Guide to SaaS Vendor Management

What is Vendor Management?

One of the central challenges of managing the proliferation of SaaS apps across the modern business is staying on top of all of the different vendors behind those SaaS products. Vendor management means having a comprehensive vantage point and control over the entire vendor lifecycle—from selection to implementation to renewal (or removal, depending on the outcome). Today, many businesses attempt to manage SaaS subscriptions using spreadsheets. However, with the average 250+ employee organization using over 120 apps, it’s easy to see how this can quickly become untenable.

What’s more, managing vendors in a SaaS context is a markedly different endeavor from managing legacy, on-premise software. This is because SaaS is not a one-and-done purchase and rollout. Businesses must have a plan for ongoing license management and renewals, and an organized way to keep track of their apps in use. They also need to enable collaboration across departments, since implementation and usage of SaaS apps is much more interdisciplinary than it was with legacy software.

In this guide, we’ll explain the entire vendor lifecycle, and share tips on how to manage it from stage to stage without losing control. This guide is intended to empower businesses to make software work for them, not the other way around.

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Understanding the Vendor Lifecycle

When we refer to the software vendor lifecycle, or SaaS vendor lifecycle, we are talking about the stage-by-stage process from choosing a piece of software to implementing it, and eventually to renewing, replacing, or removing it.

We call it a “lifecycle” because this is a cyclical process. That’s important to understand, because some businesses go wrong in their thinking and general usage of software—and SaaS chaos takes over. In other words, many companies invest in a piece of software at a single point in time and treat it as a one-and-done, at least from a process perspective. They don’t have an automated or centralized way to track usage, spend, renewals, and other key pieces of metadata related to the software. This lack of attention can result in wasted spend, inefficiency, security and compliance issues, and more. Thus, SaaS management in many ways is all about vendor lifecycle management. In this guide, we’ll cover the following key stages in the SaaS vendor lifecycle:

  • Evaluation
  • Approval
  • Roll-Out
  • Administration and Management
  • Renewal or Removal

The Vendor Lifecycle: Stage by Stage

Vendor Management Flowchart

Stage 1: Define the Need

Before searching for a solution, involve all stakeholders in identifying your organization’s or team’s pain points. Begin your search with complete information on exactly what features you need, who will use the tool, and what problems they are trying to solve. If the need involves a larger project or organization, you might consider creating an RFP (Request for Proposal) to circulate to potential vendors.

Review Your Current Vendors

Next, determine whether existing tools in your organization might meet the needs of this project. SaaS tools are constantly updated with new or retooled features. Keeping a SaaS app inventory will help you review your current toolset to see whether any of your existing apps have new functionality since your last update. Determine whether there are untapped features or functionalities that could solve your issue. While it’s less exciting to use features in a product you already have in your arsenal, it’s also less of a hassle to set up and may save you some money. Be sure to check across departments, as the engineering department might be using a task management tool that the marketing team could use.

Stage 2: Evaluate Options

If you decide that it’s necessary to bring in a new SaaS app, the next step is to carefully evaluate the choices on the market.

At many organizations, due to the ease of implementing SaaS tools, there may be little to no evaluation phase—especially for free, low-cost, and open source tools. While this may sound ideal to the users of the apps, unsanctioned or shadow IT can lead to all sorts of challenges for a business. The solution, however, is the same as above: Get everyone on board with a streamlined SaaS evaluation process. That said, remember that the most successful SaaS apps are the ones that users love, and you don’t want to disregard the needs and preferences of everyday users during the evaluation process.

Let’s take a look at what we recommend during the evaluation stage of the SaaS lifecycle:

Compare Options

It can be easy to get excited about a particular app and contract a case of tunnel vision that excludes products that could be a better fit for your company. So, before settling on a specific SaaS product, make sure to evaluate what else is out there.

