14 SaaS Procurement Mistakes: Buying Traps (and How to Avoid Them)
Startups are always trying to bootstrap their way to success. That means spending less and doing more. Even established companies seek out ways to limit expenses and boost the bottom line. For these cost-conscious companies, smart SaaS procurement is one of the best ways to keep expenses low and get real ROI out of the tools a business uses.
Unfortunately, it is sometimes hard to be smart about SaaS procurement. Whether a company needs a CRM tool, productivity and collaboration software, or a cloud-computing solution, the search for the right software can lead to all sorts of mistakes.
But there’s good news too: These mistakes are ultimately avoidable. At Sastrify, we exist to make SaaS buying easier to manage. To help you get started on your search for the right software and tools to manage your business, here’s a look at 14 SaaS procurement mistakes to avoid.
1. Moving too fast (or too slow)
When a company recognizes the need for a specific type of SaaS platform, that need is typically urgent. Given this urgency, it is easy to rush into a purchase or contract. Moving too fast can lead to serious issues, though. When you move too fast, you often fail to reasonably evaluate multiple options. It also means you do not take enough time to negotiate properly.
And then there is the opposite problem: moving too slowly. When your business demands a quality SaaS product to solve an organizational problem, you do not have weeks or even months to conduct an RFP process, speak to leading options, and agonize over a final decision. Rather, you need to move deliberately and decisively without rushing a decision.
There is a happy medium between moving too fast and moving too slow on SaaS buying decisions. Moving at the right pace allows your company to make an informed decision on time. That eventually allows your business to secure the benefits it needs from a SaaS solution without waiting an inordinate amount of time.
2. Declining to shop around
In today’s SaaS environment, there are typically multiple searching options for products. Make sure that your company weighs its various options without focusing too narrowly on just one.
There are plenty of reasons why startups and other companies fail to shop around for any given SaaS solution:
- A team member has previously used a specific platform.
- A team member knows someone who works for a specific platform.
- There’s little time to waste, and the team focuses on the first platform that appears on a Google search results page.
These are just a few of the reasons why a SaaS procurement process can too quickly narrow to a single option. But there are compelling reasons why your company should shop around before developing a consensus around one solution:
- You may not need all of the functions and features that a given platform offers.
- One of the competitors may offer exactly what you need but at a lower price.
- A different SaaS platform may be more customizable or otherwise fit better into your current workflows.
Again, these are just a few of the reasons why you should spend time shopping around before making a final decision. There are likely more reasons that are specific to your business and situation.
3. Not pushing for a pre-purchase test
Sales pitches are tolerable. Demos are nice. Visits to a vendor’s home office can be helpful. But there is no replacement for testing a SaaS solution before you make a purchase. In the past, truly testing software before buying it was challenging. But given modern technology and today’s SaaS environment, it is easier than ever for buyers to conduct in-depth testing before making procurement decisions.
Testing of SaaS options typically takes place in sandbox environments. Allow relevant team members at your company to participate in testing so you can get assurance that the SaaS platform delivers the features, functions, and benefits that the business needs. Also, test to make sure any given SaaS option does not do more than you need it to do. After all, you do not want to pay for a premium solution when the features you need are already available through a down-market option.
4. Ignoring hidden costs
Most SaaS products offer multiple pricing tiers. The higher you climb up the tiers, the more users you are given, the higher the volume you are allowed, the more features you enjoy access to, and so on. Frequently, you get greater access to support as you move up in SaaS tiers.
If you are looking at a lower pricing tier, be careful that you are not missing any hidden costs. In some cases, you may end up paying à la carte for features that are included at higher pricing tiers. In other cases, you may find that a SaaS solution can not meet your needs at the pricing tier you initially selected, forcing you to upgrade.
Either way, you ultimately end up spending more than you planned. At the outset, a SaaS procurement process should emphasize an open and honest evaluation of what a SaaS product can do for the business. It should also reveal the pricing tier and the total cost at which the product can meet your company’s needs.
5. Focusing on the wrong information
SaaS sales teams will throw a lot of information your way during the procurement process. After all, each SaaS company has a list of unique selling points used to convince companies like yours. But your company may not be typical. So be intentional about filtering for the right information.
For example, a SaaS sales team may pitch you a pricing tier that allows for up to 20 users. But if your startup only employs 10 team members, getting 20 users onto a SaaS platform does not do much for the business. Similarly, a SaaS sales team may pitch you on its platform’s ability to meet the needs of international users. But if your team and your customer base are all located in one country, you do not need international capabilities. And, as a final example, a SaaS sales team may emphasize that you get access to its API for free. But if you plan on using the software through an interface only, free access to an API does not move the needle for your business.
All of this to say: Do not get sidetracked by the glossy, finely tuned presentation of a SaaS sales team. You should know what your company needs most from a SaaS solution then filter for that relevant information.
