SaaS vendors are becoming increasingly popular in the business world. They offer affordable, flexible, and scalable solutions for businesses of all sizes. SaaS allows businesses to outsource software and IT infrastructure to third-party vendors, which helps companies save time, money, and resources they can allocate elsewhere. However, outsourcing comes with its own set of challenges. Managing SaaS vendors can be a complex task that requires a well-designed system and accurate processes. So, in this blog post, we'll discuss ten best practices for successful SaaS vendor management.

But first, let's review the basics of SaaS vendor management before diving into the 10 Best practices themselves.

What is SaaS vendor management, and why is it important?

SaaS vendor management is the process of managing relationships with third-party vendors who provide software and IT infrastructure to a business, usually on a subscription basis. It involves selecting the right vendors, negotiating favorable contract terms, monitoring vendor performance, building solid relationships, and conducting regular evaluations to ensure the vendor meets the business's needs.

Effective SaaS vendor management is essential for businesses that rely on a variety of third-party vendors for critical software and IT services. It ensures that companies get the best value for their money while minimizing risks associated with vendor dependency.

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SaaS vendor management process

The whole process typically involves the following steps:

• Vendor selection – where the company identifies and evaluates potential vendors based on required product features, pricing, reputation, and customer reviews.
• Contract negotiation – where the company's representatives negotiate favorable contract terms that clearly define the scope of services, performance metrics, pricing, and termination clauses.
• Vendor monitoring – where the responsible monitor vendor performance regularly to ensure they meet the agreed-upon service levels.
• Relationship building – where you build a strong relationship with the vendor to improve communication, performance, and long-term partnerships.
• Vendor evaluation – where you conduct regular assessments to evaluate the vendor's performance, identify areas for improvement, and ensure that they meet the business's needs.

The benefits of SaaS vendor management 

Effective SaaS vendor management can help businesses achieve the following benefits:

• Cost savings – SaaS vendors offer affordable, flexible, and scalable solutions that can save businesses time and money.
• Improved performance – Monitoring vendor performance regularly ensures that vendors meet agreed-upon service levels and deliver optimal performance.
• Reduced risks – Effective vendor management can help businesses mitigate risks associated with vendor dependency and ensure business continuity.
• Better decision-making – Regular evaluations and up-to-date records can help businesses make informed decisions about vendor relationships and optimize their IT infrastructure.

10 Best Practices for SaaS Vendor Management

1. Establish clear communication channels with your SaaS vendor

Communication is key when it comes to managing SaaS vendors. Establish clear communication channels with your vendor to ensure smooth communication. Identify who the point of contact is and establish regular check-ins with them. Ensure that all parties have access to the same information and documentation.

2. Define your SaaS vendor management process

This system should outline how you will manage all your vendors in the future. It should include the vendor selection process, the contracting process, evaluation criteria, and reporting requirements. A well-defined system will ensure that you are consistent in your approach to vendor management.

3. Choose the right SaaS vendors

Before making a choice, identify the features and functionality you need and evaluate potential vendors against your requirements. Remember also to consider the vendor's track record, customer reviews, and reputation in the industry. This will save you from troubles in the future when you find a deal-breaker among the vendor features and will have to search for a better match.

4.Negotiate favorable contract terms

It may sound obvious, but it's essential to protect your business interests when signing a long-term contract like this. You'll need to clearly define the scope of services, performance metrics, pricing, and termination clauses in the SaaS contract. A perfect case scenario will be to work with a legal team to ensure that the contract protects your interests.

5. Monitor SaaS Vendor Performance

Effective monitoring of Vendor SaaS performance is essential for ensuring that your vendor meets the service level expectations in the contract. By regularly monitoring vendor performance, you can identify any issues early on and take corrective action before they escalate. Here're a few key points to help you effectively monitor Vendor SaaS performance:

• Establish clear metrics and reporting requirements to track vendor performance.
• Use monitoring tools to track vendor uptime, response, and resolution times.
• Regularly review vendor performance data to identify any adverse trends or issues.
• Hold regular meetings with your vendor to review performance and address any concerns.
• Conduct periodic vendor assessments to ensure they adhere to industry best practices and meet your specific business requirements.
• Use performance data for contract renegotiations or vendor selection decisions.
• Establish consequences for failing to meet service level expectations, such as financial penalties or termination of the vendor relationship.
• Continuously evaluate and refine your performance monitoring practices to ensure that they are meeting your evolving business needs.

By implementing these best practices, you can effectively monitor your Vendor's SaaS performance and ensure that your vendor delivers the services within the requirements needed to operate your business.

6. Build a strong relationship with your SaaS vendor

Better relationships lead to better communication, improved performance, and long-term partnerships. You can build vendor relationships by attending vendor conferences, participating in vendor user groups, and providing feedback on the vendor's products and services. It will help you build a strong rapport with your vendor that will pay off in the long run.

