It’s common these days for businesses to face challenges with renewals and the need for a dedicated team to manage numerous SaaS subscriptions. In fact, businesses used an average of 110 SaaS tools in 2021 – a 38% increase from 2020.
Procurement teams and the budget management team need to be on board with renewal management, especially with the rising number of software license renewals.
With so many upcoming renewals and technology investments, companies risk losing visibility into their active contracts and software licenses. Especially for larger organizations, the renewal cycle may become complex.
Many renewals, such as subscription renewals, are automated, challenging teams if the proper renewal management process is not in place. Additionally, contract renewals with software vendors can be tricky. Monthly pay-as-you-go models offer flexibility, but enterprise software contracts might entail strict subscription terms.
To ensure that your customer success team and other teams are managing SaaS contracts efficiently, we’ve highlighted the main pain points and provided solutions.
Here are some best practices for managing your software renewals and ensuring a frictionless renewal process:
What is software renewal management?
Software renewal management involves the tracking, management, and renewals of software licenses and subscriptions within an organization.
The process encompasses monitoring renewal deadlines, evaluating software performance, negotiating with vendors, and ensuring compliance. It's an ongoing cycle that starts from acquisition to renewal.
Best practices for managing your software renewals
1. Define ownership for each SaaS subscription
Problem:
With so many SaaS resources, it’s common for companies to lack clear documentation on SaaS ownership.
SaaS renewal best practice:
Assign SaaS ownership from the very beginning is your solution. Consider the business unit and the expense records to make this decision. If the owner leaves the organization, their SaaS account must be reassigned.
2. Check renewal terms in software contracts
Problem:
Software vendors have various language in their terms of service and requirements, as well as their SLA.
SaaS renewal best practice:
Regularly review SaaS renewal contracts, terms of service, and SLAs. Make sure to pass to your legal team for review so that there are no surprises when renewal dates arrive.
3. Build a long-term calendar for SaaS renewals
Problem:
Many SaaS tools auto-renew, and even those that don’t will have contract end dates for customers.
SaaS renewal best practice:
Keep all this information in an automated SaaS renewal process calendar that notifies you or the respective SaaS owner well in advance. That way your team has plenty of time for negotiations with SaaS companies (or to decide if you even need the subscription anymore).
4. Watch out for auto-renewals
Problem:
The SaaS tools that auto-renew can slip by under the radar, making it difficult to renegotiate terms or cancel in time a subscription.
SaaS renewal best practice:
Use the automated SaaS renewal process calendar to notify you when SaaS renewals approach with plenty of buffer time. Many of the applications require you to reach out to the vendor 60 or 90 days in advance of the SaaS renewal process if you want to cancel. So, keeping the date in mind is key – otherwise, you could end up in a new contract for a tool you don’t even need.
5. Know state laws for SaaS renewals
Problem:
Evergreen contracts are ones that automatically renew after the expiration of the initial term. During the initial agreement process, the parties agree that the contract automatically rolls over until formal termination.
SaaS renewal best practice:
A SaaS renewal best practice to understand your state laws regarding evergreen SaaS contracts and other clauses in your agreements. California, Colorado, Delaware, Illinois, New York, North Dakota, Vermont, and Washington DC all have recent changes to laws specifically for automatic renewals. For example, businesses selling licenses in California are required by law to notify customers 15 days prior to their renewal date with an option to cancel. Understanding various state laws is beneficial when dealing with enterprise software licenses.
6. Store contract details in one place for easier management
Problem:
Many businesses fail to create a well-rounded place or process for all SaaS contracts to be stored, making it a challenge to identify details when needed about any subscription.
SaaS renewal best practice:
Store all contracts in one shared drive, and pull out basic details for easy access if you can. For example, add the following to a dashboard:
- Category
- Start date
- End date/ length of SaaS renewals process term
- Volume/ number of seats
- Contract value
- Owner
- Vendor contact information
- SaaS renewal process details
7. Ensure visibility of all SaaS data
Problem:
Companies lack visibility into their total SaaS spend process, and how those expenses break up across tools.
SaaS renewal best practice:
Regularly track all expense transactions to identify any SaaS and/or cloud-related spending. Ideally, this would be compiled in one place for the whole organization.
8. Talk to your SaaS supplier about options
Problem:
SaaS companies regularly update their platforms, pricing, and features. At times, customers will be unaware of these recent changes and updates to the SaaS software service.
