From initial vendor selection to the renewal or termination of contracts, a SaaS vendor management system streamlines the entire vendor lifecycle.
Based on Gartner research, with SaaS spending reaching $1,370 per employee annually (a 55% increase since 2021), companies need robust systems to oversee their growing software ecosystems and vendor relationships throughout the vendor lifecycle.
The evolution of vendor lifecycle management reflects the broader digital transformation happening across industries.
By 2027, organisations without centralised SaaS management will overspend by at least 25% due to unused licences and redundant tools.
This projection is particularly significant given that companies are typically only aware of 40% of their SaaS applications in use.
Looking ahead to 2027, over 50% of organisations are expected to centralise their SaaS application management using dedicated platforms, up from less than 10% in 2024.
This shift comes as businesses recognise that proper vendor lifecycle management isn’t just about cost control—it’s about security too.
Organisations lacking centralised management are five times more susceptible to cyber incidents or data loss.
The financial stakes are considerable; studies show that as many as 25% of provisioned licences go unused regularly.
Managing relationships with SaaS vendors is crucial to addressing the rising costs, as highlighted in “Love SaaS, Hate the Bills? How Building Relationships with SaaS Vendors.”
For large enterprises managing hundreds of vendors, this represents significant waste that could be prevented through systematic vendor management.
As digital transformation continues to accelerate, particularly post-pandemic, having a structured approach to managing SaaS vendors has moved from a nice-to-have to a business imperative.
What Is a SaaS Vendor Management System?
A SaaS Vendor Management System (VMS) is a cloud-based platform designed to simplify and optimise vendor relationships throughout their lifecycle.
With procurement automation capabilities, these systems track licencing costs, monitor usage patterns, and ensure proper data governance across hundreds of cloud services.
VMS combines procurement automation, data governance, and advanced vendor management tools to ensure seamless contract management, performance monitoring, and compliance.
Unlike traditional systems, SaaS VMS operates in real time, offering centralised dashboards and automated workflows for onboarding, offboarding, and cost tracking.
In the current landscape, SaaS VMS is crucial for organisations managing diverse vendor portfolios.
These platforms address inefficiencies by providing detailed insights into vendor performance and cost optimisation, often leveraging AI to detect risks and forecast trends.
For instance Gartner reports that centralised SaaS lifecycle management reduces overspending by up to 25%.
With its focus on scalability and integration, SaaS VMS empowers businesses to adapt quickly, ensuring alignment with broader digital transformation goals.
Platforms like Octobits and others listed in “Top SaaS Vendor Management Tools in 2024” provide centralised control and automation for efficient vendor oversight.”
Differences Between SaaS VMS and Traditional VMS
The differences between SaaS vendor management systems (VMS) and traditional VMS are clear.
Both are rooted in their capabilities and approach to modern challenges.
SaaS VMS is the clear choice for streamlining vendor processes thanks to its unparalleled procurement automation, dynamic features, and cloud-based accessibility.
Traditional systems simply weren’t designed to handle the speed and scale of modern SaaS adoption.
Traditional VMS often rely on manual inputs and static processes, making them suitable for smaller-scale operations.
However, as vendor ecosystems grow more complex, the inability of traditional systems to adapt leads to inefficiencies.
For example, traditional tools struggle with data governance, often relying on isolated databases that limit real-time oversight.
This is a critical drawback in industries that require immediate compliance reporting or risk analysis.
In contrast, SaaS VMS offers centralised, real-time visibility across all vendor activities.
Those capabilities enable organisations to mitigate risks and reduce administrative burdens.
SaaS platforms integrate advanced vendor management tools, including automated workflows for contract renewals and compliance tracking.
These systems also excel in scalability, making them ideal for hybrid and multi-cloud environments.
By focusing on agility and innovation, SaaS VMS redefines vendor management, offering scalable solutions that traditional systems cannot match.
That’s why, according to Gartner reports, over 50% of enterprises plan to centralise SaaS management by 2027, highlighting the growing need for these platforms.
To ensure cost-efficiency, evaluating SaaS vendors effectively is key, as detailed in “Evaluating SaaS Vendors for Cost-Efficiency: How to Find the Right Balance.”
Benefits of Implementing a SaaS Vendor Management System
The benefits of using a SaaS vendor management system lie in its capacity for optimising processes while improving supervision and achieving cost savings.
One major advantage is the enhancement of productivity with the help of automation.
