Companies using a wide range of Software-as-a-Service (SaaS) tools need a system to track information such as:
- Cost per subscription
- Active users on each tool
- Data privacy and compliance
- Renewal dates and upcoming pricing changes
If you don’t have a SaaS vendor management process in place, you’ll soon discover the problem of shadow IT: your organizations can lose track of software licenses and have low visibility into who has access to your tools.
Over time, this leads to enormous amounts of wasted spend, and exposes you to security risks.
To easily understand and manage every SaaS tool being used in your company, you need a SaaS vendor management system.
In this guide, we’ll show you exactly what an effective SaaS vendor management system should look like.
We’ll highlight a few key benefits of implementing one, who should be responsible for it, and key factors that matter when choosing a vendor management platform.
Table of Contents
- What is SaaS Vendor Management?
- The Growing Role of SaaS in Organizational Growth
- Growing Pains During SaaS Adoption
- Benefits of Using a SaaS Vendor Management System
- Who Should be Responsible for Your SaaS Vendor Management Process?
- Questions to Ask When Choosing a SaaS Vendor Management Platform
- SaaS Vendor Management Made Easy with onetool
What is SaaS Vendor Management?
SaaS vendor management is the process you use to understand what tools your team is using, how much you’re spending every month, and who has access to specific software and apps.
Considering over two-thirds of companies use at least 36 SaaS tools, it’s clear why this can get complex.
Most companies end up using a simple spreadsheet that needs to be manually updated. Unfortunately, this means it’s easily forgotten. Others built their own internal tools, which takes developer time and resources.
SaaS vendor management platforms have emerged to help growing companies keep track of their SaaS vendors, who is using them, and how much they’re spending.
The Growing Role of SaaS in Organizational Growth
Companies are moving towards cloud-based tools as the new normal, rather than building internal tools. 90% of enterprise companies are using more cloud tools today than they had predicted prior to 2020.In your organization, you’ve most likely seen a similar trend.
With remote and hybrid work environments becoming the norm, companies are using SaaS tools for a range of tasks across every department.
Tools like Zoom, Teams, Slack, Dropbox, Confluence, and DocuSign are all examples of cloud-based apps that have seen huge adoption over the past year.
It’s faster and more efficient to use existing SaaS tools than build your own internal tools. Purchasing software to help your teams do their work means you can move faster, and save your development team needing to spend their own time updating tools to fit new use cases — costing hundreds of thousands in developer time every year.
Growing Pains During SaaS Adoption
Having your employees using these tools comes with complications:
- Increased spend on software
- Potential security risks
- Lack of visibility into who is using which tool
They’re typically collaborative by nature, and multiple team members will have permissions.
Most SaaS licenses are paid on a monthly or yearly basis. If you’re not managing your spend, it’s easy to end up with a huge bill at the start, or end of a billing cycle.
To manage this, you can use a SaaS vendor management platform. It’ll help you unify your tools, improve visibility into usage, and reduce your total spend on software.
Here are the key benefits:
Benefits of Using a SaaS Vendor Management System
1. Easily Onboard New Team Members
When you’re onboarding new employees, you need to get them up and running as soon as possible.
Unfortunately, if you’re like 42% of companies doing this manually, you know it’s a slow, manual process. Different team members responsible for various tools will need to manually add the new employee to the SaaS apps they need to use.
Instead of relying on this inefficient process, a SaaS vendor management platform lets you onboard employees to every tool they’ll need access to in minutes.
For example, a new frontend developer can be onboarded to every tool that your team needs them to have, in a few clicks.
You’ll have full control over permissions, and be able to add or remove team members to tools whenever you need to.
2. Manage Costs and Track Renewals
If you’re noticing your organization is spending more and more on SaaS tools, a vendor management platform will help you manage your costs.
You’ll have access to details such as:
- Total cost and how many seats you’re paying for
- How many people are actually using a tool
- Which licenses are being renewed soon
- All past invoices
You can identify areas where you can reduce spending without hurting employee productivity. For example, if you’re paying for three seats in a tool, but one person only uses it, you can downgrade your license.
In situations where one employee starts using a new SaaS app but another tool you’re already using has overlapping functionality, you can suggest they use that instead.
If your team is no longer using a tool but you’re still paying, you can reach out to the team that owns the tool and find out if you can pause their subscription.
A clear picture of the SaaS solutions your team is using will let you effectively manage costs and set future budgets.
3. Improved Security Processes
Using SaaS tools has inherent risk attached. Different tools may have access to data such as:
- Your company payment information
- Your employee information
- Customer data
A vendor management platform enables you to understand exactly who has access to what data, and ensure you’re not exposing any unnecessary data to unauthorized employees or third-party software.
Your IT team will know who has permissions to every tool and data stored inside it, and have the ability to easily onboard or offboard team members when they no longer need access. It’s a proactive way to improve your cloud security practices and minimize risks of data breaches.
4. Quickly Roll Out New Initiatives
If your marketing team has a new campaign, they’ll request a set of tools they need to ensure they can execute and analyze their efforts.
In most large companies, this results in a long approval process, and lots of back-and-forth emails. With an effective vendor management process, your team can let their department head know what they need.
If the request is approved, they can sign up for the tool and integrate it into your organization’s SaaS vendor management platform. Your IT team will instantly have visibility into usage, and when the new campaigns or initiatives are done, they can offboard any team members who no longer need access.
