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3 best practices to manage SaaS subscriptions

Seemingly simple tools -- such as spreadsheets and work calendars -- can go a long way in helping IT teams keep track of SaaS billing and contract renewals.

As SaaS applications proliferate in the enterprise, the traditional IT role continues to change. Subscription management and billing -- tasks that are typically within the purview of accounting and purchasing teams -- now demand IT involvement. Without that involvement, organizations might pay for additional cloud services or features they do not need.

This means, however, that IT professionals must develop purchasing and accounting knowledge. When organizations use a wide variety of SaaS applications, this knowledge is especially critical.

Challenges with SaaS subscription management

All SaaS support services and subscriptions have a start and end date. If you have multiple SaaS subscriptions, try to co-term them within the same timeframe to simplify billing and payment. Staggering payments leads to tracking challenges; any time you de-group resources, they require more time and effort to track.

Co-terming can be difficult, however, because some SaaS subscriptions are monthly, while others -- more rarely -- are annual. In addition, if an organization co-terms all of its SaaS applications, it could face one massive bill. It needs to have operational dollars to pay for it, not capital. Condensing the entire annual ops budget for one point in the year can be very daunting for companies because of how it looks on the books. This is why some opt to separate contracts into different quarters, rather than a larger co-term.

Best practices and tips

The following best practices can help an IT team effectively track and manage SaaS subscriptions.

1.      Keep a primary spreadsheet.

Many business and IT professionals keep pertinent information in their email. Email as a means of storage, however, has unique retention policies and questionable longevity, particularly if employees leave the company. This means it's a risky way to store information.

Instead, maintain SaaS subscription information in a comprehensive spreadsheet of data points, including:

  • the start and end date of contracts;
  • contract numbers;
  • contact information for the SaaS vendor's sales and support staff;
  • a roll-up of key issues;
  • renewal dates;
  • internal contacts for the SaaS app; and
  • other critical contract details.

The spreadsheet can also have an embedded, secure Word document with relevant passwords and other sensitive information. The key is to not depend on a single person or email account to contain all this information. It must be accessible to the team -- especially after someone leaves and the email accounts are wiped out. 

2.      Use a calendar.

Business and IT professionals rely on their calendars every day. So why not use them to more effectively manage SaaS subscriptions -- specifically, to track contract renewals and payments?

Careful examination of SaaS contract renewals takes time. Set aside that time in a shared calendar to ensure these renewals get the attention they need, and include any necessary team members on the reminder, as this is a group effort.

3.      Conduct annual contract reviews.

Conduct these annual reviews outside of contract renewal timelines or payment deadline. This is because they can take weeks or months to complete. Examine usage of the SaaS application, what you're getting and why. While IT teams will review some of these components before they pay their SaaS bill, these annual reviews are more of a deep dive. They shed light on the value an organization gets from the services it pays for.

Without these in-depth reviews, SaaS costs can climb quickly and unnecessarily within just a few years.

Subscription management tools

There are several products on the market to help with subscription management. Some popular ones include:

  • Chargebee. A subscription management system that handles SaaS subscriptions and recurring billing.
  • Chargify. A subscription and billing management platform specifically for B2B SaaS companies. It runs an events-based pricing system using real-time data.
  • Paddle. A revenue platform for SaaS companies which offers end-to-end subscription management.
  • Zylo. A SaaS management platform that includes subscription renewal management and contract payment tracking.

All of the products share an ideal single-vision dashboard ability for all parties to view the ops spending. However, having insight on all of the spending is great from budget planning, but it can't really save money unless the company isn't already tracking spending. While these tools are helpful, don't use them as a crutch for getting more cost savings -- they cannot make up for poor cloud planning or operations.

Next Steps

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