Procurement

How to make your software procurement process flow smoothly?

Business need? There are over 30,000 SaaS apps… Time to shop! But with ineffective procurement, another app could be more cost surprise than cost optimization. 

Software purchasing has changed hugely over the last few decades. Before, IT or a purchasing manager would buy a perpetual tool license and manage it for the whole company. 

Now, most software is sold on a subscription basis. This opens the door to quick purchasing of new exciting tools but can make the procurement feel unmanageable. 

With SaaS usage growing, the Hackett Group reports a 10.6% increase in procurement needs for companies globally. The report also highlights concerns about a lack of procurement experts, leading to inefficiencies and money waste. 

But your procurement process can be refined with smarter steps and clear thinking, paving the way for a smooth operation end-to-end. 

What is a software procurement process?

It’s easy to get bogged down in the terminology, but essentially, a software procurement process is a step-by-step method to procure tools that your business needs

Like any workflow within your organization, having a standardized process makes things smoother, more visible and less susceptible to risks.

Procurement goes beyond just purchasing, though. What are the differences between purchasing and procurement? 

Purchasing

Purchasing covers the steps involved in buying software, such as evaluating requests, creating purchase orders, receiving products and paying for them. It is a short-term action within the procurement process. 

Procurement 

Procurement is a long-term, strategic process from identifying software needs to maintaining great vendor relationships. Get it right, and your business can benefit from cost-savings and workflow efficiency improvements that create more space for growth and innovation. 

Understanding the fundamental principles involved in procurement is the next step to achieving company-wide optimization. 

Procurement principles

Three key elements lay the foundation for best procurement practice—people, process and paperwork.

People

Gone are the days when IT personnel would handle software purchases on their own. Effective procurement now requires collaboration across departments and strategic thinking that originates from a centralized source of truth. 

Key collaborators may include:

  • Department managers
  • HR
  • Purchasing managers
  • IT
  • Finance
  • Legal

The bigger the software cost, the more people are involved in procurement. With this many eyes on software procurement, risks are reduced, and decision-making is financially beneficial.  

However, there is also a need to account for the schedules of multiple parties. For instance, if an approver is on holiday for two weeks, the process may need to be started earlier to account for their timely approval. 

It’s not just approval decisions that people are responsible for. Other activities, such as supplier evaluation, vendor negotiations and contract management, are also integral to successful procurement. These activities will be explored in more detail further on. 

Process

A well-established procurement process makes company-wide adoption easy and leaves little room for errors. Consistency, transparency and efficiency can lead to significant cost savings. 

Paperwork

Physical paperwork is a thing of the past, but documentation and records still underpin each process step. Purchase order records, invoices and audit trails must be accurate to support legal compliance, financial management and efficient organization.

How do these three areas work together in practice? To help visualize the reality of procurement, a flow diagram is a valuable tool. 

Procurement process flow

Process flow graphs provide a clear and simple picture of each new procurement journey.  

A graphic representation of steps employees must take in the procurement process makes compliance smoother and reduces the risk of discrepancies. Everyone knows what tasks must be completed and when.

Such graphs include:

  • Inputs: This can include request inputs or data entries. These usually occur at the start of the process.
  • Decision points: Mostly yes or no answers; these junctures ensure everything is being considered before moving to the next step. They ensure compliance with company policy and external regulations. 
  • Actions: These show activities designated personnel must do before the process can continue, such as research or approvals.
  • Outputs: The result of actions, such as approved purchase orders or processed payments. 

Every organization will have slight variations in its process, yet according to the best practices for procurement the process flow should be outlined and communicated to the team.

Procurement process steps

The procurement process from a request to purchase consists of many steps, most of which can be automated. Intake-to-procure, procure-to-pay, or intake-to-pay software provides businesses with much-needed support at different procurement stages to save time and optimize cost-saving opportunities. 

Here’s a breakdown of the key procurement process steps. 

1. Identify needs

Regular auditing of app usage and performance can reveal opportunities for development in areas across your company. 

For example, if your current project management software does not grant significant access to resources for a specific department, they might not use it. This results in less efficient workflows and cost-wastage. 

Recognizing a software need is the first procurement stage and can be achieved easily with a management platform that helps analyze usage and collect employees’ requests. 

Before moving to the next step, it’s important to ensure the need aligns with wider company goals and does not just fulfill a ‘want’ or preference. 

2. Create a purchase requisition

To start the formal process, a request must be submitted for the software. The request should include information such as the department requesting the tool, the expected price, the due date for approval, or else. 

The information to be submitted is usually predefined by the procurement specialist in a blank or a form to standardize requests. The information may vary depending on the company but it should provide enough details for the approvers to decide on the request.

3. Research and select a supplier

Choosing the right supplier to fulfill the company’s needs is a pivotal step. Done well, it can lead to long-term procurement relationships with healthy negotiations and reliable future cost-saving opportunities. 

Potential suppliers are researched and evaluated by the Procurement Team, who look at areas including:

  • Reputation and reviews
  • Cost
  • Speed of service
  • Customer service
  • Quality of product
  • Alignment of values, e.g. sustainability
  • Security 
  • Compliance

You can also request a VPAT (Voluntary Product Accessibility Template) from your potential vendors. This outlines how well the product conforms to accessibility standards and helps you plan for any equally effective access measures that may need to be implemented. 