Long and short-term changes to permissions and your company’s software stack will be simple to manage, and you can save department leaders time and energy usually spent on managing their software.
Who Should be Responsible for Your SaaS Vendor Management Process?
To make the SaaS vendor management process work at your company, it needs to be owned by a few key individuals.
Usually, this starts with the Chief Information Officer, Chief Security Office, or Chief Technology Officer, depending on your organizational structure.
When we surveyed 100+ decision-makers at companies with 500-1,000 employees, 95% of them said that their IT department was in charge.
This is because using third-party vendors can potentially expose companies to cybersecurity threats, so it makes sense for the people most adept at managing those threats — the IT team — to handle external SaaS vendors.
However, once your SaaS vendor management processes are in place, you can begin training and delegating responsibilities to the relevant head of departments (Head of Marketing, Engineering Manager, HR Manager..). This allows them to have more flexibility over their tool stack, and react faster to changing departmental needs.
Questions to Ask When Choosing a SaaS Vendor Management Platform
There are several key factors to consider when choosing your platform. Here are some of the most important, based on our conversations with decision-makers at mid-market companies using tens, or hundreds of SaaS applications in their companies.
1. Team size: Have you grown past spreadsheets?
As your team grows, your needs change.
During a startup’s early stages, speed is the most important factor. This often means there’s no need to invest in a feature-rich SaaS management platform, and you may be able to get most of your needs from a password manager or even a spreadsheet.
However, as a company grows, this becomes unmanageable.
Once you hit 50+ employees, your SaaS spend will be quickly increasing due to increased team sizes meaning you need more seats per tool, and you have more requests for new tools to be added to your company toolbox.
It’s at this stage where resource wastage becomes common, due to unused licenses or out-of-date spreadsheets.
A platform that gives you access to user provisioning features, tool usage statistics, and spend data will become essential if you want to avoid wasting money.
2. Features: Nice to have vs. essentials
Another key consideration is the features you need. Depending on your goals, this will vary.
For example, if you only need to know:
- What SaaS tools your team use
- Average cost per month
Then, you may be able to get by with a spreadsheet. It won’t be fancy, but it will tell you the information you need at a glance.
On the other hand, if you’re part of a fast growing company, or well-established organization with hundreds of employees, a spreadsheet won’t cut it.
You’ll need features like:
- Simple user provisioning and deprovisioning
- License management to track seat usage and avoid wasted spend
- Have a unified place for every invoice
Unless you hire two or three people to manage this, it won’t be possible to do it efficiently at a medium-large-sized company.
Once you outgrow spreadsheets, a platform like onetool becomes an essential part of managing your SaaS vendors.
3. Budget: How much could you save?
Budget is always a key part of the discussion around software adoption.
When considering your spend, you also need to factor in:
- The cost of unused licenses: The average company wastes 37% of its software budget on unused tools. Improved visibility can help you drastically reduce that wasted spend.
- The cost of a data breach: Could you be fined under regulations such as the GDPR? If so, the fines will exceed the cost of implementing a secure vendor management system.
- Cost to build in-house: You can spend tens of thousands building a robust internal vendor management platform. By using an existing platform like onetool, you can quickly and affordably start managing your SaaS stack without needing to create any in-house tools.
For most companies, the costs associated with onboarding your team and existing tools into a vendor management platform are worth it.
Once you have visibility into your team’s software usage, you can optimize your spending, quickly recovering and making back the costs associated with starting the new initiative.
4. Build vs. Buy: considerations and costs
If you have a large development team, you may want to consider building an internal tool to manage your SaaS vendors. In fact, 53.5% of mid-market companies manage their SaaS stack with an internal tool.
But, there are several questions to ask before you build a custom solution:
- Is this going to be the best use of your developer’s time
- Who will be responsible for updating it?
- What’s the opportunity cost of building?
- What will be the ongoing management costs?
Because vendor management platforms need to integrate with potentially hundreds of third-party SaaS solutions, building a platform that integrates seamlessly with them all can be hard — even for an experienced team.
As your company grows, you’ll be continually adding new SaaS vendors, onboarding new team members to various tools, and need to track usage more effectively. To ensure your in-house tools don’t miss anything, we’d recommend using a dedicated SaaS vendor management platform that includes all of the capabilities you need.
Naturally, there will be a cost associated with using a third-party tool to manage this. But, the key advantages are that your internal team won’t need to spend weeks, or months, creating a complex tool that doesn’t have any features an existing vendor doesn’t offer and the ongoing management costs will be drastically reduced.
5. Compliance: Rules and regulations that affect you
There is a myriad of regulations that companies need to abide by:
The list goes on. If your company is in breach of regulations that apply to you based on your location, or your customer’s location, it will cost you in fines, legal fees, and loss of trust from customers or potential customers.
Depending on your jurisdiction, you may or not need to follow these particular rules, but there will be others that relate to you.
An effective SaaS vendor management system will ensure you’re never in breach of these regulations and mitigate the risk of data breaches.
When employees leave, they can be securely offboarded and deprovisioned from all tools they had access to.
You’ll be able to see if employees ever start using unsanctioned tools, and take actions to ensure those tools don’t pose a security risk.
SaaS Vendor Management Made Easy with onetool
If you need a platform to manage your growing number of SaaS providers, onetool can help.
Our platform lets IT leaders easily set up, monitor usage, and disable tools for all of your employees.
You’ll have access to all of the information you need to improve security, onboard and offboard employees, and monitor your SaaS usage and spend.