6. Buying too soon
Spending money on a SaaS solution before your business really needs it is a big no. Sometimes, it can be tempting to recognize a future or emerging need and push for a SaaS solution that helps meet that need in advance. But most startups can not afford to spend money on solutions they do not quite need yet.
For instance, there are many lead-generation tools on the market. But if your startup is working with a small sales team that can barely keep up with inbound leads, it is not time yet to invest in a lead-gen tool. As the company grows and the sales team grows with it, you may ultimately hire outbound representatives. At that time, it would make complete sense to invest in a lead-gen tool for the team to use.
7. Accepting off-the-shelf pricing
When it comes to enterprise-level software, most SaaS platforms do not offer clear pricing. Instead, they invite you to contact their sales teams to talk about pricing options.
First, be sure to fight for your company to get out of lower pricing tiers and into the enterprise tier, where you get volume-based discounts. Getting into this enterprise-level tier can mean serious savings.
Second, if you easily qualify for enterprise-level pricing, fight for the largest volume-based discount you can get. Sales teams are eager to close deals, and the first or even second price offered is rarely the last and best deal. Push hard for the best pricing, and do not be afraid to walk away from the negotiation table if you feel you are not getting what you need. As noted above, there is rarely just one option when you need a SaaS solution.
8. Dismissing ROI
SaaS products are typically available month-to-month or through contracts that last a year or longer. Before you make a procurement decision, ensure that you have a plan in place to track the ROI of any given SaaS solution. When the time comes for annual budgeting, you will need to demonstrate how a platform is helping the business. Decide on the ROI you need from a SaaS platform before purchasing, and then put in place methods for tracking ROI as you use it in the first year.
9. Silo-ing purchases
As startups begin to get bigger and transform into more established companies, one mistake is too common: SaaS procurement decisions are made at the departmental level, allowing the company to end up with various products used by team members in silos. In many cases, if SaaS buying decisions are made across all departments, the company would be able to eliminate redundancy and lower overall costs.
10. Skipping proper implementation
Not all software is easy to implement so make sure you discuss during the procurement process how long implementation will take, who will handle implementation, and how much support the vendor can provide.
The implementation process often lasts for months rather than just weeks or even days. This lengthy implementation process is time wasted when the team does not have access to the SaaS platform that it needs.
11. Assuming scalability
Many SaaS buyers expect their businesses to grow over time. That is why it is so essential to choose SaaS solutions that can grow along with your company. Never choose a SaaS platform that will be unable to meet your company’s needs in the short term when it grows as you expect.
If you ignore scalability, you risk investing time, money, and energy into the implementation of a software solution that will quickly become obsolete to your business. Focus on scalability, and you can avoid ending up in this situation.
12. Leaving users out of the process
Where does your company’s SaaS decision-making happen? Is it the responsibility of an administrative operations team? Dev ops? IT? No matter where the decision-making takes place, do not sign the dotted line until you get feedback and input from the people who will use the software.
- If you’re investing in a lead-generation tool, get input from the sales team.
- If you’re investing in marketing automation, make sure the marketing team is intimately involved in the process.
- If you’re seeking out a collaboration platform for developers, do not make a decision until the developers have weighed in.
13. Avoiding training and onboarding
A SaaS solution will not help your company unless team members adopt it. Usually, team members are reluctant to adopt new platforms without some nudging from above. Make sure that you couple investments in new software with proper training and onboarding so that you get company-wide buy-in and usage. Without training and onboarding, you can not get the adoption you need. And without widespread adoption, the chosen SaaS platform will never deliver the ROI you expect.
14. Forgetting about upgrades
Do not forget about upgrades when choosing SaaS products. How complicated are the SaaS platform’s upgrades to manage? Who in your company will oversee the upgrade process? Does the vendor provide support during upgrades? Those critical questions need to be asked first and foremost during the SaaS procurement process.
Imagine for a moment that you have invested in an enterprise-level SaaS solution. Implementation goes well, and team members quickly adapt and start using the platform. Everything goes smoothly until the first upgrade comes along.
Without the right plan to manage and implement upgrades, the value a SaaS platform drives could completely disappear. That is why it is a must to solve upgrades and answer related questions before making a purchase.
Save on SaaS, from procurement through ongoing operations
Are you part of a company that has been wrestling with SaaS problems for far too long? The 14 mistakes listed above are common for both startups and more established companies. It is certainly difficult for any business to develop in-house expertise on SaaS procurement.
At Sastrify, we exist to help companies find the right SaaS solutions and save money on both procurement and ongoing operations. We can help your business by:
- Identifying the ideal SaaS products to meet your unique needs
- Bringing transparency to your existing setup
- Getting rid of unused licenses
- Monitoring cost, usage, and compliance (like GDPR)
- Negotiating with your suppliers to get their best deals
Are you ready to simplify your management of SaaS platforms? Contact our experts and start saving now.