Tips to Manage Vendor Relationships and Get More Value From Vendors
The global software as service (SaaS) market is to grow from approximately $130 billion in 2021 to $716 billion in 2028. To have an optimal SaaS procurement strategy, businesses need to start thinking about how to manage vendor relationships to build stronger ties and get more out of your solutions.
Vendor relationship management (VRM) is critical to any long-term partnership and procurement process. Below we’ll get into how you can manage vendor relationships, build partnerships, and cultivate the most efficient and cost-effective SaaS stack.
What is Vendor Relationship Management
VRM is all about strengthening your ties with a vendor or supplier to build trust and cultivate a mutually beneficial partnership. For your organization’s needs, a VRM strategy will require you to control your SaaS/vendor costs, optimize your services, and minimize risk to keep you and your clients/customers safer.
We mention both suppliers and vendors because they aren’t always the same thing. While the two terms are often used interchangeably, there are a few important differences.
- Are the last link in the B2B supply chain.
- Distribute and resell the technology.
- Negotiate contracts with businesses and companies.
- Are the first link in the B2B supply chain.
- Create the software/technology that can be resold and distributed by vendors.
- Are sometimes also vendors.
Why are vendor relationships important?
Vendor relationships are important for a number of reasons. As we stated above, they enable you to get more value out of your solutions, build long-term relationships with vendors that could look to more profitable contract renewals, and allow you to optimize your procurement strategy.
Other reasons that highlight the importance of vendor relationships include:
- You’ll be able to control costs more easily.
- You can limit security risks.
- You’ll have greater transparency into your SaaS stack.
- You can get more out of your SaaS contract negotiations.
- You'll be able to improve services for your clients/customers.
How to Manage Vendor Relationships
So what are the best ways to manage vendor relationships?
A robust VRM strategy involves a pro-active, multi pronged approach to vendor relationships. You can help streamline your approach by investing in SaaS procurement software and integrating a systematic approach to how you interact with vendors.
Procurement technology and vendor relationship management software will automate a lot of what is an otherwise tedious process of negotiation, stack management, and SaaS forecast. When you have a greater understanding of what your SaaS ecosystem looks like, you have a better understanding of what your technological needs are and will be able to communicate more effectively with your vendors.
Below we’ll look at some concrete tips for how to better manage vendor relationships. .
Tips to Better Manage Vendor Relationships
When working directly with vendors, you want to to build trust, communication, and an ethos of mutual gain. You can start creating the ideal vendor relationships with the following tips.
Integrate KPI scorecards
Scorecards are perennial performance appraisals that you can offer to vendors. This gives you an opportunity to provide the kind of praise or critical feedback that lets vendors know how well their services are performing. You can demonstrate this by showing KPIs and any feedback you have from stakeholders. These scorecards are another level of transparency that makes sure you’re both on the same page.
SaaS procurement technology
An advanced SaaS procurement technology, like Sastrify, will analyze your SaaS landscape to evaluate your usage, security risks, spend, and other valuable insights. Procurement technology will also optimize your stack by removing waste, monitoring use, and forecasting SaaS spend. You’ll be notified of auto-renewals and contract re-negotiations so you’ll be ready to meet with vendors when the time comes. Finally, procurement tools will also negotiate with vendors so you don’t have to. We’ll deal with the back-and-forth between vendors and provide you with complete visibility throughout the entire process.
Communicate openly and often
Barring confidential content, you should be as open with your vendors as possible. When you communicate effectively, you build trust and a mutual understanding. Even if you have to address an issue or provide negative feedback, vendors want to know what is and is not working on their end. It allows both of you to work together, problem solve, and build long and lasting partnerships.
Make a long-term plan
Don’t just pick the first vendor that will address your most urgent and current needs. If you want to succeed in the long-term, you want the kind of vendor that can scale and grow with you. Long term vendor management strategies also allow you to address root problems in your business model as opposed to seeking quick fixes. You can do this by evaluating vendors more closely and discussing long-term opportunities with vendors. This can help create a collaborative approach that fits both of your future goals.
Questions to Ask Vendors to Get More Value Out Of Your Relationship
You can ask key questions to vendors to get the most out of your relationships. Some of these may be more useful at the beginning of your negotiation, while others can help you further your relationship when renegotiating contracts.
- Have you worked with a business like ours before?
- How much will you be able to scale if we grow by X amount in Y years.
- How do you plan on adapting to innovations and newer technologies?
- How often do you expect to communicate with your clients?
- In what ways could we reduce the cost of your services?
- What quality management practices do you have in place to maintain quality and important deadlines?
- Who are some of your key partners?
Creating a Shortcut to Manage Vendor Relationships
You can simplify the vendor management process by integrating a SaaS procurement technology, like Sastrify.
With Sastrify, you’ll be able to leverage SaaS spend, usage, landscape visibility, and other key insights to communicate more effectively with vendors. On top of that, we take care of the entire negotiation process so you don’t have to.
Try a free demo to manage your vendor relationships and entire SaaS ecosystem with Sastrify today.