24 July 2024

SaaS vendor management (Image by Octobits)

Octobits Blog -As more and more businesses start using SaaS, it’s become clear that SaaS vendor management is becoming more and more important for companies. It’s no longer just a side issue.

So, SaaS vendor management is the process of ensuring your company gets the most value, performance, and security from your SaaS investments while minimizing potential risks.

A solid approach to managing SaaS vendors lets companies make the most of their digital tools while keeping costs down and reducing the risks associated with software sprawl, compliance, and security vulnerabilities.

So, let’s talk about how your company can manage SaaS vendors effectively.

Why is SaaS Vendor Management Important?

Managing SaaS vendors is a really big deal for companies that depend on cloud-based software services to streamline operations and bolster security. How?

This process goes beyond traditional software procurement. It’s a continuous effort to make sure that the vendor solutions are strategically aligned with your company’s goals and that they meet the highest security standards.

Rather than just picking software based on features or cost, good vendor management is all about making sure it integrates well with what you already have, performs as it should, and keeps your data safe.

SaaS vendor management includes vital steps like meticulous vendor selection based on specific requirements, skillful negotiation of beneficial contract terms, and ongoing monitoring of vendor performance.

This holistic approach helps you avoid potential traps, such as overlapping applications performing the same function or runaway expenses from unmanaged SaaS subscriptions.

Robust SaaS vendor management also plays a significant role in mitigating security risks.

It helps prevent shadow IT – unauthorized or non-compliant software that can leave your company vulnerable to data breaches and compliance violations.

By implementing a well-structured vendor management system, businesses can rest assured that all software applications adhere to their high-security standards before being deployed within the organizational environment.

The case of Fulton & Roark offers a compelling example of how transformative SaaS management can be.

Before adopting an integrated ERP system, the company’s reliance on manual processes hampered its ability to scale effectively.

Implementing NetSuite ERP allowed them to bring their entire operation into a centralized system.

This led to a boost in sales, streamlined inventory, and financial management – all without needing to expand their team.

This strategic SaaS deployment exemplifies how effective SaaS management can directly result from improved operational efficiency and bottom-line profitability.

One thing that often gets overlooked in vendor management is compliance. This is pretty important in the long run.

As a starting point, you might want to check outThe Cost of Compliance in SaaS: Get Ahead of the Game (and Regulators).”

What are the Key Elements of SaaS Vendor Management?

This thorough element below ensures that your chosen SaaS solutions consistently support your business objectives, stay within budget, and meet security standards.

Vendor Evaluation and Selection

The journey begins with a precise understanding of your company’s unique requirements.

Only then can you identify potential vendors that have the potential to be good partners.

This phase demands in-depth research—comparing features, assessing vendor track records, and scrutinizing compliance capabilities.

Setting Up a Structured Procurement Process

A formalized procurement process makes SaaS vendor selection systematic and less prone to misalignment.

Drafting comprehensive requests for proposals (RFPs) is a key element; these RFPs clearly define your expectations and provide a framework for the vendors to demonstrate their capabilities.

Think of RFPs as a way to help you compare apples to apples.

Ongoing Management and Communication

Once you’ve brought vendors on board, the management process is an ongoing effort.

Regular performance reviews, open communication channels for support and troubleshooting, and organized contract and compliance tracking are essential.

Centralizing this information streamlines the management process and can shine a light on underutilized or unnecessary software.

The result? Optimized software spending and a more efficient SaaS ecosystem.

Performance Review

It’s crucial to regularly measure the performance of SaaS vendors against the key performance indicators (KPIs) you established together.

This evaluation helps verify that vendors are honoring their service level agreements (SLAs) and continue to be a good fit for your organization’s evolving operational requirements and security standards.

SaaS Vendor Management Systems

Organizations seeking to maximize their software investments, maintain compliance, and nurture strong vendor partnerships often turn to SaaS Vendor Management Systems (VMS).

These systems offer a structured framework for several critical functions.


A VMS brings structure to procurement by standardizing how you evaluate and select vendors.

You can establish clear criteria based on functional business requirements, security standards, and budget.

This ensures that each new software investment is carefully justified and directly supports your company’s goals.

Monitoring and Performance Reviews

These systems provide tools for tracking your SaaS applications’ performance and day-to-day usage.

This lets you schedule and conduct regular performance reviews in the context of your service level agreements (SLAs).

Should any application underperform or fall out of alignment with your needs, you’ll spot it quickly.

This ability to course-correct early can help you avoid unnecessary spending.

Relationship Management

Building strong SaaS vendor relationships is central to a successful VMS. The system supports open communication channels, regular feedback collection, and strategic discussions that focus on continuous improvement and ensuring that vendor offerings align with your business objectives.

Nurturing these vendor relationships can lead to better service quality, faster response times, and a more collaborative experience.

Take a look atLove SaaS, Hate the Bills? How Building Relationships with SaaS Vendorsfor some detailed insights into long-term relationships.

Compliance and Security

A VMS ensures all your software adheres to relevant laws and regulations.

This is essential to mitigate risks related to data breaches and other cybersecurity threats.

The system helps you maintain a detailed inventory of all SaaS applications, giving you better insights to countershadow IT and enforce stricter adherence to security policies.

SaaS Vendor Management Software

Specialized SaaS vendor management software can streamline the entire process for companies managing a growing and complex network of SaaS vendors.

These platforms offer a range of features that automate and simplify many of the core tasks, including software usage tracking, cost management, compliance monitoring, and the generation of timely renewal alerts.

Let’s use the Octobits platform as an example. The Octobits are designed to be a powerful tool in your SaaS management toolkit.

Octobits delivers in-depth analytics, along with detailed insights into SaaS vendor performance.

This data is invaluable when deciding which SaaS products provide ongoing value, which may need to be discontinued, and when to negotiate more favorable terms with vendors.

Octobits also helps optimize your SaaS spending and strengthens your SaaS vendor relationships by setting clear expectations backed by transparent performance metrics.

These tools also combat the risks of shadow IT by giving you visibility into your SaaS landscape and ensuring that every application goes through the proper vetting and approval processes.

As a bonus, the Octobits platform is free for the next several months. This gives you ample time to experience its benefits and assess how well it aligns with your company’s needs.

And remember, we are ready if you want a discussion session. You can easily schedule a discussion on the Octobits contact page.


So, we all agree SaaS vendor management has become critical for organizations seeking to achieve operational excellence and maintain a competitive edge. 

That’s why, by investing in the necessary tools and establishing clear best practices, your company can ensure that they extract maximum value from their SaaS investments.

Equally important, you can uphold rigorous security protocols and comply with relevant regulations. 

Ultimately, a well-crafted SaaS vendor management strategy will differentiate adaptable, successful organizations from those that struggle to keep pace.