Founder and CEO of Vendr, a SaaS buying platform. On a mission to fix SaaS sales by making it easier to buy.
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Having the right software is a massive competitive advantage to your business. However, in a time when there are more software as a service (SaaS) companies than ever, how we find, buy and manage software has become complex. Executives who nail this process will lead the way in operational efficiency, helping their companies reach their goals.
I’ve found that the average sales cycle for SaaS is more than 60 days. The exact time varies based on annual contract value (ACV)—with deals under $5,000 taking almost 40 days and deals over $100,0000 taking up to six months. The software you purchase significantly impacts your business, so it’s important to ensure purchasing decisions are handled correctly.
However, busy founders and CEOs have a lot on their plates, and getting sucked down the rabbit hole of software procurement is one more thing they don’t need—and likely don’t have the bandwidth—to worry about.
In my experience helping hundreds of companies buy software, I’ve identified the biggest time traps for executives and am ready to channel those learnings to help you find the software you need—and purchase it in a fair and fast way.
Time Trap #1: Scoping Out Your Needs
Understanding your company’s actual needs—the goal you’re trying to accomplish by purchasing software—is often the most time-consuming part of buying SaaS.
Assuming you have all the right people at the table, it may be a good idea to set up a grid to help key stakeholders determine specific needs for the new product.
On the vertical axis, consider listing categories such as functionality, ease of use, compatibility, implementation, costs, time and supplier support. Your team will likely come up with several additional groupings that are relevant to your company’s use case. Then, use the horizontal axis to create two columns: your “must haves” and your “nice to haves.” This approach can help you limit debate and establish a consensus to help develop your RFP.
Time Trap #2: Identifying And Vetting Suppliers
When shopping for a car, you probably have a solid idea of which manufacturers to look into and what each offers.
The SaaS space is more frenzied. SaaS has more than 25,000 different suppliers and at least 6,000 new ones have been funded since 2021. This proliferation of SaaS can make finding the right partners challenging, to say the least.
You can shop around at trade shows or conferences, solicit feedback from colleagues at other companies and spend hours online doing your due diligence. But even then, you may be missing out on suppliers who have the solution you need. After all, what’s worked for one company doesn’t always align with another.
How do you know that you’ve completed the best search possible? This is a great place to utilize third-party expertise. Hiring a third-party solution can help you tap into unbiased data and unlock which suppliers best fit your SaaS needs.
Time Trap #3: Scoping Out Your Staffing
The time you’re selecting a vendor is also a great time to scope your company’s in-house talent. It’s important to know if your employees have the skills and technical acumen to get the most out of the tech purchases you’re considering. This includes day-to-day software users and the IT staff who will implement and support the technology.
If you don’t have what you need in-house, think about how you will factor the resources and effort required to outsource or hire into your selection process. Oftentimes, suppliers can fill the talent gap and provide support. Identifying this early will save you a lot of time and headaches.
Time Trap #4: Negotiations And Contracts
Negotiating terms and contracts is one of the biggest hot buttons in the procurement process. Some people look to get it done as simply as possible while others see the negotiation as a game and relish the thought of a win. From an efficiency perspective, both of these approaches are wrong.
Avoiding tough conversations creates unnecessary knowledge gaps on both sides of the table. These gray areas are where negotiations either break down or get hung up, as both sides need to reconsider the implications of a decision that could have easily been agreed on earlier in the negotiation. When negotiations are done incorrectly, your team may end up waiting an average of three months before they get their hands on the software.
If you have chosen the right strategic partner, your common goal should be finding a fair and fast way to close the deal.
Time Trap #5: Auto-Renewals
Renewal time can be the least efficient element of the entire SaaS purchasing cycle. Freemium models and trials that auto-convert to subscriptions may seem efficient, but they’ve proven to create a significant drag in an otherwise streamlined SaaS procurement process.
A straightforward way to get a handle on auto-renewal is eliminating software spend on credit cards. This gets rid of shadow expenses and provides a regular reminder to evaluate what you’re paying for—and what you are getting in return.
Auto-renewals and long-range termination requirements are staples of many SaaS contracts and may not be something you can negotiate your way out of. That’s why knowing your renewal dates, rates and termination requirements is critical. Accomplishing this manually at an organization with multiple SaaS contracts is simply not a good use of your staff’s time. Automating the process with SaaS vendor management software can optimize the process.
Building Your Perfect Stack
The proliferation of SaaS has forced us to reenvision how we think about our IT stack, staff and tools. The companies that do this right will be the ones that win big.
It’s time to stop letting long sales cycles and tricky renewal processes slow you down. Instead, operationalize SaaS in a way that works for your company and not against it.
When you can find the right SaaS fast, buy it at a fair price and manage it effortlessly, you unlock opportunities for your business to do what it does best—focus on your product, innovation and growth.
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