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Did you know that auto-renewals are one of the major causes of spend escalations in SMBs and enterprises using SaaS applications?
Yes, CloudEagle’s SaaS spend report showed that software spend is the third-highest in an organization, next to employee and office lease spend. Poor renewal tracking and auto-renewal of subscriptions are leading factors that can impact your financial performance.
Despite providing various benefits in terms of scalability and operational excellence, SaaS apps have their pain points, too. Keeping track of SaaS renewals is a significant obstacle for businesses; they are often overlooked.
Why?
But there is always a solution, and it’s a simple fix. Start using a SaaS management platform and follow these SaaS renewal best practices to stay on top of renewals and avoid losing money due to auto-renewals.
So let's get started.
What is a SaaS renewal process?
The SaaS renewal process involves a series of steps that lead to renewing a SaaS subscription. It involves extending the existing agreement for an additional period, cutting down on licenses, or canceling the subscription, and often includes renegotiating terms and conditions.
SaaS renewal allows the buyer to continue using the product or make necessary changes to the contract that align with their business needs. You can use contract renewals to right-size your licenses, revamp your SLAs, align your pricing with the latest benchmarks, etc.
SaaS contract renewal is essential, and what’s more important is to have a systematic plan to track it and effectively renew subscriptions on time. A proper SaaS renewal plan reduces the cost escalations of missed renewals and prevents the renewal of unnecessary apps.
Some vendors will revoke app access if you miss out on renewals, hindering your team's productivity. Timely renewals are about cost savings, preventing application downtimes, and ensuring smooth operational performance.
SaaS renewal strategy: How to prepare for a SaaS renewal?
1. The first step in your SaaS renewal strategy is to get rid of your spreadsheets. Here’s how Oyster HR did it using CloudEagle.
2. Secondly, the easiest way to stay ahead of renewals is to automate the process. Have a robust tool to track renewals and send automated renewal reminders via Slack.
3. The next step is to analyze how your team utilizes the applications. You cannot visit each app for usage data. This is where a SaaS management platform like CloudEagle can help you see how well each application is being used by your team.
4. Reclaim unused licenses and prepare a negotiation plan to right-size them.
5. Conduct a competitive and market analysis and prepare your BATNA and price benchmarks to ace your negotiations.
6. Head into negotiations confidently and renew or cancel subscriptions based on your needs.
Follow this SaaS renewal strategy with a clear emphasis on ownership, negotiation, and auto-renewals to control your SaaS renewal process. A proper SaaS renewal management practice reduces missed renewal costs and prevents redundant contract renewals.
Preparing for a SaaS renewal doesn’t require a manual 24/7 oversight; you just need the right tool to track renewals and keep you ahead. So, do not overlook adopting a SaaS management or SaaS renewal management software.
SaaS renewal best practices to stay ahead of renewals
Before diving into the best practices, it is essential for you to know this 3-step SaaS renewal playbook. By combining this with our best practices, you can streamline contract renewals today.
Renewing a SaaS subscription can be overwhelming if the size of your SaaS stack is vast. It requires careful planning, review, and tracking to ensure you get the best value out of your renewal. To help make this process easier, here are ten best practices to follow during SaaS renewals,
1. Plan ahead
Always plan, preferably 90 days in advance. Planning includes setting reminders and starting discussions with your team before the renewal date. To plan ahead, you’ll need software that can send renewal reminders.
This will give you plenty of time to review your usage and determine if you need to make any changes to your subscription. Planning ensures you are well-prepared for the SaaS renewal process and have enough time to make informed decisions.
Platforms like CloudEagle have renewal workflows. You can create a workflow to send automated reminders. Set an auto-trigger for this workflow, either 30, 60, or 90 days in advance.
The workflow will be triggered and you’ll receive notifications via Slack and email regarding the renewals. If someone doesn’t act on it, it’ll automatically escalate the process to the next stakeholder, ensuring that you renew the contract on time.
Renewal opt-out dates, auto-triggers, and stakeholder escalations are what differentiates CloudEagle’s renewal module from other SaaS management tools.
