Procurement and IT Can Align to Optimize SaaS Costs With This Framework

Procurement and IT Can Align to Optimize SaaS Costs With This Framework

By Alec Woodward and Todd Idler

Procurement plays a critical role in driving cost optimization. And now, as companies meticulously review their budgets in the face of recessionary pressures, Procurement is in a key position to deliver these cost-saving business outcomes.

But where should you focus your time to drive the biggest impact? With the average company using over 250 SaaS apps, SaaS spend is a great place to start. Especially when up to 60% of SaaS licenses are underutilized, according to Productiv data. However, Procurement teams today face a variety of challenges.

Why Procurement can’t deliver effective cost optimization today

High-performing Procurement teams need to work collaboratively with IT and across the business on software procurement. This starts with being on the same page as IT — from app consolidation to license renewals — and having insights for productive conversations with line of business app owners.

Spreadsheets slow down these important processes. They’re difficult to collaborate in and quickly become the source of stale or bad data. Without trusted data and shared insights, Procurement might want to go it alone and mandate cuts when a SaaS contract is up for renewal. However, this can strain the relationship with IT, who have to explain these cuts to business leaders and app owners. Additionally, cuts made without the right insights can negatively impact business performance.

What Procurement can do to align with IT on cost optimization

By adopting a SaaS management platform, Procurement and IT can jointly view vendor, contract, licensing, pricing, and usage information — including granular, feature-level usage.

With the right SaaS management platform in place, Procurement and IT can follow our SaaS Intelligence™ Cost Optimization Framework to continuously and proactively manage spend across the SaaS portfolio.

SaaS Intelligence™ Cost Optimization Framework

How Productiv helps solve your SaaS cost optimization challenges

1. Spend Visibility

Challenges today: Line of business areas are buying apps or adopting free apps, often without IT or Procurement’s assistance. Many of these purchases are expensed and not always with the right expense category. As a result, Procurement can miss them. Additionally, due to the number of free licenses for an app in use throughout the organization, the organization may be unexpectedly forced to switch to a paid plan, impacting technology budgets.

With Productiv, you can: Combine data from SSO, finance, contract, and HR systems with employee app usage insights to give Procurement and IT the full picture of your SaaS portfolio. Identify new apps not currently tracked by Procurement or IT via expenses, payments, networks, and SSO activity.

2. Spend Rationalization

Challenges today: The same app is being purchased multiple times across the business. Subsequently, purchases across the organization need to be combined into a contract at a lower price point. Apps with overlapping functionality should be examined for potential consolidation, too. All of these are difficult to manage with limited visibility into vendor spend from contracts and expenses by team and employee.

With Productiv, you can: Track app expenses by department, division, and employee and manage them against your IT and Procurement policies. Consolidate apps in similar categories through engagement insights and benchmarks. Track team- and employee-level spend and usage. Get app usage benchmarks to see how your performance compares.

3. Renewal Management

Challenges today: It’s difficult to identify and keep track of how many licenses are actively used, which app will soon be auto-renewing, which contracts will be ending, and whether the license price is above or below a benchmark price.

With Productiv, you can: Ingest contracts. Centralize and manage vendor, spend, and contract information. Validate license costs against pricing benchmarks. Proactively manage renewals across contract lifecycles with a calendar, alerts, and recommendations for cost savings and avoidance opportunities. Enable alignment between Procurement, IT, and business leaders.

Where to go from here

See how Databricks used Productiv to help optimize costs by 35% across key business apps.

Hear how Procurement leader Maria Centeno uses Productiv to gain the upperhand in vendor negotiations and more.

Schedule a demo of Productiv SaaS Intelligence Platform to see how a data-driven approach enables proactive management of your SaaS contracts and renewals.

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