It is good practice to gather at least three quotes from suitable vendors at this stage. Considering not just pricing but all key evaluation areas, decide which vendor will provide the best value for the company. 

4. Review requisition

This serves as a check-in point. Is the requisition accurate, compliant, and is there budget availability? 

If yes, the purchase request is approved and becomes a PO (purchase order). Rejected requests are sent back to the requester with a reason for rejection. 

5. Negotiate the contract

You may have chosen the best value vendor deal, but there is still an opportunity for cost savings at this stage. 

Negotiating on storage, licenses and subscription terms ensures that the software is right-sized for your company and doesn’t lead to unnecessary SaaS waste. 

Helpfully, expert vendor negotiators can take this off your hands and win vendor discounts of 45–50%

6. Manage the order

Once the price and details have been agreed upon and the contract is signed, a PO (purchase order) is issued to the vendor. You will also decide on the software’s delivery timelines and onboarding details to ensure no hidden surprises. 

7. Process the invoice and pay

Next, the vendor will submit an invoice. This provides details of the service, a breakdown of costs and a deadline for payment. It’s your last chance to check that everything works for you and that the pricing is accurate. The finance department must pay by the deadline.

8. Record keeping 

Save a significant amount of time by keeping comprehensive records of procurement activities. That way, each new procurement does not need to start from scratch, and templates can be adapted for a speedier process. 

Using a centralized platform for maximum visibility is critical to ongoing procurement success. Top procurement platforms offer a single source of truth and automated actions, saving valuable hours and streamlining an otherwise lengthy procedure. 

Procurement process cycle

Successful businesses recognize that procurement is not linear, it’s cyclical. 

Each purchased SaaS app gets into your company’s software stack and needs reviewing, renewing, and sometimes suspending. This is all centered around your company’s needs, which evolve just like a growing ecosystem should.

The key here is that procurement doesn’t end with a payment. It requires ongoing maintenance of vendor relationships to guarantee support and access to the best deals. It also calls for regular and rigorous SaaS auditing to reveal any updates to company needs as you grow. 

Seeing the never-ending nature of procurement in all its glory can feel overwhelming. Certainly, if you’re still relying on manual actions for multiple stages of your process, this might feel unmanageable. 

But, procurement challenges can be eradicated with the best procurement optimization tools

Automated procurement workflow

With cost-saving opportunities at almost every step, it’s easy to see why 83% of CPOs (Chief Product Officers) are considering digitizing their procurement process. 

Manual practices throw up critical challenges such as:

  • Complex approval workflows
  • Rushed supplier selection
  • Lack of supplier management
  • Lost cost-saving opportunities
  • Inaccurate record keeping
  • Compliance risks
  • Maverick spending
  • Reduced adaptability: market changes
  • Integration and company-wide adoption issues 

To avoid such threats, it is well worth investing in a high-quality procurement platform.

For example, Spendbase specializes in the intake-to-procure process and supports companies that don’t have a big enough procurement department for their growing needs. 

Its automated workflows and notifications speed up approvals and offer visibility over every purchase request. 

Even better, with a centralized platform, your auditing of applications is speedy yet in-depth, making for a smooth transition through the procurement lifecycle. 

Feel in control with notable features such as: 

  • Linear and conditional approval workflows. Every request follows the smoothest trajectory from submission to completion.
  • Automatic notifications. Real-time updates for approvers and requesters help keep the process within time schedules and ensure final decisions are made by the due date. 
  • Integration with Slack. Employees submit, track, and approve requests without ever leaving their main communication tool. A winner for company-wide adoption. 
  • Cost savings with discounts: Software and cloud services discounts that you wouldn’t usually get eyes on. You can save 39% on your software thanks to Spendbase’s assistance in vendor negotiations. 

Takeaways

Let’s make software procurement a strength, not a headache. Here’s what we covered:

  1. Procurement isn’t just purchasing—it’s a strategic process that saves money and builds stronger vendor relationships.
  2. Align procurement with your company’s goals to prevent wasteful spending and optimize performance across departments.
  3. Supplier research is crucial—long-term relationships with the right vendors unlock better deals and smoother operations.
  4. Automation can save you—manual processes are time-consuming, error-prone, and miss opportunities for cost savings.
  5. Successful procurement is cyclical—managing contracts, auditing software, and maintaining vendor relationships is an ongoing effort.
  6. Centralize and digitize for efficiency—a single platform creates a “source of truth” and ensures compliance, transparency, and control.

Procurement, when optimized, transforms from a burdensome process to a vital function that drives your business forward. Invest the time and resources now, and reap the benefits for years to come.

Takeaways

Let’s make software procurement a strength, not a headache. Here’s what we covered in this article:

  1. Procurement isn’t just purchasing—it’s a strategic process that saves money and builds stronger vendor relationships.
  2. Align procurement with your company’s goals to prevent wasteful spending and optimize performance across departments.
  3. Supplier research is crucial—long-term relationships with the right vendors unlock better deals and smoother operations.
  4. Automation can save you—manual processes are time-consuming, error-prone, and miss opportunities for cost savings.
  5. Successful procurement is cyclical—managing contracts, auditing software, and maintaining vendor relationships is an ongoing effort.
  6. Centralize and digitize for efficiency—a single platform creates a “source of truth” and ensures compliance, transparency, and control.

Procurement, when optimized, transforms from a burdensome process to a vital function that drives your business forward. Invest the time and resources now, and reap the benefits for years to come.

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