Managing any type of vendor contracts requires careful attention to detail, and SaaS contracts are no exception. If you’re tasked with handling the upcoming renewal for a SaaS contract, it might seem natural to wait until the renewal window comes up to start the process.
Waiting until go time is like running a marathon with no previous training. Your body hasn’t built up the necessary endurance and reserves. The stakes are different here: a fumbled renewal could mean higher costs for your business or intermittent loss of access to the SaaS platform.
Giving yourself a head start on the renewal process is critical – but that’s not all. Here’s a handy checklist to help you successfully negotiate a SaaS renewal contract:
- Before you do anything, check (and double-check) the renewal window in the contract. This window is the amount of time you have to handle the contract renewal. Looking for the renewal window in the contract is a start, but to take it one step further, reach out to your SaaS account rep to confirm the window. The last thing you want is to be operating off an incorrect time period. If you need a refresher, review our recent post on the nuts and bolts of contracts.
- Scour the contract for an auto-renewal clause. Knowing the renewal window gives you one important input, but you might also have an auto-renewal clause. This clause states that if the client doesn’t notify the SaaS vendor by a certain date, the contract auto-renews for a set amount of time. The auto-renew clause can take effect during or at the end of the renewal window. It’s also a good idea to confirm the terms of the auto-renewal clause with the SaaS vendor.
- Give yourself 90 days to do some homework before the renewal window starts. If you have the luxury of time, use it. Gathering a wealth of data allows you to better understand your business’s relationship with the SaaS vendor, and how you can improve it during the renewal process. If you walk into a current renewal, so be it, but do yourself a favor and pad your calendar wherever possible.
- Contact departmental owners for context and history on the SaaS platform. The leaders and employees at your company can provide great insight in the renewal process. How did employees find the SaaS tool? Who negotiated the initial contract? How did the negotiation go? How has the SaaS tool performed since the launch? What do managers and employees wish they could change about it? This is just a handful of questions to ask to give yourself a broader picture – before renewal discussions begin.
- Evaluate SaaS usage against what you’re currently paying. Dig into the reports for the SaaS platform and look for usage patterns. Are 80% of your users only using about 20% of available functionality? Are there ways you could cut costs by dropping down to a lower usage level? Alternatively, are the majority of users frequently going over usage limits and costing you overage fees? Evaluating usage will give you another important data point that may provide leverage during the renewal.
- Understand changes to the SaaS tool since the contract started. This data might come from multiple sources, including employees who use the tool AND your SaaS account rep. Survey employees internally to find out what new features of the SaaS platform they use that weren’t available initially. If you come up short, check in with your SaaS account rep – not to start renewal discussions, but to ask for any enhancements they’ve built. You’ll have a better understanding of any additional value your employees might derive from the SaaS platform.
- Contact your SaaS account rep when you’ve filled in all the blanks. With all the information you’ve gathered, you’re ready to reach out and begin the renewal conversation. Even if you’re on a short timeframe, try to wait until you feel prepared. There will almost always be surprises you can’t anticipate. The best thing you can do is equip yourself with all available inputs to make the most informed decision.
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