Getting a 360 degree view of any area of your business is a tough proposition, and SaaS spending is no exception. Contracts aren’t easy to understand. Marketing, sales, and account management all use the same SaaS tool in vastly different ways. ROI is difficult to quantify. Nothing is black and white – there are always shades of gray. Let’s say you’ve done a bit of analysis of your current SaaS landscape. You know who the main players are, and you’ve done some due diligence about who uses specific tools (and how). Bonus points if you’ve already done some proactive work to boost usage, increasing ROI and decreasing costs in the process.
Now that you have more information, get ready to take control of SaaS spending. Here are 3 critical steps to get you started.
Gather up all your SaaS contractual payment obligations. You have a list of all the SaaS platforms your business is using, and you might have records of corporate card charges for some of those SaaS accounts. To complete your list, go back and fill in the holes. This is where all the heavy lifting occurs.
Start with your legal and finance teams, as they are most likely to have copies of vendor contracts (SaaS or otherwise). Payment terms in SaaS contracts will give you a more complete picture of what you’re paying. And make sure when you request contracts to ask for any amendments made since the initial contract was signed. Changes to the number of users, payment terms, and/or contract tier could significantly impact the payout to each SaaS vendor.
If you’re coming up short with legal and finance, request contracts and associated amendments directly from department heads. Any departmental owners who have made the purchase themselves should have a copy, or an employee who keeps copies and manages contracts.
If your department request comes up empty-handed, this is a great time to ask for a contact at that specific SaaS vendor. Who sold the product and handled the transaction, and may be able to share the contract? Reaching out to the platform-specific sales rep will help establish a relationship, and let the rep know that you are paying attention.
As you go through and request contracts from stakeholders, be ready for anyone you ask to send you directly to the SaaS platform itself. Many SaaS vendors provide payment terms, usage, and contractual obligations with an admin login, generally under the “Settings” or “My Account” area. Make a note for future reference for SaaS platforms with contracts versus online terms.
Calculate your per-vendor SaaS spend for a given timeframe. Now that you’ve pulled together your contracted payment terms for SaaS, pick a timeframe and add up the total cost per-vendor.
Your business probably started paying for different SaaS tools at different times, so it may be difficult to get an exact historical comparison. Instead, take the most recent year of each contract and plot out the cost. You’ll be able to see exactly what was paid for those that have been around a year or more. For newer contracts, determine what was paid for the time they’ve been live, and what will be paid based on the terms of contract remaining the same.
For any historical data you use, verify what should have been paid against what was actually paid. This is where records of those corporate card charges can come in handy. For non-credit card payments, check with your accounts payable team for checks cut per vendor. They should be able to provide a report of payments made on a per-vendor basis for a given timeframe.
As you pull together all this data, think about fees that may not be comparable – monthly fees vs. initial up-front fees, penalty fees, and the like. Consider pulling out those extra fees into distinct buckets for a more accurate comparison.
Stack-rank SaaS platforms based on cost. Here’s the fun part – for some of us, anyway. You now have a ton of information about SaaS costs at your fingertips. You’ve created your own historical estimate or future projection of costs, and accounted for extra fees in a way that makes sense. It’s time to click “sort” to see which SaaS providers incur the most cost.
It might sound easiest to just start at the top of this list and evaluate each vendor. If there’s a ton of SaaS vendors on the list, overwhelm can take over. Break it down into meaningful chunks. Do the top 3 SaaS vendors make up 50% of your spend? Review those first, and table the others. Choose the platforms where you can have the most impact.
Gathering data on your SaaS spend will take time and effort. The end result is worth it though – increased visibility and the ability to take action. Look out for the next post in this series, where we’ll discuss how to leverage payment data and user behavior to lower your SaaS costs.