SaaS buying has become complex and expensive. It doesn’t have to be.
For employees, SaaS buying is easy. They pick the product they like, try it, buy it with their credit card, and reimburse at the end of the month. In essence, SaaS buying is decentralized.
For the hyper-growth company CFO, this is a finance ops nightmare—it leads to wastage, compliance issues, and security concerns.
Unmonitored SaaS spend: when employees either pay for it themselves and reimburse or use the company credit card, the expense itself is unmonitored. By the time the finance teams process the statements, make the reports and understand that it is a software-related expense, it would be months of unnecessarily paying for the product.
Unused licenses: without organizational visibility, licenses go unused. For instance, someone might have left the organization, but the SaaS charges are still on the company's credit card. Or employees may have tried something and forgotten to cancel after the trial period.
Shadow IT: the natural response to red tape is decentralization. Likewise, the natural consequence of decentralization is shadow IT. Neither can IT efficiently manage product sprawl nor can finance track expenses.
Overpaying for SaaS: most SaaS companies hide their ‘enterprise pricing.’ This is with reason. Not all enterprises pay the same price. There is immense negotiation power that comes as an enterprise, which is lost when buying is scattered. Employees end up paying individual pricing, which is often much higher. To say nothing of auto-renewals that leak budgets every single month!
Contract mismanagement: decentralization of buying means scattered software. Not only is this with every employee, but it’s also stuck in mail threads that are difficult for the organization to access and manage.
Compliance nightmare: employees are not equipped to perform vendor due diligence before buying software. They might miss matters of security and adherence to local/state/national laws, which open organizations up to risks.
While the risks are plenty, decentralization can not—and should not—be undone. To understand why we need to look at past trends to identify the root cause of decentralized SaaS buying.
Why SaaS buying got decentralized
Hyper-growth teams need the tools to be more productive and build higher-quality products. They need it fast. They don’t have the time to wait for organizational red tape to work its way before they have access to a simple cloud deployment tool or social media publishing software. These needs are instant.
Yet, organizational buying processes are inefficient and cause delays. Send a mail > get approval from skip manager > wait for procurement to negotiate with the vendor > wait for legal to vet the contract > wait for the signatory to actually sign the contract > wait for finance to release payment > wait for license number > so on and so forth.
Employees' response to this red tape is “I’ll do it myself” aka decentralized buying.
While it has its challenges, centralization is not the answer. Embracing decentralization is. Here’s how.
How can CFOs embrace decentralized SaaS buying?
Let’s agree that decentralized SaaS buying empowers employees. It removes roadblocks from their path to productivity and effectiveness. Logistics shouldn’t come in the way of performance. For that, CFOs need a process that bridges the time gap from tool request to usage at the fairest price without compromising security, visibility, and contract consolidation. Here’s what it looks like.
Streamlined and scalable SaaS buying process
The ideal way of buying SaaS should be with a single click — your process must enable that. For this, you need streamlined workflows for:
- Approvals within departments
- Managing all the existing vendor contracts
- Centrally managing the procured software
- Processing upgrades
- Canceling licenses for employees who’ve resigned or no longer need them
Not all SaaS purchases need to be vetted by multiple humans across various departments.
- Under a price threshold? Automate approvals.
- Vendor we know? Automate due diligence.
- Standard contracts? Automate executions.
The thing that takes the most time in negotiations is figuring out the fair price. The best way to do this is with benchmarking.
A good SaaS buying process needs frameworks to process legal and infosec requirements quickly and effectively. It must not compromise speed for thoroughness. This also includes clauses like auto-renewals, cancellation policies, and so on.
How is each SaaS product being used? How is it affecting goals—productivity, efficiency, cost savings, etc.? What contracts are up for renewal? Are terms and conditions changing? Have infosec or industry regulations changed? The finance, legal, and procurement teams need complete visibility into all aspects of SaaS buying in real time.
All this is precisely what Spendflo delivers using data, expertise, relationships, and an intuitive platform. With Spendflo:
- Finance teams get 2x-3x ROI and a strategic partner in SaaS buying
- Procurement teams reduce workload, and get more visibility and control over contracts
- IT teams speed up compliance procedures and focus on security
- All departments get the right tool in the shortest amount of time
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