SaaS Renewal Management, Explained

Ben Pippenger: Imagine someone on your marketing team comes to you asking for your help on a renewal that happens in 30 days. You now nothing about this application and you have no idea for getting a good price or if even people at your company are using it or not. And there's really no time for negotiation with your supplier. The clock is ticking, so you do your best with what you have to get the renewal done, but you know there could've been a better outcome if you had some more time. This scenario is all too common for procurement teams. There's got to be a better way, doesn't there? Well, there is, and that's where SaaS renewal management becomes a critical business practice to proactively address your renewals.

Ben Pippenger: But what is it and how do you do it? We'll start off with a definition. SaaS renewal management is the process of renewing a software contract from strategy and preparation to negotiation and acceptance. The key here is to build a process around your renewals and operationalize it at scale for all of your applications, not just the short tail IT owned apps. To be effective, you must have visibility into contract, usage, and benchmarking data, all of which is gathered as you build out your SaaS inventory. I mean, it's easy to miss renewals, buy too many licenses, or forget to cancel an app without a centralized inventory. Because you have hundreds of renewals, this can feel overwhelming. Depending on your organization, renewal management can be done in- house, through negotiation services or with a combination of both.

Ben Pippenger: What is the ideal renewal process? Let's talk through the key milestones you should follow to proactively manage your renewals and make data- driven decisions. All right. At 120 days out before your renewal, make sure all key stakeholders, including procurement as well as business application and IT owners are receiving an initial alert about the upcoming renewal. This early warning begins the collaboration process with app owners and ensures everyone is taking the correct prepared action. Making sure you understand the strategy for this app in your business so you also know what you're up against. Make sure if you want to keep the application, maybe you want to expand it to more broad use across your organization. You may want to contract it or you may want to cancel altogether. Starting early gives you enough time to build that strategy and take the appropriate actions. Also, take advantage of this notification to review the contract, such as this auto- renewal terms and notification periods, to understand your options as well as your deadlines.

Ben Pippenger: One quick note, 120 days applies to most applications, but this first step may be further out than 120 days for core business applications like Salesforce and Microsoft, as they tend to be much more complex and take more time to prepare for. Next milestone to look at is 90 days before the renewal. This is a great time to review your utilization data and partner with your IT team to run a workflow to identify and reclaim any underutilized or unused licenses. By optimizing your software usage, you can prevent buying shelf- ware and potentially reduce your costs.

Ben Pippenger: Once you have a new baseline for usage, you can determine a more appropriate quantity of licenses and use that number to request a renewal order form from your vendor. Beyond the renewal, this is also a good time to look at consolidation and rationalization options. Consolidation is when you bring multiple contracts together into a single contract and enterprise agreement for that vendor. Rationalization is when you look at redundant functionality across your complete SaaS stack and consolidate onto a single vendor choice or maybe a couple vendor choices for that specific functionality. 60 days before your renewal, at this point, you know how many licenses you need and you have pricing.

Ben Pippenger: Next, you need get a benchmark comparison to understand whether it's a fair rate. This benchmark data becomes extremely helpful and great leverage as you negotiate with your vendor. If your pricing is above the benchmark, bring that to the negotiation table to help secure a lower cost. Now, if you're already getting a pretty good deal, it may not be worth haggling over price, but you could consider asking for add- ons, like a sandbox account, or maybe support credits. At the end of the day, the insights found during this step will enable you to secure the best possible deal, ensuring your agreement is fairly priced and right- sized to your organization's needs.

Ben Pippenger: The last step is to finalize your renewal. Once you finalize and sign the renewal, make sure the final agreement is added to your SaaS management platform or your system of record. Keeping the contract record up to date will ensure that the renewal process runs seamlessly when the next renewal rolls around. And last but not least, make sure you track your savings and communicate the outcome of the renewal. Take credit for the work that you've put in and continue showing the value of your program to the executive team by highlighting this win and the cumulative savings over time.

Ben Pippenger: All right, let's recap. You must have a process and strategy in place to manage the hundreds of renewals your organization has each year. Start with inventory management to centralize the key data you need to make informed decisions for your business. Then give your team time to execute by following key renewal milestones at 120 days, 90 days, and 60 days out from the renewal. Remember, SaaS renewal management is most effective when combined with inventory and license management. Be sure to check out the last two episodes for details on those two practices. That's all I have for today. Thank you for joining, and we will catch you next time.