What is SaaS Contract Management? - Complete Guide

Have you ever dreamt of a world where the SaaS contract negotiation and management lifecycle is seamless, efficient, and effortless? 

Welcome to the era of SaaS Contract Management! 

From negotiating and signing documents to tracking contract expirations, SaaS can take the complexity out of managing contracts to make things easier for everyone involved. And who couldn't use a little help when it comes to making those arduous tasks simpler? Now that’s what we call a win-win!

You can rest assured that SaaS contract negotiation will provide the organizational peace of mind to focus on running your business. Plus, it's got incredible features such as document storage and AI-enabled analytics that make SaaS contract management the ultimate solution for keeping your agreements organized. So save yourself some headaches and check out the SaaS contract management blog post below.

Here's a comprehensive take on SasS Contract Management and SaaS Contract Negotiation.

What is a SaaS Contract?

A SaaS contract is an agreement between a software supplier and a customer outlining the conditions of use for a cloud-based application. It often states that the hosting firm provides services that users can access via the internet in exchange for a regular subscription.

While the actual terms of the contract differ, all SaaS agreements are designed to provide both parties with a clear understanding of their commitments and liabilities for the service provider if a user misuses it or for the subscriber if they experience extended, misinformed technical difficulties.

What is the Purpose of a SaaS Contract?

Software as a Service (SaaS) contracts are essential to protect the SaaS provider and the user. A clear, concise agreement helps ensure that both parties work on the same page and understand their expectations. The below-suggested points outline what should be included in an effective SaaS contract and why they're important. 

1. Simplifies and automates the process of creating a contract

Contract lifecycle management software, commonly known as contract management software, integrates the automation into the contract administration process. Contracts can be dynamically assembled depending on contract characteristics such as geography, products, services, or price terms if a library of approved designs and clauses is in place. Users can utilize powerful contract management software to automatically construct contracts based on defined business rules and bulk data upload. Self-service contract formation allows for a speedier time-to-revenue and dramatically lowers legal and operational costs.

2. Ideal for cloud-based and fully auditable contract assessment and approval

Contract management software systems are nearly entirely available today as cloud-based software-as-a-service (SaaS). This means that teams from all over the world can communicate and examine contracts. When COVID-19 struck, this proved an essential tool for businesses that needed to keep operations operating despite massive office closures. Furthermore, contract management software enables businesses to build automated workflows that automatically route contracts to the appropriate person. The program captures modifications to contract terms throughout the creation process, generating an irreversible audit trail and escalations if unapproved clauses are inserted.

3. Make contract data readily available and actionable

Users may surface comprehensible metrics inside configurable dashboards since contract management software is always acquiring contract data and combining it with the flow of the company. Contract risk is a typical dashboard metric. Companies can use contract management software to create risk rankings based on internal and third-party data. This allows users to recognize a contract at risk and take appropriate action.

What is SaaS Contract Management?

Manual contract management is a time-consuming, laborious operation prone to human mistakes. In contrast, it is simple to purchase and run SaaS contract management in minutes without reading the detailed contractual provisions, resulting in a touchless approach.

Furthermore, vital information, such as information storage and automatic renewal dates, is neglected because of the requirement for human participation. Regular monitoring of these dates is critical for increasing productivity and lowering costs. With hundreds or thousands of agreements to track and no automation, concerns such as security breaches, missed renewal dates, duplicate applications, and squandered funds may arise.

Implementing SaaS contract management guarantees that contracts and agreements are processed on time, avoiding interruptions and fees. Furthermore, contract management modules may discover, curate, and archive all agreements to free up office space and human resources, which reduces an organization's expenses.

Contracts are rather simple to support. Two or more organizations or parties define the contract rights and obligations. Both organizations or parties agree and then follow through on their entire agreement. If an issue arises, everyone in both organizations may locate the contract agreement and refer to it to establish who was at fault. This is where a cloud-based contract lifecycle management software may help your entire company and its contractual arrangements.

SaaS Contract Management Process

A typical contract management application software workflow includes developing, collaborating, negotiating, signing, tracking, and renewing. This includes every stage in which a legal document is necessary for the firm to keep track of. Instead of the centuries-old manual contracting methods, these stages are increasingly being managed using a contract software tool to maintain track of contracts.

1. Contract lifecycle management

The contract lifecycle stages and features are often the same whether a company employs a contract lifecycle management (CLM) system or handles documents manually. The first step in a software solution is to document the contract with all its details, such as legal clauses and conditions. This allows users to track contract performance over time, especially when dealing with complex contracts that span multiple parties.