First, identify competitors and conduct a survey of what is on the market. One place that may be helpful to start is Gartner’s Magic Quadrant or Forrester’s Wave report for the space (if these exist). Analyst reports can help you build a list and may give you some insight into how key players rank against each other, though it’s worth noting that these reports are often pay-to-play, meaning smaller or more up-and-coming vendors may not be listed. However, it can be a good place to start to get a sense of the market.

After this, we recommend talking to your peers who use similar software. For example, if you’re considering various marketing automation platforms, it’s worth asking marketers you know at companies of a similar size and/or industry what they think of their current tools and what they recommend.

Now, take a look at what some of the major review sites and forums—like G2 Crowd, Capterra, Product Hunt, Quora, Reddit, or more niche sites depending on your use case—have to say. This information will help you get a broader point of view and may be a useful way to begin to narrow down your options.

Finally, evaluate the size of your list. Determine how many options you want to test out before committing. In some spaces, there will be a few top contenders that are no-brainers to try out, but in other spaces there may be a lot to choose from.

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Key Questions to Ask:

Here is what you want to evaluate:

Capabilities

  • What features does each product have?
  • Which of these features do you absolutely need?
  • Which features (if any) are extra bells and whistles that might go unused?
  • What can your current tech stack already do? Is there any overlap that might affect your decision?
  • How well does each option integrate with your current tech stack?

Pricing

  • How is each option priced? (per license, per seat, per terabyte, etc.)
  • How do the prices compare to other vendors?
  • What are certain features worth to you? (Are there any must-haves?)
  • Is there room for negotiation?

Security

  • What security features are built in?
  • Does the product integrate with security features you already use? (e.g. identity and access management platforms)
  • Does the tool uphold current security (and relevant compliance) best practices and regulations that apply to your business?
    • Get documentation on what security processes, certifications, and/or attestations your vendor has, particularly as it relates to your internal or regulatory compliance.
  • What is the vendor’s Privacy Policy and Terms and Conditions?

Ease of Set-Up

  • How long will it take to get up and running?
  • Does the development team need to be involved in set-up?
  • Are integrations offered out of the box or will they have to be customized?

Ease of Use

  • What’s the learning curve on the tool?
  • How long will it take to get individual team members onboarded?
  • Will significant training be required?
  • Is the tool worth the extra time or training required?

Customer Support

  • What level of customer support is offered? (e.g. chat, phone, 24/7, intermittent, etc.)
  • What do peers and reviewers have to say about the customer support experience?
  • Do you know of any areas in advance where you will need extra support? Can you test that support out before
  • committing?

Proof of Concept

You may want to conduct a proof of concept or trial run, in order to see for yourself how well the tool works and how well it fits within your unique environment. Some of the areas you want to cover in a proof of concept include:

  • Does this work for all of our use cases (or at least all of the major ones)?
  • Does this fit well with the other SaaS solutions we are using?
  • Does it integrate or share data the way we need it to?
  • What will it take to stand up a fully functional instance?
  • Do we have the technical resources needed?
  • If not, will the vendor help us get set up?

Once you have evaluated the tool(s) and conducted trial run(s), it’s time to approve the right tool.

Stage 3: Approve the Vendor

Vendor approvals can be time-and-energy consuming if you don’t have a well-defined process in place. Below, we’ve included a seven-step checklist to guide your vendor approval process. The steps are included below, or you can visit our vendor approval checklist and download the full list.

  • 1. Review Privacy Policy Terms & Conditions
  • 2. Negotiate Pricing and Terms
  • 3. Establish Internal Relationship Owner
  • 4. Conduct a Security Assessment
  • 5. Approve Annual Budget
  • 6. Review Compliance
  • 7. Review and Sign Contract

Using this checklist will streamline your vendor approval process and help you onboard new SaaS tools faster.

Stage 4: Roll Out

When the paperwork has been signed and the budgets approved, it’s time to roll out your new app. It’s likely that the internal owner for the app will be in charge of roll-out, perhaps in partnership with IT. They should work together to develop a list of current employees who will need to use the tool. Then, IT (in partnership with development in some cases) will do the actual implementation. They should also do whatever they need to do to integrate the new tool with your existing SaaS stack.

