How to achieve the best outcome from your SaaS contract renewal and negotiations

At Livingstone Group, we provide our customers with visibility of their entire SaaS estate and offer continuous advice on how to optimize their cloud spend. Our global team of Cloud Investment Managers assist clients on exploring the options available and prioritizing the actions that will make the biggest impact or saving for their organization.

In this blog we discuss how to get the best outcome from your SaaS contract renewal and negotiations, including the main four areas to keep an eye on.

Understand your estate and know your goals

SaaS contracts and estates come in all different shapes and sizes. An organization can have multiple contracts, containing a variety of products bought at different times with varying lengths and costs. Alternatively, a business might have just made the move to cloud and have only one current SaaS product contract. Businesses also have to keep in mind that their product usage and requirements will change over time, in addition to keeping track of multiple renewal dates and varying terms and conditions. All these factors combined create a complex licensing estate.

When it comes time for a contract renewal, the complexity of SaaS estates can be overwhelming. Organizations struggle to see the wood from the trees, particularly if their IT Asset Management (ITAM) is poorly organized and don’t always come away from negotiations with the best outcome. However, with proper preparation, a good understanding of your current SaaS estate and clear goals in mind, it is possible to come out on top. Below are the main four areas to consider in order to achieve the best outcome during contract renewals:

1. Know your current contracts, metrics and entitlements

Initially, make sure you know what products and licenses you have licensed. What is your current entitlement? With so many metrics, price points, varying terms, restrictions and product mixes across multi-year contracts, it’s easy to lose sight of entitlements and what you’re using where. Understanding the current state of your contracts is a simple but essential start to the SaaS renewal process.

 2. Understand your utilization of existing licenses

Before you decide what product licenses you’d like to negotiate, it’s an invaluable practice to understand your current software usage across the business. This will help you to determine exactly how many licenses you’ll need going forward. Also keep in mind the products that haven’t been fully utilized especially in a multi-year contract, it’s not uncommon for certain licences to be under-deployed or not deployed at all as the business has evolved. If this is the case, make sure these licenses aren’t included in your new contract, as you don’t want to pay for software that you aren’t using.

 3. Have a clear idea of your future business needs

Having assessed your previous usage, it’s important to next look into the future, and map out your business requirements. Will you need to increase or decrease your number of licenses for certain products, or in certain business departments? Has your organization moved to permanent remote working and will you need a higher percentage of SaaS products as a result?

This understanding can often get lost over the contract term, so always keep in mind what you want to achieve. Before renewing an agreement, it is necessary to enter negotiations with a clear idea about your business needs moving forward, to make sure that the new contract fulfils this and delivers value.

4. Ensure you are dealing with the right people

Throughout the negotiation process, you must make sure that you are speaking to the correct people from the vendor’s side in order to achieve the best terms in a contract renewal. Are the people you’re speaking with authorised to give you the discounts and packages you need? Or are they only being incentivized to sell you a simple renewal and are not able to renegotiate to your required level? Also think about making the most of peer-to-peer relationships as this can help facilitate more streamlined discussions, and creating strong and effective relationships with the SaaS supplier will only help to achieve the best outcome for your business.

And last but not least – Get expert help

We know entering into SaaS negotiations can seem like a daunting process, with many key aspects to consider and a big ask if you don’t have a dedicated in-house ITAM team. At Livingstone, our team of industry experts has negotiated some of the largest and most complex cloud and software vendor contracts globally. They have many years’ experience of working with and for cloud vendors, working to proven methodology to deliver significant client outcomes for their cloud and software estates.

If you’d like to learn more, visit our dedicated cloud optimization management page, or listen to our webinar, Get the best outcome for your SaaS contract renewal – Salesforce.com Case Study

Alternatively, please contact our team of experts at https://www.livingstone-tech.com/contact-livingstone/ or contact us at info@livingstone-tech.com.

 

ABOUT THE AUTHOR

Karen McAllister

Karen McAllister is Livingstone Group’s Saas Practice Lead. She has over 30 years’ experience in the software sales industry having worked at Oracle, Siebel, SAP & for the last 5 years at Salesforce.com.  Karen has experience of contracting & negotiating with a wide range of local & global clients both in on-premise & SaaS contracts.