SaaS renewal best practice:
SaaS loyalty is the practice of remaining a long-term customer to a specific platform. This can be while working for a single company, or as you transition to different ones throughout your career. Speaking to your customer service representative and forging a relationship with them is beneficial to understand all of the feature upgrades that you can include in upcoming SaaS renewals for you to drive more value from your contract.
9. Track usage of each SaaS tool and renewal process
Problem:
Business needs change, and not every SaaS subscription will be needed forever. Oftentimes an application will have little to no usage but may continue to get renewed because the owner or procurement team doesn’t realize the process is no longer needed.
SaaS renewal best practice:
To help eliminate any software that is underutilized, take a look at historic and current usage trends or data across each application. This solution can help you decide if tool resources can be downgraded (e.g., fewer seats, lower tier, etc.) or canceled altogether.
10. Create a SaaS renewal strategy
Problem:
Companies lack defined SaaS renewal management processes and an overall strategy, leading to unnecessary spending, confusion, and inefficiency.
SaaS renewal best practice:
To get your SaaS renewal process under control, create a strategy with clear guidelines for ownership, negotiation, auto-renewals, and more. Ensure this data is a written document that is easily accessible to any employee that will need it.
11. Avoid spreadsheets and receive support
Problem:
Many companies’ first instinct is to track SaaS data and tackle renewal process management by using spreadsheets, but this is inefficient and ineffective.
SaaS renewal best practice:
Avoid spreadsheets for SaaS data and renewals. Instead, use an automated platform like Sastrify to put your SaaS tools on autopilot. Our team will give you a quick onboarding for your tool landscape to our all-in-one, spreadsheet-free platform. You’ll get access to a streamlined overview of your usage, spend, security risks, and other insights. Expect key solutions for all your SaaS problems.
Why is SaaS renewal management important?
1. Sharper budgeting
The trajectory of SaaS costs is upward, and in such a scenario, accurate budgeting for IT spend becomes a tightrope walk. However, with software renewal management, you have a clear lens on when each contract renews, and when the bills will roll in.
It's about staying ahead of the curve, anticipating the recurring costs, and ensuring revenue streams are robust enough to cover them. Additionally, the lurking price uplifts at renewals, averaging 9% annually as per data, can be a budget buster especially when you're juggling over 100 software tools. Being forearmed with renewal management can help brace against these price hikes.
2. Better contract terms
Renewal time is a golden window to renegotiate contract terms to resonate with your evolving company needs. Managing your software schedule meticulously ensures you never miss these windows of opportunity before the renewal period kicks in.
Regular reviews and tweaks to your contract terms can morph into significant value over time—be it dodging exorbitant overage fees or snagging discounts for longer subscription terms.
3. Eliminate underutilized tools
Renewal management also doubles as a scalpel to trim away the flab of underutilized, redundant, or duplicate tools in your software portfolio.
Having a clear sight of contract end dates aids in planning for termination or transition to alternative products without a hiccup in workflow or productivity.
Manage your software renewals with Sastrify
Sastrify is the all-in-one SaaS procurement solution for growing teams and enterprises. Whether you're looking for pricing benchmarks, visibility into your company-wide subscriptions, or need help on an upcoming contract renewal — Sastrify is flexible and can help you save on SaaS and cloud costs.
Some of Sastrify's most valuable features include:
- Centralized contracts and communications mean relevant stakeholders can get up to date and start or join the conversation immediately.
- Workflow automations ensure a standardized process for buying and renewing software is following by the entire company.
- Renewal notifications keep you ahead of important contract renewal dates.
- Pricing benchmarks from Sastrify's database of over $1.8 billion in managed SaaS spend helps you compare your costs to competitors.
- Negotiation support from Sastrify's expert buyers ensures you get the best SaaS deals.
Sastrify offers competitive pricing with a range of products and plans to fit different procurement needs.
Adopting a robust renewal management program is imperative for subscription-based businesses. It not only impacts the budget but also the relationships with vendors, and ultimately, the organization’s ability to meet its primary goals.
Through the steps outlined above and by leveraging industry-leading renewal management tools, businesses can achieve a frictionless renewal process, ensuring a smooth transition from acquisition to renewal.
Learn more about managing your software renewals with Sastrify.
Check out our renewal management guides for all the most popular tools
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