Check out this exciting customer story of Falkonry and how they streamlined renewals using CloudEagle:
2. Centralized contracts
Secondly, one of the SaaS renewal best practices you have to follow is organizing your contracts. Once a new contract is signed, where do you store it? Do you have centralized, secure storage? Or do you use spreadsheets to track your contracts?
Most businesses use spreadsheets to track SaaS contracts, which is an unsecured practice. Instead, use a contract management tool to centralize your SaaS contracts.
So that, during internal auditing or SaaS renewals, you can find and retrieve all the required contract data in one place.
3. Review your usage
Before renewing your SaaS agreement, reviewing your usage and determining if you are getting the most out of the service is essential.
This means identifying features or services you're not using and additional features or services that could be beneficial. By understanding your usage, you can make more informed decisions about your subscription and ensure you only pay for what you need.
Ways to review your app usage
There are two ways to do it,
1. Login to each application and check the usage manually.
2. Use a tool that provides real-time app usage insights, including impressions on the applications and details about their users.
Reviewing app usage manually is a time-consuming process. Instead, you can use SaaS management platforms to see who’s using the applications and how much they use them.
It’ll also provide optimization insights that can be leveraged during renewal negotiations. SaaS app management platforms like CloudEagle can integrate with your internal SSO, finance, and HRIS systems to provide a birds-eye view of your application portfolio.
300+ direct integrations enable the platform to analyze app usage, purchase licenses, spend, provisioned users, etc. You can leverage this data to prepare a solid negotiation plan for your contract renewal process.
4. SaaS contract negotiation with vendors
Once you clearly understand your usage and needs, you can head to negotiations and ensure you leverage all the data points you’ve collected.
There is always room for negotiation. Remember, renewal aims to align your contract with your business needs. The only way to do it is through negotiations, and here’s a smart playbook to help you ace your contract negotiations.
One of the SaaS renewal negotiation practices includes asking for discounts or special terms and creating custom packages that better meet your needs. If you’ve been a trustable, non-frustrating, long-term customer, the vendor will be open to discounted pricing.
By negotiating with vendors, you can ensure that you get the best value for your money and that your subscription is explicitly tailored to your business needs.
However, negotiations can be complex if you have a lean procurement team. A business uses 100+ SaaS applications on average, so negotiating through all the renewals can be cumbersome. This is where you need the help of assisted buying experts.
These on-demand negotiation experts will review your usage and requirements, re-negotiate with vendors on your behalf, and help you save on SaaS spending. They’ll do all the heavy lifting for you and get the best SaaS deals, while your team can focus on more strategic tasks or optimize more SaaS contracts.
Learn why outsourcing your SaaS negotiations can help improve your ROI.
5. Evaluate alternatives
Evaluating alternatives is essential, even if you are happy with your current SaaS provider. This means researching other providers and solutions that could better meet your needs.
By evaluating alternatives, you can ensure that you make informed decisions and take advantage of better options.
Consider the price benchmarking data from CloudEagle. Get the latest updates on the pricing plans of SaaS vendors worldwide, compare them with your existing stack, see what your competitors are paying for similar products, and leverage the data during renewal negotiations.
You can also use the BATNA analysis against your vendor, no SaaS provider would want to lose their customer to their competitors. You can persuade vendors to align their pricing with your needs by leveraging alternatives.
6. Create a streamlined renewal process
To ensure that your SaaS renewals are efficient and effective, it's essential to establish a straightforward process for renewing your agreements. This should include regular usage reviews, vendor negotiations, and a clear decision-making process.
By having a process in place, you can ensure that your renewals are handled consistently and that you are always using the best possible solution for your business.
You don’t have to spend too much time creating a SaaS renewal process. Just use the renewal workflows from SaaS management tools to stay on top of SaaS renewals. These workflows will ensure that you renew on time, as you can create a Slack channel specifically for workflows so your team can stay updated all the time.
