Procurement

Efficient SaaS procurement:
Key strategies for finance and IT teams

Is your SaaS spending growing faster than expected? It might be the right time to rethink your procurement process. 

Without a structured strategy, managing software purchases can become chaotic — leading to budget overruns, duplicated subscriptions, and compliance issues.

SaaS procurement is more than just buying software. It’s about making strategic choices that align with your business goals. Without a clear process, you risk overspending on tools that don’t add value or fail to manage contracts efficiently.

Let’s dive into what makes SaaS procurement essential for your budget and ROI and how you can streamline it for better results.

What is SaaS procurement?

SaaS procurement refers to the process of acquiring and managing subscription-based cloud software (Software-as-a-Service) for a business. 

Unlike old-school software procurement, where you purchase a one-time license, SaaS involves ongoing contracts and subscriptions. Key tasks in SaaS procurement typically include selecting the right software, managing contracts, and tracking renewals.

Many definitions highlight SaaS procurement as both a cost-saving and productivity-improving tool. However, to introduce a more comprehensive definition, we have to focus on its strategic value. 

SaaS procurement centralizes software acquisition, prevents redundancies, and ensures compliance across departments. This contrasts with decentralized models where different teams purchase software independently, leading to duplicate subscriptions and security risks.

Take the example of a company with 100+ employees. In such a business, without a structured procurement process, different departments often buy the same tools. This results in wasted funds on multiple subscriptions, along with increased cybersecurity risks due to unmanaged software access.

Implementing a SaaS procurement process mitigates these issues. Once in place, businesses gain complete control over software usage, streamline contract management, and make informed decisions about which tools truly benefit the company.

How SaaS procurement is different

SaaS procurement presents unique challenges and advantages when compared to traditional procurement models. Unlike industries where procurement revolves around physical goods or one-time software purchases, SaaS operates on a subscription model, requiring ongoing vendor relationships. 

Small businesses, in particular, need to navigate these differences carefully.

In traditional procurement, businesses often deal with bulk purchases or fixed contracts that last for years. With SaaS, you manage multiple short-term contracts, often with different renewal dates.

Additionally, SaaS vendors offer flexible pricing models. It requires more active contract management. Small businesses must regularly assess if they are still getting value from their subscriptions or if it’s time to scale up or down.

Integration with existing systems is another crucial factor. Many small businesses rely on accounting or ERP systems, and SaaS procurement solutions have to fit into this architecture.

If SaaS procurement tools don’t integrate well, they create additional work for finance and IT teams, making tracking costs and usage more complex.

With multiple SaaS tools in use, companies need to centralize their data management to avoid information silos. If they fail to do so inefficiencies and difficulties in making strategic decisions based on accurate data are inevitable.

In short, SaaS procurement demands continuous oversight, flexibility, and efficient vendor management. By addressing procurement challenges, small businesses can avoid unnecessary costs and guarantee the alignment of software tools with their growth.

Common SaaS procurement mistakes

SaaS procurement is a dynamic process, and many businesses make recurring mistakes that lead to unnecessary costs and inefficiencies. Here are some of the most common issues:

  • Lack of visibility. Businesses often overpay for unused or underutilized subscriptions if they don’t control their software usage. It’s essential to track the procurement process from start to finish and check that every purchase aligns with actual business needs. To learn more about how to overcome this challenge, check out our guide on procurement visibility.
  • Uncontrolled software sprawl. As businesses grow, they accumulate multiple SaaS tools, many of which serve similar purposes. This leads to duplicate subscriptions and higher costs. Regular audits can help stop SaaS sprawl.
  • Failure to manage renewals. Auto-renewals can be costly if businesses forget to evaluate whether they still need the software. Businesses must actively manage their contracts and set alerts for upcoming renewals to reassess their software needs before committing to another subscription cycle.
  • Poor contract management. Many companies don’t pay attention to the importance of contract negotiation and management. Missing out on volume discounts, or failing to renegotiate contract terms, can result in paying more than necessary for services.

Benefits of SaaS procurement done right

Effective SaaS procurement brings numerous advantages that significantly impact a company’s bottom line. 

One key benefit is cost control. On average, 30% of SaaS software spending is unused or wasted in a company. However, this does not have to be the case.

SaaS spend management software is one of the approaches businesses follow to control their SaaS portfolio costs and maximize the value of SaaS apps through effective cost optimization tactics. Proper management helps companies avoid such waste and guarantees that every tool serves its purpose.

Another major benefit is improved visibility. When companies organize their SaaS procurement, they centralize management and avoid software silos. 

SaaS procurement tools help organizations analyze how much they use their subscriptions compared to what they’re paying. They can spot where they’re paying for things they don’t really need so they can use their resources better.

Vendor management also becomes easier. With a clear procurement process, businesses can negotiate better terms with vendors. This might include discounts for long-term contracts or adjusting subscription tiers based on actual usage.

Data security improves when procurement teams track and manage all software. This ensures tools meet compliance standards, such as GDPR, which is essential for sensitive information protection. Keeping track of software usage also helps avoid security risks associated with unmanaged apps.

Finally, effective SaaS procurement fosters innovation. When tools are well-integrated and strategically selected, businesses can try new software without worrying about budget or security issues. This flexibility supports growth and helps teams adopt tools that drive long-term success.

How to set up a smart SaaS procurement process

A SaaS procurement process includes everything that goes into procuring a new SaaS product. To manage your software efficiently it is crucial to set up this process right. 

Relying on spreadsheets to track software purchases, renewals, and usage is no longer practical as your business grows. This is especially true for small businesses that are scaling rapidly.

To gain full visibility and control over your SaaS stack, you need specialized procurement tools that automate key steps in this process.

These tools automate request handling, approvals, and renewals while centralizing all procurement data, giving you a clear view of spending.

What is SaaS procurement software?

SaaS procurement software is meant to automate and streamline acquiring and managing cloud-based software subscriptions. You should consider solutions like intake-to-procure (I2P) and procure-to-pay (P2P), that cover different stages of procurement. 

While I2P solutions focus on streamlining the procurement request approval flows, P2P solutions cover the purchasing stage.

To get a better idea of what these tools do and how much they cost, check out the list of the best procurement tools for SMBs.

Investing in the right procurement tool can offer significant time and cost savings, particularly for small to mid-sized businesses (SMBs) looking to scale efficiently.

Takeaways

SaaS procurement isn’t just a buzzword—it’s the backbone of modern business efficiency. As we’ve seen, mastering this process can mean the difference between a streamlined operation and a chaotic money pit. Let’s distill the essence of what we’ve learned:

  1. Without a structured SaaS procurement strategy, you’re essentially throwing money into a digital black hole.
  2. The subscription model turns software acquisition into an ongoing relationship, not a one-time purchase.
  3. Businesses waste an average of 30% of their SaaS spending on unused or underutilized tools.
  4. Proper SaaS procurement transforms cost control from a headache into a strategic advantage.
  5. Visibility isn’t just about seeing what you have—it’s about understanding what you need.
  6. Effective vendor management isn’t negotiation; it’s orchestration of your entire software ecosystem.
  7. The right procurement tool doesn’t just track spending—it unveils opportunities for growth and innovation.

Remember, in the world of SaaS, ignorance isn’t bliss—it’s expensive. By implementing these insights, you’re not just managing software; you’re sculpting the future of your business, one subscription at a time.

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