Next, it’s time to provision the app to employees. As a note, this is also a good time to ensure that the app is added to the SaaS onboarding process for relevant new employees, and that secure authentication processes are in place. Employees who will be using the new app should be provided with any training they require.

Stage 5: Store & Manage Vendor Details

As you’ll recall, we recommended earlier that you confirm who the vendor’s internal owner will be, as well as their proposed use case. Having internal ownership of a vendor is important for tracking documentation and responsibilities.
In this stage, add your new product into your app inventory, and record key metadata about the product. You will want to have a documented record of:

  • Renewal date
  • Business owner
  • IT administrator
  • Contract
  • Compliance and security documentation
  • Key documents
  • Any important notes

If you’re using a spreadsheet to track this information, it can quickly become out of date and burdensome to maintain. A SaaS management platform like Blissfully will give you automated vendor approval workflows and help track key information for the many vendors your organization uses.

Next, set up notifications. Depending on your business and internal needs, you may want to set up a variety of notifications for each tool. It’s helpful, for example, to receive a notification when a new invoice comes in. This will aid in record-keeping and ensure that the business stays on top of payment and there are no service disruptions.

Additionally, it’s a good idea to set notifications to remind you when a renewal date is coming up. These should be annual and automatic since you might need 30 or 60 days’ notice to cancel.

A Note on Contract Management

While it may not be the most exciting aspect of vendor management, managing contracts is very important. We recommend that organizations report the key information around a contract, including renewals and licenses. Storing contracts in a single place (such as Blissfully) enables the automated notifications we mentioned above. It also allows stakeholders to review the details and terms of a contract when needed. For example, you may need to check at some point on how many licenses you have and what type, so you can avoid waste and ensure you’re getting the maximum value out of your SaaS spend.
Some of the key information that often lives in a contract includes:

  • Number of licenses
  • License types
  • Training sessions available
  • Billing terms
  • Renewal dates

Having all of this information in a central location, especially when there are dozens or hundreds of apps in play, is a very good idea to maintain organizational knowledge and reduce the odds that something important falls through the cracks. You may want to read our guide to License Management as well.

Stage 6: Renew or Remove

No one wants to be surprised when a renewal date arrives and it’s too late to cancel. Some companies are great at notifying you, but many aren’t, and you may not hear about a renewal until just a few days before the deadline. Many contracts stipulate 30 or 60 days’ notice for cancellation or changes, so having a heads-up is smart. We generally recommend setting up an automatic reminder two months out, but that depends on the tool.

In this blog post, we provide a checklist for vendor renewals, if you’d like to take a look. Following these steps for your SaaS renewal process will ensure you get the most out of your SaaS toolset and enable you to optimize SaaS spending across your organization.

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Vendor Management at Scale

The typical organization is using hundreds of SaaS apps. Setting up consistent processes and workflows is necessary to manage this volume of applications. Each app is likely at a different lifecycle stage and in use by different teams at any given point in time. Moreover, IT is no longer a siloed department that gets brought in to install an app and move on; Collaborative IT is the way of the future. For all of these reasons, communication and consistency across teams is vitally important.

Finally, it’s worth noting the high-level importance of involving the right stakeholders in reviewing the key details of any given vendor. Executives and those charged with compliance effort should always know the compliance status of each third-party app in use—as well as having quick and simple access to contract information, invoices, renewal dates, and other key pieces of meta information about your technology stack. Vendor management at scale is both the challenge and the end goal.

Manage Software Vendors Effectively with Blissfully

Blissfully offers all the tools needed to effectively manage SaaS vendors in one pane of glass, replacing spreadsheets and ad-hoc processes that lead to chaos. Blissfully has key security and compliance considerations built right in. Additionally, while Blissfully is SaaS-first, but it is not SaaS-only, so even if you have a hybrid software landscape, the platform will help you streamline and build process around your vendor management strategy.

Learn how Blissfully can help your organization with Vendor Management.

Or request a demo to see Blissfully in action!

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