7. Post-renewal practices
7.1. Continuously monitor and evaluate the service
Once your SaaS agreement has been renewed, it's essential to continue monitoring and evaluating the service. This means keeping track of usage, identifying areas for improvement, and working with your vendor to address any issues.
By reviewing and updating SaaS contracts, you can ensure that you are getting the most out of your subscription and that it is meeting your business needs. This will help you identify services that may be redundant or no longer needed and cancel them, saving you money.
7.2. Track ROI of SaaS applications
Keeping track of the ROI of your SaaS subscription is essential. It’ll help you ensure that the applications deliver a positive investment return. You’ll know which contracts should be renewed or canceled by tracking ROI.
This will help you understand the value of the service and make more informed decisions about renewals.
Businesses must utilize SMPs to track the usage, adoption, and ROI of their SaaS services. This will help your team make data-driven decisions and identify areas for optimization.
7.3. Communicate with your vendor
Keep open lines of communication with your vendor and discuss any concerns or issues you may have. Communicating with SaaS vendors can address any issues and ensure your service meets your business needs.
As you renew your SaaS agreements, you must ask your vendor about their future roadmap, features they plan to add, and plans to support the existing features. This will help you understand the vendor's vision and plan your usage accordingly.
Also, before renewing SaaS agreements, you must ensure your vendor is financially stable and can continue providing the service. This will ensure the continuity of the service and give you peace of mind that your business will not be affected by any unexpected disruptions.
By following these SaaS renewal best practices, businesses can ensure that they get the most out of their SaaS subscriptions and use the best solutions for their needs.
SaaS renewal challenges and how to overcome them
Managing SaaS subscriptions and renewals can be challenging for businesses of all sizes. Businesses often need help managing their SaaS investments. Read on to learn about overcoming SaaS renewal challenges.
Lack of visibility into usage and adoption
One of the biggest challenges businesses face when renewing SaaS agreements is a need for more visibility into how their team uses and adopts the service. This can make it difficult to determine if the service is providing value and if any changes or adjustments need to be made.
To overcome this challenge, businesses should establish regular reporting and usage tracking to understand how the service is used and identify improvement areas.
To get SaaS visibility, you can use tools like CloudEagle, which displays all your SaaS stack, including the usage and spending data, on a single dashboard.
Difficulty in negotiating with vendors
Another challenge businesses face when renewing SaaS agreements is negotiating with vendors. Many businesses struggle to get the best deal or terms for their subscription and may pay more than they need to.
To overcome this challenge, businesses should research and be prepared to negotiate with vendors. This includes clearly understanding their needs and usage and being willing to walk away if a vendor is unwilling to offer a fair deal.
If your procurement team doesn’t have enough bandwidth to negotiate with all the vendors, you can seek assistance from SaaS buying experts who can negotiate for you and secure the best deals.
Limited budget
Renewing SaaS agreements can be challenging for some businesses due to budget constraints. They may need more funds to renew a subscription at the current price point or be unable to add new features or services.
To overcome this challenge, businesses should review their usage and determine if they are getting the most out of the service and if there are any areas where they could cut back or adjust to reduce costs.
Have a clear understanding of your budget before renewing. Perform a thorough cost optimization check before proceeding with the renewals. Check if your teams are using apps with similar functions and remove them.
Difficulty finding a suitable alternative
When renewing SaaS agreements, finding a suitable alternative can be challenging. They may need to know other providers or solutions that could better meet their needs.
To overcome this challenge, businesses should use a vendor research tool to research and evaluate alternatives, even if they are happy with their current provider. This will give businesses a better idea of the market and help your team make more informed decisions.
Poor vendor monitoring
One of the challenges businesses face during renewals is poor vendor monitoring.
As part of the renewal plan, you must determine whether to renew the contract or shift to a different vendor. However, poor monitoring makes it hard for businesses to track the costs and value that vendors provide.
Moreover, vendors often change their plans and pricing policies annually without making any announcements. So, with poor monitoring, the renewal process gets more challenging, primarily if you deal with several vendors.