2. Improve your contracts

Although handwritten contracts are largely obsolete, several individuals still use word processing programs to draft better contracts. They locate an old Word document, copy and paste, and tweak key facts to obtain a new contract. The danger of error is that a user will easily copy across a detail such as a time, address, or ID that needs to be modified from a legacy contract. A new contract management platform alters the contract formation process.

A SaaS contract negotiation and management software tool enables users to develop better document management templates from current contracts for the most frequent contracts required by their organization, such as employment contracts, non-disclosure agreements, and sales contracts. When asked to generate a better and brand-new contract, the document management template successfully establishes the rules the software application will follow. Using top solutions, these templates can be built and edited using a clause library without leaving Microsoft Word.

3. Collaborate

A contract may require many individuals to work on it for various reasons. It could be a difficult set of terms and conditions. While a rookie lawyer can handle short and necessary contract administration, a more experienced lawyer must establish the vocabulary for a high-value contract.

Because businesses can employ several contracts to influence multiple business parts, document management is critical. Those top-level teams and people may be scattered around the country, making it difficult to bring them together to discuss appropriate document management.

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Today's top contract management software SaaS apps like Spendflo enable organizations to work on document and contract management simultaneously, like in Google Docs or Microsoft Outlook. These have unique features that are tailored to a contract management solution. The characteristics enable a company to use tools that communicate work-in-progress links via email to top-level teams in multiple locations. The capabilities of approval workflows will allow users to designate who must sign a document before it can be utilized.

4. Sign

Picking up a pen and scratching an old tree is not essential when conducting business. Digital contract management systems support technology duplicating a physical signature's binary, permanent character. Some programs allow you to paste a scanned version of a written signature; others need you to input your name; and others let you draw it with a mouse.

Many services connect with third-party contract management and e-signature technologies, allowing for mobile-responsive e-signature on portable devices.

An e-signature has the potential to revolutionize the workflow process for those who are on the other end of most contracts. When it comes to user pleasure, signing a contract for new employment with your finger on a phone or deciding on a sale contract from home rather than a lawyer's office is transformational.

5. Track

Assume your contract is stored in a filing cabinet. In that situation, it may be difficult to determine how long it took to discuss, which terms in the clause library were amended, how many individuals read it, how many people used it as the foundation for various contracts, the key implementation dates, and who saw it.

If your contract was generated and handled as a structured electronic contract, relevant data, and analytics, this data is at your disposal. It can help consumers make informed contract decisions about terms to accept and reconsider. It is also possible to choose when to renew, how much to charge, and how long the notice period should be. Additional contract data, knowledge, and analytics can help to improve these judgments. Tracking capabilities can reduce major dangers.

Managing data, information, and analytics through contract review is intended to aid in modernizing in-house legal departments and the field of legal operations. Most forward-thinking firms may create contract data, information, and analytics dashboard from a contract review to track daily legal performance in many areas.

6. Renew

Contract management software capabilities also help you to have a comprehensive view of contracts, thanks to data, information, and analytics. In contract management systems, signatures do not mark the conclusion of the contracting approval process. They are only the beginning; additional responsibilities will be imposed on those involved. 

As a result, a contract management system should be in one location to monitor contracts as they advance through their lifecycle, with delivered notifications to keep important stakeholders informed. Users can return to the contract generation stage in their contract management systems and start over at the conclusion of the life cycle. They could also need to make changes to the contract. Again, contract management SaaS is intended to assist.

Using a post-signature management platform, contract lifecycle management is designed to handle contracts' development, editing, and collaboration all in one place. Monitoring dates and contract renewal deadlines are included in a post-signature management platform.

How to Negotiate SaaS Agreements?

Many SaaS suppliers concentrate on monthly or annual revenue-generating growth to reach a critical mass of clients. Keep this in mind while negotiating SaaS contracts, renewals, or True-ups, such as the Microsoft EA True-up, as you can gain long-term discounts.

SaaS agreements present new problems to IT and procurement, necessitating a different strategy than a standard contract. The SaaS renewal strategy developed for IT and procurement describes how to save decentralized contract data and assign app ownership. When combined with renewal best practices, it aims to shift business executives from a reactive to a proactive renewal approach.

Some SaaS providers are willing to "grandfather" an existing customer to reduce churn. Leaders may get favorable pricing and terms by knowing the intrinsic value levers and supporting negotiation dialogues with actual usage data for each vendor. Simply construct a case and inquire.

Policies that govern discounts and margin management determine SaaS prices. Depending on the vendor's objectives, these are intended to encourage or discourage specific habits and trends.

Consider the following circumstances in which your understanding of a vendor's pricing strategy and business objectives could result in more favorable contract terms and effective saas contract negotiation

1. Understand the various forms of SaaS provider licenses

Companies frequently deploy enterprise-grade apps with unneeded functionalities. You can create a baseline of user requirements and then size license types based on the features and functionality required.