Handling many tasks, such as bringing on vendors efficiently and keeping track of contract renewals and compliance requirements, can lead to smoother operations by saving time and minimising mistakes made by people.
One crucial benefit is the reduction of risk involved in using a SaaS VMS, as it provides companies with a comprehensive overview of vendor performance and adherence to regulations.
And as we all know, in today’s world of regulations and rules, having information can result in breaking the law or facing financial consequences.
Another significant advantage is cost optimization. Businesses can use analysis insights to negotiate improved terms with SaaS providers and prevent redundant expenses on services that overlap.
Moreover, employing automated processes to monitor and recover licences can lead to substantial cost savings in the long run.
Scalability is a factor that makes SaaS VMS essential for businesses that are looking towards growth and expansion in the future.
These systems are built in a way that allows them room for growth along with the vendor networks they operate within, ensuring integration as businesses grow.
If you’re wondering whether your SaaS is helping or hurting your business, it’s time to explore tools like SaaS vendor management systems, as discussed in “Your SaaS Helping or Hurting? So, It’s Time for SaaS Vendor Management.“
Steps to Implement a SaaS Vendor Management System
Implementing a SaaS Vendor Management System (VMS) requires a well-thought-out approach for seamless integration and maximising the benefits while efficiently handling SaaS vendors. Let’s break down the journey.
The first step is identifying your organisational needs. Map out vendor relationships, current challenges, and future goals.
For example, if procurement inefficiencies or compliance risks are issues, these should be central to your system requirements.
And please remember: organisations typically discover they’re using 60% more SaaS applications than they thought.
The second step is choosing the right vendor management software. That’s why Octobits stands out for its comprehensive features.
Octobits, a SaaS vendor management for small and medium-sized businesses, offers centralised control over billing, device management, and reporting.
Also, Octobits simplifies vendor oversight with an all-in-one dashboard, integrates seamlessly with tools like Microsoft 365 and AWS, and offers real-time alerts.
Its ability to consolidate alerts and automate workflows ensures proactive issue resolution, which is critical for managing complex vendor ecosystems.
The third step involves data migration and setup. Transfer existing vendor data into the new system, ensuring robust data integrity and governance.
Here, Octobits’ streamlined onboarding process minimises manual input and ensures consistency.
The fourth step is training your team. A SaaS VMS like Octobits is user-friendly, but staff training ensures better adoption.
Octobits’ single-login feature eliminates complexity, making it easier for teams to manage SaaS vendors across departments.
The final step is monitoring and optimization. Regularly review vendor performance and system efficiency.
Octobits enhances this process with detailed analytics, helping you identify unused licences or overlapping tools, which reduces costs and improves ROI.
By integrating Octobits into your SaaS VMS implementation, businesses gain a cost-effective, secure, and scalable platform.
With its free trial until December 2024, it’s your opportunity to experience the benefits without immediate investment.
For long-term references, adopting best practices for vendor management is essential, as outlined in “SaaS Vendor Management Best Practices: 5 Strategies for 2025 Success.”
In Closing
Organisations need systems that optimise costs and ensure security and compliance across complex software ecosystems.
The shift towards centralised management reflects a broader recognition that effective vendor lifecycle management is key to navigating digital transformation.
By integrating tools like Octobits, your business can streamline operations and reduce waste, setting the stage for scalable and secure growth.
And, adopting a SaaS vendor management system is not just a strategy for cost control but a foundational step towards sustainable digital success.
References:
- Cipolla, T., Harris, Y., & Others. (2024, July 22). Magic Quadrant for SaaS Management Platforms. Gartner. Retrieved from https://www.gartner.com/en/documents/5605991
- Rani, A., Mishra, D., & Omerovic, A. (2023). A framework for software vendor selection by applying the inconsistency and conflict removal (ICR) method. International Journal of System Assurance Engineering and Management, 15(3), 1070–1085. https://doi.org/10.1007/s13198-023-02190-x
- Roche, P., Schneider, J., & Shah, T. (2020, June). The next software disruption: how vendors must adapt to a new era. McKinsey & Company. Retrieved from https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-next-software-disruption-how-vendors-must-adapt-to-a-new-era
- Alhosban, A., Pesingu, S., & Kalyanam, K. (2024). CVL: A cloud vendor lock-in prediction framework. Mathematics, 12(3), 387. https://doi.org/10.3390/math12030387
