Four tips for maximising the value you get from your Software-as-a-Service (SaaS) contracts

Best value from SaaS contracts

We have spoken with 30 Australian organisations to understand how they achieve best value from their relationships with vendors of Software-as-a-Service (SaaS) products. Over the past five years this has become the predominant way for buying software and even a wider range of ICT services.

Below are the top tips that our research participants shared in how they achieve best value from their SaaS relationships:

1. Be prepared before talking to vendors: Understand yourself
The most consistent advice provided by respondents for maximising value related to being prepared, prior to engaging with any suppliers or diving into the assessment of SaaS solutions. Respondents clearly placed a lot of value in establishing their own scope of requirements and needs before engaging the market directly. Their tips for preparedness consistently recommended:
• ensuring you have a clear view of your organisations needs and requirements
• gaining as much understanding as possible of available SaaS products and their off-the-shelf capabilities
• seeking to understand the alignment of target products with organisational strategy

2. Playing the long game: It is as much about vendor management as it is about procurement
A significant number of respondents took a longer view of the engagement process, additionally recommending the application of strategic vendor management techniques, including:
• maintaining an ongoing knowledge of the supplier industry and general product capabilities
• making use of internal technical expertise to ensure alignment of solutions with strategic goals
• synergise product selection with the longer-term direction of the business by maintaining an architecture roadmap.
In terms of active management, respondents recommended a range of other controls including:
• use of agile and continuous improvement cadence to ensure that the use and fit of a product continues to improve over time
• ongoing measurement and monitoring of license, seat or component numbers against actual requirement to ensure best value for money
• ongoing scanning of the external environment to see how other SaaS competitors and the market more broadly is changing, to ensure you retain the best SaaS for your needs

3. Negotiation and clearly documented expectations are key
Respondents were also quite clear on the need to negotiate with suppliers – even for SaaS products where suppliers try to lock down their terms and conditions – and ensure that key performative aspects of the SaaS product are clearly articulated in the resulting contract. Specifically, they recommended:
• clearly defined service level agreements
• locking in of known future demand and unit pricing, where possible
• formalising processes for usage reviews and cost optimisation activities

4. Short term contracts keep the focus – and avoid complacency
Some respondents further recommended the use of short-term contracts as a way of keeping suppliers focussed.
Once a SaaS contract was on foot, respondents emphasised that this isn’t a set-and-forget arrangement, and recommended undertaking active vendor management meetings and reviews to ensure the contract, services and SaaS products maintained their relevance.


For more information talk SaaS to us: