. Define contract guidelines