Airmeet's Director of Finance, Naga Subramanya B B, has been a long-time customer of Spendflo. We manage 80+ tools, having created 17x ROI for Airmeet. Naturally, there have been some learnings. Here are Naga’s hacks for optimizing SaaS spends from a conversation with Sid (Siddharth Sridharan, CEO, Spendflo). Whether you work with Spendflo or not, these are golden!
#1 Turn auto-renewals off
You don’t want money leaking from your budgets without you noticing it. For the sake of convenience, several organizations end up keeping auto-renewals. When reviews and ROI discussions get endlessly delayed, you lose money. Moreover, some contracts are hard to get out of, and payment liabilities are high.
By turning auto-renewals off, you allow yourself to evaluate SaaS spends regularly. You also have the opportunity to renegotiate contracts with vendors during renewals.
#2 Encourage SaaS stack champions within your org
At Airmeet, we have a SaaS stack champion within every department. They monitor SaaS spends, usage and employee sentiment about these tools. They are the finance team’s ears on the ground to gauge ROI in SaaS spends.
This helps build a sense of accountability within the teams. Those closer to the departments can notice inefficiencies like unused licenses, unnecessary upgrades etc., and optimize on the go.
#3 Prioritize the SaaS tools you want to optimize
SaaS optimization isn’t a blanket activity, just as not all tools are the same. Some SaaS tools impact the Cost Of Goods Sold (COGS) and gross margins more than others. So, prioritize time and energy in tools that have a higher impact on gross margins to realize better value.
Moreover, think about the stage in your current business journey and optimize accordingly. For instance, Airmeet is at a growth stage, so customer acquisition is a critical metric. Any tools that reduce customer acquisition cost or increase conversions is essential to us. So, we wouldn’t let go of marketing tools. Similarly, see what’s important to your business at the moment.
#4 Approach SaaS buying differently during a downturn
When the market is good, organizations are willing and able to invest in a number of tools. As the downturn is impending, there is a sea change in both predictability and cash flow. Both SaaS buying and renewal negotiations need a different strategy during this time.
Now, I would optimize for optionality over savings. For instance, while negotiating for savings, it’s common to agree to a specific number of seats or longer contract periods. When we can’t commit to that in a downturn, choose tools that are more flexible. If a tool is seat-based, you can get out at any point, the freedom to do this can be precious in a downturn.
#5 Set up SaaS spend reviews contextually
Scheduling periodic reviews for SaaS spends is an absolute must, of course. However, most CFOs end up putting a monthly or quarterly on their calendar with all departments without considering the context. This can add to unnecessary pressures on the teams to show ROI on their SaaS spends.
Instead, look at them contextually. Say, you use a sales accelerator tool. If your sales cycle is 3-4 months, there is no point in doing a review within the first month. Schedule reviews accordingly.
#6 Do not assume anything is set in stone
Most people assume that the price on the website is the product's final price. From experience, we know that this is far from the truth. While negotiating a SaaS contract, never assume anything and ask a lot of questions. Ask for a discount. Ask for longer payment terms. Tell them you’re talking to a competitor and ask them to match the price.
#7 Gather and leverage SaaS spend and usage data
Collect intelligence on an ongoing basis for all the SaaS tools your teams are buying. What’s the spend, how many licenses, how often are they using it, what is the engagement like, what are the contract terms etc. Also, gather some qualitative metrics — employee sentiment is one. But go further and collect team feedback through the SaaS stack champions. In short, as a CFO, own the source of truth on SaaS spends. This can be your biggest weapon during renewals and negotiations.
#8 Take responsibility for SaaS spend optimization
We’ve been using Spendflo, who have delivered us 17x in ROI and 500+ hours in savings. Yet, they can only do so much, if you, as the CFO are hands-off. Take responsibility for the budgets, plans and roadmaps. Align your SaaS tech stack with your business roadmap and re-evaluate the tools you need — perhaps even categorize them as renew, negotiate, replace and remove.
Then, have a strategic discussion with Spendflo and give them visibility into your plans, empowering them to help you save more.
#9 Cut the fluff
The market is flooded with products these days, with many of them claiming to make pigs fly. More often than not, you don’t need a flying pig. In an upturn, teams are enthused by the tool's possibilities, and CFOs are willing to spend more. So, they buy products so complex and all-encompassing that they don’t even know if they’re utilizing all the features they’re paying for.
However, in a downturn, take a ‘this will do’ approach to SaaS buying. Procure only those tools and features you are sure will return value within a reasonable time.
#10 Sid’s bonus hack: Build empathy with SaaS vendors
Just as the downturn is affecting you, it’s affecting your vendor too. During these times, it’s important to build empathy with their salespeople. Have deeper and more meaningful conversations. When you explain your situation, what’s changed etc., if they’re the right vendor, they’ll stand by you and make those decisions easier for you.
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