SaaS spend management in the current financial landscape
In the current financial landscape, net positive interest rates for investments in the US have made investors wary of riskier ventures. Hence, obtaining capital is increasingly harder for hyper-growth businesses. The focus has moved away from growth at all costs to maintaining growth while keeping the burn rate low. Spendflo’s SaaS buying and management solution helps modern businesses achieve the fine balance between growth and managing expenses by simplifying SaaS buying. In this blog, we’ll explore why the current way of SaaS buying is complicated and how uncomplicating the process helps in business growth.
What makes the current SaaS buying process difficult?
1. Opaque SaaS pricing.
The modern SaaS consumer fails to get accurate pricing on the SaaS application they want to buy since most SaaS vendors do not reveal it on their websites. As such, there’s no real way to find pricing benchmarks without getting involved in a product demo. However, even after getting the pricing post demo, you can’t be confident if it is the best deal you could get.
2. No visibility into SaaS contracts.
Most SaaS contracts do not provide buyers with the information they need. Many metrics and usage limits are often not clearly stated and are hidden in the fine print. These pitfalls cause businesses to overpay for their SaaS, especially when the contract involves comprehensive clauses and multiple licenses.
3. Recurring high volume renewals without streamlined approvals.
Businesses often overlook auto-renewal clauses. Employees find it convenient to have perpetual availability of their favorite tools. This conditioning is a result of having to deal with contract consolidation, negotiation, and keeping track of renewal dates every time that their payment plan is expiring. However, unmonitored renewals lead to overspending on SaaS.
4. Vendors hold leverage in the current buying process.
When SaaS pricing is opaque it often gives SaaS vendors an edge in the buying process. Without accurate pricing benchmarks, the SaaS buyer is left handicapped from negotiating the best price.
The true cost of following a broken SaaS buying process.
To help you get an idea of expenses incurred in dollar cost, here’s how the current SaaS buying process affects an average series A-D funded company.
Say we have a business with 3000 employees.
- They have been quoted $120,000 for a CRM software from a popular vendor for 30,000 licenses.
- It took them at least 5 hours trying to complete the purchase process from attending the demo to signing on the dotted line.
- Without an experienced negotiator on the team or relevant pricing benchmarks the business pays $120,000 instead of the benchmark price of $80,000.
( Numbers shared here are for illustrative purposes and do not reflect real prices)
In this case, we are not including the cost of time spent, which if included would include another $7,000 for the five hours spent merely procuring the tool. Now, this is the case for only one SaaS application. Imagine if this is a company that uses at least 200 SaaS applications.
When you’re wasting millions in SaaS spending you’re restricting your growth by having a negative cash flow and not investing the excess spending in more revenue-generating activities.
This is why SaaS spend management is crucial if companies want to avoid the negative cash flow trap and stay afloat.
So, what is SaaS spend management?
In layman’s terms, SaaS spend management is the process of how you control and minimize your spending on SaaS in a company.
It also covers the process of negotiating with vendors and managing your SaaS license to avoid paying for team members that have already left the organization.
Ultimately, no matter what your process is, if it means reducing SaaS spending within your organization then it’s considered a part of SaaS spend management.
Why is SaaS spend management important for organizations, especially in this financial landscape?
SaaS spend management is crucial for companies in hyper growth mode that are looking to extend the runaway and sustain their growth momentum. Here’s why.
1. Reduces the risks of higher burn rates.
So what do we mean by burn rate? Simply put, the burn rate is the rate of how much money you’re losing per month. In other words, your negative cash flow.
SaaS startups often find themselves facing higher burn rates as they tend to run out of cash faster. In the long run, it will threaten the survival of a Startup business. As such, they can’t afford to overpay for SaaS products, especially the ones that they didn’t plan and budget for.
While you might think that SaaS subscriptions can’t leave a dent in your finances- you need to think twice. Especially when CFOs report that SaaS is the 3rd highest expense in their books.
You’ll also need to realize that if you fail to control your SaaS spending, it’s your bottom line that takes a blow. That is why it’s important to have a proper SaaS spend management system and make wise decisions regarding SaaS spending- ultimately reducing your burn rate.
2. SaaS spend management is not a one-time effort.
Managing your SaaS spending requires continuous intervention and effort as it’s not just limited to negotiating prices with SaaS vendors and is far from merely keeping track of your SaaS subscriptions. We at Spendflo, consider SaaS spend management as a long marathon rather than a short sprint.
Here’s why 👇
When you have recurring SaaS subscriptions, you need to continuously revisit your SaaS contracts to optimize them for your advantage. Sunsetting unused licenses and planning proactively for renewals is the key for you to save millions of dollars in SaaS spending.
3. Eliminate redundant software.
The lack of a unified solution to track SaaS often leads to the rise of redundant software.
Unmonitored SaaS procurements make it difficult to keep track of shadow IT where employees use software from different vendors to solve the same problem. Shadow IT makes you leak expenses on your SaaS and also prevents you from getting a discount for bulk buying.
4. Stops the wastage of valuable resources.
No, we’re not talking about money here. Instead, we’re focusing on the time and human resources that are spent on merely procuring the tool you need.
A modern hypergrowth business uses around 140 SaaS tools on average and you’ll need to spend five or more hours on each tool.
Now imagine, spending the same hours and manpower in revenue-generating activities- you’ll have a better bottom line and fewer complaints from your overworked staff.
That’s the power of spend management done right.
Speaking of which, it’s equally important to have the right SaaS buying and management platform.
How to choose the right SaaS buying and management platform?
