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 when it comes to SaaS procurement.

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 and SaaS renewals. 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 SaaS 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

The six steps of the SaaS Intelligence Cost Optimization Framework

Govern SaaS

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.

Productiv helps by delivering up to 100% automated app spend discovery.

1. Discover SaaS including shadow IT

Use 100s of out-of-the-box connectors (expenses, payments, network, SSO, and more) to identify existing and new apps, as well as spend not currently tracked.

2. Measure SaaS usage, engagement, and spend

View spend analytics by segments like employee, team, department, location, remote workers, and more.

Rationalize SaaS

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.

Productiv helps by revealing up to 17% portfolio consolidation opportunities.

3. Consolidate SaaS portfolio

Determine apps to consolidate in similar categories via engagement insights and benchmarks.

4. Automate license rightsizing

Remove inactive licenses and downgrade license tiers based on employee app engagement data.

Procure SaaS

Challenges today: With businesses relying on hundreds of SaaS apps, the constant renewals are difficult to manage effectively. Not to mention the slew of intake requests that bog down IT and procurement teams. Today, the decisions to be made and actions to be taken across both of these processes require handfuls of siloed systems, countless meetings, and often lack the necessary data and insights.

Productiv helps by enabling up to 30% cost savings via benchmarks.

5. Automate data-driven renewals

Automate renewal processes, orchestrate reviews and approvals, and use data and insights for a stronger negotiating position.

6. Automate data-driven intake

Streamline intake requests, understand what peers are paying, and save time when managing and fulfilling requests for new software and services.

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 upper hand 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.