In a world increasingly reliant on digital solutions, SaaS vendor management is a strategic necessity. But did you know effective tips for SaaS vendor management?
But wait, why do we need effective tips for SaaS vendor management?
First, research shows that enterprises use an average of over 3,800 SaaS applications, with up to 41% of this operating outside IT oversight, escalating security and budgetary risk.
The rising prevalence of shadow IT emphasises the need for efficient management to mitigate risks and streamline costs.
As Gartner highlights, organisations could save significant resources by optimising SaaS licencing.
Some companies have identified savings of $100,000 within six months through proactive oversight.
Companies increasingly adopt multi-vendor ecosystems to stay agile, which can heighten complexity.
Deloitte suggests integrating diverse suppliers via a unified platform to enhance collaboration and achieve operational transparency.
Moreover, a McKinsey study found that SaaS now accounts for 75% of enterprise software revenues, making its management pivotal to maintaining a competitive advantage.
Before diving deeper, you might want to read, “Your SaaS Helping or Hurting? So, It’s Time for SaaS Vendor Management,” to understand the basics.
Table of Contents
ToggleTop Tips for Effective SaaS Vendor Management
Implement Regular Performance Reviews
Implementing regular performance reviews ensures SaaS vendors deliver value and meet expectations.
A 2016 Deloitte report emphasises that 35% to 60% of outsourcing value can be lost due to inadequate monitoring and governance.
Performance reviews should focus on service quality, contract compliance, and cost-effectiveness.
Leveraging centralised dashboards like Octobits’ platforms can provide real-time visibility into vendor performance metrics, allowing IT teams to identify issues early.
Companies conducting regular reviews report improvements in service quality and operational efficiency, with some reducing vendor-related delays by 30%.
By maintaining accountability and fostering transparency, regular evaluations support continuous improvement and better alignment with organisational goals.
For a comprehensive overview, kindly check “SaaS Vendor Management Best Practices: 5 Strategies for 2025 Success.”
Centralise SaaS Vendor Information
Centralising SaaS vendor information ensures transparency and simplifies management in a multi-vendor ecosystem.
According to a 2016 Deloitte report, fragmented data often causes companies to fail to realise up to 40% of outsourcing potential.
By consolidating vendor data into a single platform, businesses can monitor contracts, performance metrics, and billing details in real time.
This approach not only streamlines workflows but also helps detect redundancies and eliminate shadow applications, which account for 41% of IT usage in enterprises.
Octobits, a SaaS vendor management tool, demonstrates the value of unified dashboards, enabling IT teams to track applications and cut costs.
Over six months, optimised vendor platforms have saved organisations over $100,000. For other tool recommendations, you can read “Top SaaS Vendor Management Tools in 2024.”
Conduct Thorough Vendor Assessments
Conducting thorough vendor assessments mitigates risks and ensures alignment with business goals.
A McKinsey study shows that 75% of enterprise software revenues now come from SaaS solutions, increasing the need for rigors evaluations.
Factors like security protocols, compliance, scalability, and support services should be examined. Shadow applications, which are 7x higher in enterprises than SMBs, highlight the risks of unvetted vendors.
So we recommend implementing vendor performance dashboards for continuous monitoring, ensuring transparency and accountability.
Octobits clients that assess vendors systematically have reported a 30% reduction in operational inefficiencies, enhancing their ROI.
Regular evaluations minimise risks and promote sustainable vendor relationships, enabling businesses to stay agile in a dynamic market.
For more insights, explore our detailed “SaaS Vendor Management System Guide.”
Monitor and Control SaaS Spending
One of the effective tips for SaaS vendor management is monitoring and controlling SaaS spending to prevent waste and optimise budgets.
Gartner’s research shows that unused licences account for 25% to 35% of SaaS costs in enterprises.
Shadow IT further inflates costs, with enterprises reporting 3x to 7x more shadow applications than SMBs.
Tracking licence usage through comprehensive platforms like Octobits allows organisations to identify unused or underutilised applications, potentially saving over $100,000 in six months.