To address this challenge, businesses require efficient SaaS vendor management software. You can optimize your existing SaaS stack with vendor management software to boost productivity, decrease complexity, and reduce wasteful costs
Thus, taking these steps and following the strategies mentioned above can help overcome SaaS renewal challenges.
How does CloudEagle make SaaS renewal management possible?
CloudEagle is a SaaS management tool that helps businesses manage their subscriptions and automate the renewal process effectively. It offers a range of features and services to help enterprises optimize their SaaS investments and ensure they get the most value from their subscriptions.
One of the key features of CloudEagle is its contract management feature. This feature allows businesses to easily manage their SaaS contracts and keep track of important information such as contract expiration dates, renewal terms, and pricing.
The contract management feature of CloudEagle allows businesses to upload and store their SaaS contracts easily, making it easy to access and review the terms of their subscriptions during audits or renewals.
This can help businesses ensure that they comply with their contracts and identify any potential issues or areas for negotiation before the contract comes up for renewal.
Centralized dashboard
CloudEagle also offers a centralized dashboard that gives businesses a single view of their SaaS subscription.
This allows businesses to quickly and easily manage their subscriptions and view important information such as subscription costs, usage data, and renewal dates.
Besides this, it can help businesses identify patterns in usage and opportunities to optimize their subscriptions, such as by consolidating or renegotiating pricing.
CloudEagle's renewal workflows can make renewing SaaS contracts much easier and more efficient. The platform allows businesses to set up automatic reminders and notifications for contract renewals so they don't have to track the expiration dates manually.
This feature allows businesses to set up automatic reminders and notifications for subscription renewals 90 days before expiration. This ensures businesses have enough time to negotiate better terms with vendors, plan their SaaS investments more effectively, and avoid unexpected costs.
CloudEagle allows businesses to keep track of their SaaS spending and identify areas where they can reduce costs. Businesses can analyze their subscriptions and usage data, thus allowing them to determine which subscriptions provide the most value for their money and which ones should be canceled or consolidated.
In summary, CloudEagle's contract management feature and renewal workflows make managing SaaS contracts more straightforward and efficient, allowing businesses to focus on growing their business rather than managing subscriptions.
Listen to Sam Middleton, Head of IT at Bloom & Wild, as he shares valuable advice for aspiring IT leaders. He discusses challenges related to acquisitions and renegotiations, and offers insights on reducing SaaS costs through management platforms.
Conclusion
The SaaS industry is constantly evolving, and businesses must stay on top of the latest trends and best practices to ensure they get the most out of their subscriptions.
By following the SaaS renewal best practices and the SaaS renewal strategy ideas discussed in this blog post, businesses can ensure that they are getting reasonable renewal rates and the most value for their money, using the best possible solutions for their needs, and being prepared to face the challenges that may arise during the renewal process.
Additionally, businesses can save money, improve efficiency, and maintain a competitive edge by having a proactive, comprehensive, and well-coordinated approach to upcoming SaaS renewals.
Remember, SaaS renewals are not a one-time event but a continuous process requiring ongoing monitoring, evaluation, and adjustments to ensure the services align with the company's needs and objectives.
So, the ultimate practice is to use a platform to always stay on top of renewals.
Frequently asked questions
1. How Do I Manage My SaaS Renewal?
To manage your SaaS renewal, you can use a SaaS management tool like CloudEagle to automate the process and provide visibility into your subscriptions, usage data, and costs.
Additionally, you can set up automatic reminders and notifications for subscription renewals and use the tool's cost optimization feature to identify areas where you can reduce expenses.
Also, negotiating better terms with vendors and implementing a 90-day advance renewal can help you get more value from your SaaS subscription. Reviewing and optimizing your subscriptions to align with your business needs can also help ensure you get the most value from your SaaS investments.
2. How can businesses ensure they get the most value from their SaaS subscriptions before renewing?
Businesses can ensure they get the most value from their SaaS subscriptions by regularly reviewing and optimizing them to align with business needs. Businesses can also use SaaS management tools to track usage and monitor costs to identify areas where they can reduce expenses.