2. Take into account term discounts

Vendors require constant cash flow and avoid client attrition. You can utilize this information to get attractive discounts while negotiating your SaaS arrangement. You can merge numerous SaaS contracts and request a longer-term service extension once you've identified your mission-critical apps.

3. Request loyalty discounts

Vendors worry about the long-term value (LTV) of SaaS contracts in the same way as term discounts do. The contract value is linked to funding, valuation, and Wall Street interest for SaaS companies. With this information, you may identify your longest-standing partnerships and request loyalty discounts from those vendors.

4. The fear of churn

The SaaS model often necessitates significant effort in client acquisition, while the cost of retaining an established customer is comparatively modest. Use your negotiation leverage to secure loyalty discounts or promotional pricing if a SaaS vendor has a low clamp with your firm and offers attractive alternatives.

5. Combine vendor discounts

You can immediately identify redundant SaaS apps using SaaS management systems. In this step, you can condense app functions to a single vendor to reduce license requirements and boost bargaining power. Simply ask your favorite dealer for volume discounts and compare prices.

6. Logo strength

You can negotiate a substantial discount by utilizing your logo power if you work for an established company with strong brand recognition. Many SaaS suppliers have special accelerators to incentivize sales teams to close relatively high names as they aim to establish market leadership in their respective categories.

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Handling and negotiating SaaS contracts and agreements is a complex undertaking that involves negotiation skills and a clear awareness of your leverage, your company's needs, and how these needs may be protected. This is where Spendflo invites you to leverage its expertise and experience in the same domain. 

The most efficient method to organize and manage your SaaS contracts, maximize your cloud spend, and maintain data control is to use a SaaS management platform like Spendflo. 

Who Will Use Contract Management Software?

Contract management software is a strong tool that numerous key stakeholders in the contract lifecycle can use. All contract participants, including lawyers, program managers, purchasers, and suppliers, could gain. Contract management software streamlines the process of managing contracts from inception to completion by decreasing paperwork, closing agreements faster, and automating time-consuming administrative duties. It also provides each user with visibility into the contracting process. By merging all users onto one platform, interaction is streamlined, and progress across different teams can be tracked. These systems' centralized storage capabilities enable simple access to data that is secure, accurate, and always up to date.

Contract management systems are mostly used by teams such as legal, sales, human capital, procurement, and finance. However, each firm will have its own division or special needs.

What Are the Many Benefits of SaaS Contract Management? 

Businesses frequently invest in contract management when they reach a certain size or stage of growth that threatens to spiral out of control. Because risk is increasing rapidly, now is a great opportunity to seize control of the process.

Below are some important benefits of utilizing digital contracting.

1. Speed

Without the laborious business processes involved in physical contracting, discussion, negotiation, and signature can occur more quickly. This can save time and money, particularly for businesses with a global customer base or that frequently enter into agreements. 

2. Collaboration

Parties can instantaneously edit the live document using cloud-based contract management software features. This negates the need to print, scan and email document drafts back and forth. When you collaborate on the same page, you can make changes and provide annotations in real-time.

3. Shareability

Once a contract is complete, send an email with a link to the relevant parties, whether that's a colleague who has to evaluate the contract or the counterparty who needs to sign it. Shareable documents always guarantee that everyone is on the same page when they need to be. 

4. Searchability

When contracts are managed digitally, there is a level of search capabilities that saves a significant amount of time over traditional business processes. It is preferable to wade through filing cabinets to find concrete findings digitally in milliseconds.

5. Backups

Physical contracts are prone to loss or damage owing to unexpected events that confuse both parties about their rights and duties. Cloud-based contract management SaaS systems store documents permanently and back them up regularly to avoid the danger of loss.

6. Scalability

Many depend on cloud-based contract management SaaS since they can boost the volume of contracts they create. Management systems must be simple to implement and scale successfully. Additionally, scalability enables users to provide access rights and privileges for all necessary stakeholders.

7. Use on a global scale

Sending a contract around town is no longer a burden that businesses must endure. Sending a service provider to a client on the other side of the world takes almost no time because users may exchange and collaborate on legal papers from anywhere.

8. Limitless

Thanks to cloud-based contract management software capabilities, storage difficulties are addressed with single-cloud storage rather than warehouse storage. Managing contracts with cloud-based contract management software features are much easier without excavating a physical copy from a basement filing cabinet.

What Are the Best Practices for SaaS Contracts?