Businesses that integrate spend management into their vendor strategies reduce costs and improve ROI by aligning expenses with actual usage.
Learn more about cost optimisation in “Love SaaS, Hate the Bills? How Building Relationships with SaaS Vendors.”
Ensure Compliance and Security Measures
Ensuring compliance and security measures safeguards organisations from data breaches and regulatory penalties.
Shadow applications, which account for 41% of IT usage, pose significant risks. Kindly explore “7 Reasons You Need Vendor Management SaaS” to understand how SaaS solutions can help address these challenges.
So, we all need compliance monitoring to maintain transparency and address security gaps in multi-vendor ecosystems.
SaaS platforms must adhere to industry standards like GDPR or SOC 2, and businesses should regularly audit vendor security practices.
Companies prioritising compliance reduce risks and enhance trust, with some experiencing 50% fewer data incidents.
Strong security measures ensure operational resilience and long-term vendor reliability.
Negotiate Clear Contracts and SLAs
Negotiating clear contracts and SLAs reduces misunderstandings and ensures accountability. Contracts should specify pricing, performance benchmarks, and renewal terms.
Well-defined SLAs, focusing on uptime guarantees and support responsiveness, hold vendors accountable.
Deloitte emphasises the importance of aligning vendor terms with measurable KPIs to ensure value delivery.
Businesses that revisit and optimise their vendor contracts regularly potentially achieve savings of over 20% in licence costs.
Clear contracts streamline vendor relationships, prevent disputes, and maximise the value of SaaS investments.
Still wondering about the basics? Kindly read “What is SaaS Vendor Management Process.”
Foster Strong Vendor Relationships
Another effective tip for SaaS vendor management is fostering strong vendor relationships to build trust and drive mutual success.
A McKinsey study shows that vendors focusing on customer collaboration achieve higher customer lifetime value.
Effective communication and shared goals enhance partnership longevity, aligning vendor performance with business needs.
Tools like Octobits performance dashboards allow businesses to track vendor health and identify potential risks, improving transparency.
Octobits clients that invest in relationship management prevent escalations and reduce churn, with some reporting service improvements of up to 30%.
Using Octobits
As you’re probably aware, many organisations need a single platform that centralises data, monitors usage, and enhances transparency.
How does Octobits address this challenge?
By providing an all-in-one dashboard, it consolidates vendor information, billing, and performance metrics, giving IT teams real-time control.
Octobits integrates with platforms like AWS, Microsoft 365, and Azure, ensuring seamless oversight.
Through consolidated alerts and comprehensive reporting, Octobits enables organisations to monitor all their IT services from a single information hub.
This becomes particularly valuable when managing the average enterprise SaaS spend of $15.9 million annually.
The platform is currently free until December 2024.
So, you use this opportunity to test Octobit’s capabilities in reducing the industry average of 25-35% unused licences.
To understand the evaluation process, read “Evaluating SaaS Vendors for Cost-Efficiency: How to Find Right Balance.”
In Closing
Managing SaaS vendors effectively is more than a necessity; it’s a cornerstone of operational excellence in today’s digital-first world.
Tools like Octobits exemplify how centralised data and real-time monitoring empower businesses to streamline operations and save costs.
And some companies have achieved over $100,000 in savings within months.
To achieve this, adopting those actionable tips for SaaS vendor management we talk above can set your organisation on the path to efficiency and success.
References
- Deloitte. (2016). Next Generation Vendor Management: Outsourcing Trends and Challenges. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/process-and-operations/Downloads/Next-Generation-Vendor%20Management%20-%20Whitepaper%20Design.pdf.
- McKinsey & Company. (2020). The Next Software Disruption: How Vendors Must Adapt to a New Era. Authors: Paul Roche, Jeremy Schneider, and Tejas Shah. 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.
- Zluri. (2024). The State of SaaS Management 2024. Retrieved from https://www.zluri.com/whitepaper/saas-management-report