Why it pays for startups to introduce vendor management capability
As startups wage battles against well-funded peers or industry juggernauts, little thought is given to SaaS stack optimization or utilization audits.
But leaders realize that while product, customer acquisition and hiring are critical focus areas, they can’t compete without cash. And because of the sneaky expensiveness of growing SaaS subscriptions, the savviest waste no time in employing basic vendor management.
While the term may elicit eye-rolls from the entrepreneurial crowd, vendor management is not a corporate evil. Nor is it a defensive, growth-stifling initiative introduced by IT or a tight-fisted procurement rep.
Consciously managing SaaS vendors can’t wait until your company’s size warrants a more maturing IT, procurement or finance team. For a mid-sized startup it is possible that hundreds of thousands of dollars are at stake.Vendor management is about laying rails to maximize license utilization, ensure return-on-investment and grow insight into subscription behaviors to save cash.
And, as we know, cash is king.
Did you know that the average 200 person startup will have nearly 130 SaaS subscriptions deployed at any given time?
SaaS spend is growing. This same startup may spend over $2 million on subscriptions in 2017, which is 25% more than previous year. As startups’ appetites for plug and play services increase, the level of software use case specificity also increases.
What does this mean: there is literally a deployable subscription software for every activity.
General affordability, decentralized budget management and corporate card permissions – even at the staff level – drives rapid SaaS acquisition. This doesn’t take into account the increasingly sophisticated sales and marketing efforts from vendors.
While startups pride themselves on being lean, fast and agile, many are burning cash at a surprising level. The problem is simply out-of-sight.
Industry research firm Gartner categorizes the business, operational and financial impacts of better vendor management. Companies are wise to consider a proactive steps to achieve these benefits within the context of their own business.
While vendor management solutions vary in their complexity, effective vendor management does not have to be burdensome.
Fundamentally, vendor management requires:
- A singular, organized, view-of-record that displays current vendors and contracted rates
- A mechanism for continual monitoring of usage and ownership
- A means for license owner accountability
Once it is clear what you own in your SaaS stack, from whom, for how much and if it’s being used, then management next steps are simple.
Finance leadership is able to improve negotiation leverage, obtain cost concessions, mitigate risks related to dependence on certain vendors and drive employee accountability.
And the tactics are not all defensive!
There are likely pockets of teams or individuals deriving massive benefit from a particular software. Management insights can identify these and reallocate investment to the tools that are driving growth.
Of course, as vendor counts rise and license deployments span organizations, complexity in visibility arises. Vendor management becomes less about strategic allocation of dollars and more about not missing payment due dates. E-mail threads and spreadsheets are filled with incoherence. Dues dates, contractual nuances, and license ownerships are muddled and indiscernible.
This is the problem Cleanshelf was started to solve.
Cleanshelf is a literal, plug-and-play system of record for your cloud apps.
Our solution to track, optimize, and benchmark cloud software subscriptions means that the financial and usage benefits Gartner outlined become immediately achievable – without additional headcount, IT and business misalignment or time consuming contract document uploads.
You’re a startup. Cash matters and SaaS is the lifeblood of your operation. Make Cleanshelf an integral part of your SaaS stack and make your investments matter.
Ready to experience SaaS spend efficiency?