As a Software-as-a-Service (SaaS) provider, nailing the contract with your customers is essential in protecting your business and working together in harmony. To be successful, it's important to understand the best practices for setting up contracts tailored to the needs and expectations of both sides of the agreement. From legally airtight agreements that specify payment terms to service level terms that help ensure customer satisfaction and minimize risks, these contract considerations will help you align expectations and build trust between your SaaS business and your client.

• Bring SaaS agreement and contract details to the foreground

Understanding all current SaaS applications in use and their corresponding contracts is the essential first step toward enhancing the management of SaaS contracts.

Why is it significant? You can't manage (or optimize) contract specifics without creating visibility first. Clients often underestimate the number of SaaS applications in their environment by two to three times, according to Spendflo. An enterprise organization maintains roughly 609 SaaS applications on average. This means that approximately 200 to 300 applications are frequently unexplored.

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When undiscovered, every program has a potentially binding contract or user agreement that specifies conditions such as terms of usage, start and finish dates, license amount, data processing conditions, and renewal details. Without a comprehensive accounting of each application's contract content, it's practically hard to begin optimizing contract details for maximum value.

• Enterprise contracts vs. click-through SaaS license agreements

In any given corporation, roughly one-third of all employees acquire SaaS programs for business use. And these purchases (which are normally paid for through cost reimbursement claims) account for around half of all SaaS apps in enterprise IT systems.

The distinction between an employee-purchased application agreement and a negotiated, validated contract emphasizes the significance of examining and disclosing all SaaS application agreement terms.

When it concerns contract optimization, an employee-acquired application is more likely to exist as shadow IT (an application unknown to IT) and to rely on a click-through license agreement. While a click-through is not inherently harmful, it does not provide the same level of protection as a negotiated business contract for the same application.

• Contract details should be recorded in a system of record.

Following the discovery of all SaaS applications in use, the next logical step is to document each application's contract or agreement terms in an easily accessible system of record. Many firms may use this record system as a manual spreadsheet, a contract management system, or digital document retrieval and storage system.

• Be wary of automatic renewal

Being on the buy side of an auto-renewing contract in our company and personal lives can result in us paying for items or services that are no longer valuable. Even when a business partnership is going well, contract service providers or purchasers may lose the power to renegotiate contract parameters such as price or delivery.

Because each party is aware of an impending auto-renewal, they can reassess a commercial partnership in light of current conditions as the end of the term approaches. They can decide whether to continue under the same terms, renegotiate the price, or locate another supplier or contractor to satisfy their demands.

• Always invoice

Regardless of how close your relationship with some other business or contractor might be, bills offer a crucial paper trail for everyone's protection. Invoices serve as proof of a transaction from billing to payment and are useful for anything from tax accounting to product returns and expediting future orders.

Handshake sales or service agreements may appear to be a wonderful idea at first, but if products, services, or relationships fail to meet expectations, an invoice can save a lot of aggravation and confusion later.

How to Operate a SaaS Contract Management System?

Managing a business is no less of a task, especially when it involves nitty-gritty like contract management. Maintaining a clear record of all contracts and adhering to the terms mentioned within them is important. Operating a SaaS contract negotiation and management system can be simpler with the right guidance and tools. And Spendflo can help you with exactly this and much more.

Spendflo is an efficient, user-friendly SaaS contract management system that caters to the needs of any industry. The platform streamlines the entire cycle of contract generation, negotiation, and execution while simplifying editing and renewals.

Documents can be managed quickly in one unified platform with access to powerful storage, full-text searching, and robust document control capabilities. In addition, Spendflo allows you to centrally manage multiple contracts across your organization with a cloud-based system that ensures all documents remain up-to-date and secure.

By providing a comprehensive suite of tools, Spendflo reduces overhead costs while increasing efficiency and accountability throughout the process. It's perfect for companies seeking better control of their contract management through intuitive technology that drives compliance and productivity. With Spendflo, you can find the software you're looking for using our simple category-based search. Then, with the click of a mouse, you may easily find new software. 

Winding Up!

Companies can save money while enhancing their operations and security with the correct attitude and tools. Spendflo is a robust SaaS vendor management tool that helps consumers achieve the best pricing on software services while automating operations and increasing transparency. Begin taking advantage of Spendflo's numerous advantages right away. Schedule a demo and improve your purchase operations like never before.

Contract lifecycle management software oversees all parts of a contract or legal arrangement, from formation to negotiation to execution. Spendflo's SaaS contract negotiation and management software automates operations related to initiating, implementing, and managing contractual agreements. Implementing a contract management system saves your company money while allowing for more effective sales cycles and fewer compliance risks.

Schedule your free personalized demo here to learn more about how a SaaS contract management solution might assist your firm!

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