‍7. Conduct regular vendor evaluations

Not leave it to chance – assess their performance, identify areas of improvement, and ensure that they meet your business needs regularly and in time. Use a standardized vendor evaluation process to ensure consistency in your approach to vendor management.

‍8. Develop a contingency plan

A contingency plan can help you mitigate any risks associated with vendor dependency. Identify alternative vendors and establish a plan for transitioning to a new vendor if necessary. It will help you minimize disruption to your business operations when changing vendors.

‍9. Maintain up-to-date records

Make sure to keep all essential vendor data fresh. For example, vendor contracts, performance metrics, and evaluations should be regularly reviewed and updated. It will help you track vendor performance, identify trends, and make informed decisions about your vendor relationships.

‍10. Continuously improve your SaaS vendor management system

Business needs change over time. So, if you've been working with a vendor for a while and aren't sure if it still matches your needs, you need to consult with a vendor management system. Regularly collect feedback from your team, vendors, and customers to identify areas of improvement. Implement changes as necessary to improve the efficiency and effectiveness of your vendor management system.

Top 5 SaaS Management Platforms

SaaS management platforms have become essential tools for organizations looking to streamline their SaaS vendor management processes. These platforms provide a centralized location for managing your SaaS applications and vendor relationships, helping you optimize spend, manage contracts, and ensure compliance. 

After thorough research, we came up with five of the top SaaS management platform vendors:

1. Zylo 

Zylo offers a comprehensive SaaS management platform for enterprises that provides visibility into your entire SaaS ecosystem. Their platform features robust analytics and reporting capabilities, as well as tools for contract management and optimization. Zylo focuses on spend management and shadow IT. 

2. Vendr 

Vendr (former name – Blissfully) offers a SaaS vendor management solution that helps small businesses to manage their SaaS applications and vendor relationships. Their platform features automation tools, contract management, and compliance monitoring. It also provides tools for employee onboarding/offboarding, SaaS security, compliance, and SaaS spend optimization.

3. BetterCloud 

BetterCloud offers a SaaS management platform that provides visibility and control over your SaaS applications. Their platform features automation tools, security, compliance monitoring, and IT support management. It also offers deep API connections that allow companies to monitor user behavior, system configurations, and data-related activity across various SaaS applications.

4. Intello 

Intello offers a SaaS management platform that helps organizations optimize spending and compliance, SaaS discovery, management, and optimization. It features robust analytics and reporting capabilities and tools starting with automation up to contract management.

5. Torii 

Torii offers a SaaS management platform that provides visibility and control over your entire SaaS ecosystem. Their platform features automation tools, contract management, and compliance monitoring. Torii also simplifies shadow IT management and transforms a company's cloud software stack into a user-friendly dashboard.

These are just a few of the SaaS management platforms that offer a range of features and capabilities to help organizations manage their SaaS applications and vendor relationships more effectively. 

Whether you are a small business looking for a simple, affordable solution or a large enterprise needing advanced analytics and automation, one of these SaaS management platforms can meet your needs. 

Best Practices for Small Businesses SaaS Vendor Management

We understand that managing multiple SaaS vendors can be overwhelming as a small business owner. But by implementing the best practices for SaaS vendor management mentioned below, you'll be able to optimize your SaaS spending, improve vendor relationships, and reduce the most possible risks. 

Here's our list of tips for small businesses to consider when selecting and utilizing SaaS management platform vendors:

• Evaluate the features and capabilities of different SaaS management platform vendors to find one that meets your business needs and budget.
• Consider the platform's integration capabilities with your existing SaaS applications and IT infrastructure.
• Assess the level of customer support and training the vendor offers to ensure you have the necessary resources to use the platform effectively.
• Develop a clear understanding of the vendor's pricing model and any additional costs for data analytics or compliance monitoring features.
• Monitor the vendor's performance regularly to ensure the platform meets your business needs and expectations.

Implementing these best practices for SaaS vendor management using a SaaS management platform can help small businesses SaaS spend and focus on growing their business. 

Final Words

Effective SaaS vendor management is critical for the success of any organization that uses SaaS applications. By implementing the best practices we mentioned above, you can:

• Establish clear goals and criteria for selecting and managing vendors
• Maintain effective communication with vendors
• Monitor vendor performance
• Utilize the best SaaS management platforms

With these best practices, businesses can streamline their SaaS operations, reduce costs, and focus on their core competencies. Companies can stay ahead of the curve by continuously evaluating and improving their SaaS vendor management processes and remaining competitive in their respective industries.

Feel like a custom SaaS vendors management platform would be the best solution for you? Contact Apptension for expert assistance or guidance to through the development process.