The global software-as-a-service (SaaS) industry was valued at $130 billion in 2021. By 2028, that number is expected to grow over 5x to $716 billion. With many SaaS solutions on the market, business leaders are tasked with finding and vetting the best vendors, and then negotiating the best contracts for their organization and teams. 

As businesses grow their SaaS app adoption and usage, it’s crucial that they use the SaaS management best practices for their employees from ad hoc to a modern, efficient subscription processes.

In this guide to SaaS procurement, we’re covering all the basics:

• What is SaaS procurement?
• What is a SaaS procurement solution?
• What is the SaaS procurement process?
• What is e-procurement?
• What’s the difference between procurement and purchasing?
• What are some common SaaS procurement mistakes?
• Why you should outsource SaaS procurement?

What is SaaS procurement?

SaaS procurement refers to the process of choosing the right SaaS tools and SaaS vendors for your organization, assessing their compliance and security standards, and implementing them properly. 

Procurement often occurs ad hoc with employees on different teams making their own SaaS purchases for licenses (think a marketer buying her own CRM), but as a company and its team grows, this strategy becomes inefficient across larger teams with hundreds of different SaaS tools and contracts.

The process of SaaS procurement became more commonplace as SaaS apps have overtaken on-prem solutions. A successful SaaS procurement process ensures organizations find the right tools for their needs and properly vet the subscriptions before implementing them in day-to-day operations.

What is a SaaS procurement solution?

A SaaS procurement solution or SaaS vendor is a service, platform, tool, or partner that enables users to manage SaaS app contracts, licenses, negotiations, and more. The best SaaS procurement solutions will help your company team save time during the negotiation process and costs on monthly (or annual) tools' contracts.

What is the SaaS procurement process?

The typical SaaS procurement process for any business units has four core stages:

• P‍‍‍lanning & partnering
  Generating ideas to enable strategic goals and plan for procure-to-pay subscription activities‍
• Source to contract
  Deciding business requirements, engaging the market (RFP, RFQ, RFI, etc.), selecting suppliers, commercial negotiation and contracting ‍
• SRM & contract management
  Managing contracts, facilitating contract administration and execution, managing supplier relationships‍
• Requisition to pay
  Completing subscription purchase requisitions/ orders and invoicing

What is e-procurement?

E-procurement is another key term to know, as it’s becoming more frequently used in modern business operations. 

As we covered in this article, e-procurement is a business-to-business (B2B) process where companies buy and sell goods and services via the internet. Unlike e-commerce, however, this process occurs in a supplier’s closed system, meaning only their registered users could access it. E-procurement opens up a direct link between preferred suppliers and customers and facilitates processes from supplier evaluation to contracts to bids, purchase orders, and invoices.

Within e-procurement, there are a wide range of specialized software options and marketplaces to connect buyers and suppliers with any model. SaaS procurement is just one type of e-procurement for companies. 

What’s the difference between procurement and purchasing?

It’s common for the terms “procurement” and “purchasing” to be used interchangeably, but they’re not synonymous. For starters, let’s cover some quick definitions:

• Procurement
  “the process by which an organization buys the products or services it needs from other organizations.” This refers to a company’s multistep, strategic process to acquire goods and services before creating a purchase order.
• Purchasing
  “the activity of buying supplies for a company.” Purchasing covers the actual buying process activities such as ordering, expediting, and paying suppliers. There may be some research involved before choosing a product or service, but a formal process doesn’t exist.

The difference between procurement vs. purchasing comes down to this: Procurement covers the full, end-to-end process – pre, during, and post – of procuring goods and services. Purchasing refers only to the activity of actually buying goods and services. In a way, both work together and most procurement processes would involve a function for purchases.

Procurement is the pre, during, and post-process of goods and services. Purchasing is the activity of buying goods and services. Procurement is a big umbrella term and purchasing is just one aspect of its wider function and broader process. In many ways, procurement and purchasing need each other for a well-rounded organization and strategy.

Often, in early stages of a company's growth, many people do SaaS procurement – for example, the marketing department buying a CRM. As the company team grows, it's important to centralize procurement for subscriptions to ensure efficiencies and optimal pricing.

What are some common SaaS procurement mistakes?

As with any formalized process, there are common pitfalls to avoid when it comes to SaaS procurement. Here are the top mistakes we see companies make:

1. Moving too fast (or too slow)
2. Declining to shop around
3. Not pushing for a pre-purchase test
4. Ignoring hidden costs
5. Focusing on the wrong information
6. Buying too soon
7. Accepting off-the-shelf pricing
8. Dismissing ROI
9. Making purchases in silos
10. Failing to ensure proper implementation
11. Assuming scalability without proof
12. Leaving key stakeholders (i.e. users) out of the process
13. Skipping training & onboarding
14. Forgetting about tool upgrades

Our blog post on the 14 SaaS Procurement Mistakes covers each of these in-depth, as well as offering tips on how to avoid them.

Outsourcing with Sastrify

The SaaS procurement process can require a lot of time and effort, especially as organizations scale. While you could definitely create a team to handle these subscriptions internally, many businesses that use SaaS apps will choose to get help from a SaaS procurement and management platform – i.e. another company that can handle SaaS procurement for employees, from onboarding to purchasing to monitoring. Business leaders need SaaS transparency over all their subscriptions and a procurement solution can provide that.

There are several key benefits of outsourcing SaaS procurement:

• Save time  
  The SaaS job is never complete, with new tools popping up, auto-renewals, and re-negotiations to think about. Outsourcing SaaS solutions to an expert team leaves you, your IT team, and your in-house experts time to focus on core business activities.
• Faster deployment
  Outsourcing procurement allows your company to test and deploy SaaS apps as fast as possible to hit your targets, leading to better ROI.
• Streamline operations
  There are countless moving parts when it comes to SaaS procurement and deployment, all of which require time, money, and expertise. SaaS solutions can ensure all processes are as efficient and effective as possible.
• Lower costs  
  SaaS procurement can be expensive, especially if your employees aren’t well-versed in the process. Bringing on a solution with access to huge data pools and extensive experience will give you the leverage you need with SaaS vendors on costs, enabling you to get SaaS tools and licenses at ideal price points with minimal risk.‍
• Increase flexibility & scalability
  Leveraging a SaaS procurement solution means someone else procures, deploys, and most importantly, negotiates agreements with vendors and manages your SaaS licenses for your company. This can improve the flexibility and scalability of not only each SaaS tool, but your organization team as a whole.