SaaS contract management - tips


Michael Fornander


September 15, 2023

The process of efficient SaaS contract management involves a key step - identifying and managing the contracts for any SaaS used throughout the company. With almost a third of the SaaS software being unknown to tech leaders, however, they are facing quite a challenge in discovering the full list of SaaS contracts. 

This first, SaaS contracts discovery stage is, though, worth the effort - because it is an enabler for getting a complete picture of the SaaS inventory, and seeing any opportunities for optimizing the spend and improving the ROI.

Getting the full list of your SaaS contracts

Identifying the full SaaS stack used throughout the organization, along with the contracts signed, is a necessary first step towards optimizing your SaaS spend. Because you cannot manage what you cannot see. And companies tend to underestimate the number of SaaS used throughout the organization with almost one third!

After discovering the full set of SaaS apps, the tech leads should take care to identify and record the details of the contract agreements signed up for each app. Those details should include start and end date, billing period, pricing, terms of use, renewal terms, license quantity. With no sufficient information on the contract, it is difficult to identify any opportunity for contract terms optimization.

Tracing the details for each license contract can be time consuming, particularly if part of the apps have been signed up by employees and their expense reimbursed, without even classifying the expense as SaaS subscription fee. Using SaaS management software like Viio would significantly help to discover the SaaS apps used in the company, identify their owner and then proceed with identifying and documenting the contract details. It is recommended to involve not just the IT, but also the legal and procurement departments in the optimization process: IT can assess the risks involved with using each SaaS app, while procurement and legal are negotiating the price and terms respectively.

End-user license contracts compared to enterprise-level contracts

When the employees are purchasing SaaS for usage in the company, they are presented with a standard contract agreement allowing business use of the software in any organization. That agreement is the same for any user. However, compared to an enterprise-level agreement, it offers no space for optimization.

Why do enterprise-level contracts bring more value for the organization?

The end-user agreement is signed up by a single user and does not place the employee in a position to negotiate terms. 

On the opposite, when multiple end-user contracts are replaced by an enterprise-level contract with numerous seats, the company gets buying power which allows it to enter negotiations with the vendor - be those price-wise, security-wise, etc.

The end user agreement favors the vendor

The user is only agreeing to terms supplied by the vendor, with no option to modify them.

The end-user licenses does not give buying power to the enterprise

When there are multiple employee-signed SaaS licenses that the organization is aware of, it can negotiate with the vendor to merge them into an enterprise license with more seats, being also in a position to request a more favorable pricing per seat.

The end user license does not provide for extra security and compliance agreements

When negotiating for an enterprise license, a company is in a position to require extra security and compliance protections, for example such required by the GDPR, that are generally not available in end-user agreements. 

Maintaining up-to-date information about all license contracts is key

Once all licenses have been discovered, the information about them should be kept in a system or record, whether that would be a spreadsheet or a SaaS contract management platform like Viio. License management platforms have numerous advantages like ability to structure a catalog of approved apps for employees, search licenses, get statistics on license usage and spend and a lot more.

What is the key data you need to store for each license, in your system of record?

The data you need to retrieve and store relates to several aspects of the license: first comes the application ownership, key functions and usage. Then there should be data filed related to the license contract start and end date, renewal date and terms, and of course billing and payment data and terms. Finally, there should be the total number of licenses, specific functionalities provided with the enterprise licenses or extra security and compliance terms.

Benefits of using a SaaS contract management system

SaaS contract management systems like Viio allow to automatically retrieve all key contract details by having the contract agreement imported onto the platform. The content is automatically scraped for all key contract data and that data is being inserted into the contract record created in the platform. The contract data can then be used by business units and employees, to enrich this data, monitor the license usage, stay informed about and manage upcoming license renewals. This license visibility and system of record can contribute to taking advantage of license cost optimizations, as well as the increase in employee productivity.

Interested in finding out more about the benefits of SaaS contract management with Viio? Sign up for a personalized demo!

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Michael Fornander

Chief Executive Officer

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