Choosing the right SaaS buying and management platform can be a game-changer for businesses – even when it might not seem a huge priority. Get it right, you’re blessed with substantial savings in your SaaS spending, and get it wrong you will be left with an over-glorified excel spreadsheet in the name of a platform.
That’s why we’ll try to make the following guide as practical as possible so that you do not end up with a platform that doesn’t suit your needs and that you can’t get out of.
1. Get clear on the platform’s capabilities. You don’t have to choose the one that provides you with the most features. Instead, you should consider whether the platform is offering all the essential features needed for end-to-end SaaS buying and spend management.
2. Make sure they are not just another software provider. When you don’t have the bandwidth or in-house experts needed to help you negotiate the best price for your SaaS subscription you need to look for a platform that’ll provide you with such experts. On top of that, look for platforms that’ll provide you with the expertise to fast-track the buying process so that you save thousands of hours in negotiation.
3. Figure out if they can provide real ROI from your investments. When excess SaaS spending runs in millions it’s a no-brainer to make sure the platform you have chosen can make impactful savings on your SaaS. A good platform should be able to provide the figures that they have saved for their clients.
Ace players in the market like Spendflo will take it a notch further with their 3x ROI guarantee and money-back guarantee in case they fail to deliver. From here, it’s all about choosing the platform that could provide the most ROI for you.
Now that we have shown you how to choose the right SaaS buying and management platform, you might be wondering where Spendflo fits in.
We get you, that’s why next we’ll explain in detail what prompted us to build Spendflo and how it is helping businesses to save millions of dollars in SaaS spending.
What’s the big idea behind Spendflo and how it is helping businesses?
When our founders personally experienced and saw that SaaS spending is becoming the second biggest concern for CFOs and it is getting harder to keep track of them, they knew that they needed to build a solution that would solve all these issues.
They also knew that with an effective solution like Spendflo they could enable a step change in the SaaS buying and optimization process so that businesses could extend the runway by saving on annual SaaS expenses.
Spendflo provides you with a unified SaaS buying and management solution that’ll be supported by our expert team members to help you get up to 5X ROI from your investment. We’ll be your strategic buying partners so that you can stop wasting time on SaaS pricing negotiation, contract renewals, eliminating duplicate licenses, and start buying the SaaS application you need faster at the best price all while getting onboarded quicker. And this is not a one-time solution either as we will continuously help you to optimize your SaaS usage.
Here’s how we can help you to achieve all of that.
1. We get you the best SaaS deals and help you save up to 30% in SaaS spending with our team of expert buyers who will negotiate their way to the right price. Our expert buyers rely on benchmark data unique to Spendflo to get you the best deal in the shortest time. On top of that, we’ll keep you in the loop of new products in the market while providing all the information you need about a SaaS application that you’re considering purchasing.
2. We help you streamline procurements and renewals. Spendflo’s platform will help you manage all your SaaS vendors and contracts in one place. You will know when your contracts are up for renewal, who owns them, and how much you’re saving. The best part is you never need to miss a renewal request anymore as you can route approvals through Slack and go from requests to purchases faster.
If you want more visibility and control over approvals, you can also streamline your approval workflow according to your needs and allow the stakeholders needed to be part of the process.
3. We help you stay compliant with our streamlined SaaS onboarding and renewal processes. With us, you don’t need to worry about spending a lot of time conducting security and compliance checks, as we’ll track and vet the compliance documents and compile them in a single place to expedite the process. This in turn allows the SaaS onboarding and renewal process to be done quickly and efficiently.
4. We eliminate unnecessary paperwork and endless negotiations so that you can focus on productive work and revenue-generating activities.
Our team of expert buyers will negotiate on your behalf so that you don’t have to spend hours trying to negotiate your way around to better deals. Plus, with our ongoing relationship with SaaS vendors, you will be able to save more on your SaaS spending compared to approaching them on your own. Not only that, we’re also a big believer that paperwork should not be time-consuming. As such Spendflo is designed to give you complete visibility on all of your SaaS contracts so that you can save hundreds of hours in paperwork. Not only that, you can also easily access all your past contracts and documents from Spendflo’s centralized repository.
What makes Spendflo unique?
Spendflo is more than just a SaaS buying and optimization platform. In fact, Spendflo prides itself on offering not just a unified SaaS buying platform but end-to-end support in ensuring businesses have a quick and painless SaaS buying process while reducing their excess SaaS spending by up to 30%.
Here’s what enabled us to guarantee 2x - 3x ROI in your investment in us compared to other players in the market.
1. Expert SaaS buyers who are equipped with the industry’s best pricing benchmarks. They also share a working relationship with multiple SaaS vendors so that you can get better pricing and your SaaS buying process is accelerated.
2. Strategic buyers who will work with you and your team to optimize your SaaS stack and contracts to your advantage. You can consider them as your strategic procurement partner that’ll also help you in sunsetting SaaS overages.
3. Best-in-class account managers who will ensure a smooth onboarding and are available on call 24x7 to help you any time with your need for new procurements and renewals.
Why is a SaaS buying and management solution like Spendflo the need of the hour for modern businesses?
It’s no big secret that SaaS is playing a huge role in businesses post-pandemic, especially when Gartner predicts the SaaS market to be around $151B+ by 2023.
However, what most fail to notice is that close to $90 billion of SaaS spending is wasted.
That’s why we took the guesswork out of reducing SaaS spending by creating Spendflo from the ground up with our experience and expertise in the SaaS buying process.
It includes everything you need to save millions in SaaS spending.
Join businesses that are saving millions of dollars in SaaS spending and getting up to 5X ROI from your investment with Spendflo.
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