Over the last decade, SaaS has changed the business landscape. However, the benefits come at a cost, and if not assessed and negotiated well, may hurt an Enterprise’s already tight budget.
Negotiation, one of the hardest parts when conducting business, plays a major role in its growth. However, in the world of technology, where innovation is happening at a rapid pace, it is difficult to find parameters to successfully negotiate SaaS based collaborations.
Also, since this is merely a contract of software usage as per business need, the vendor clearly has an upper hand in the negotiation.
Most organizations fail to negotiate proper renewal deals for themselves not because of their executives’ negotiation skills but also because the organization didn’t have a proper software adoption and leverage roadmap in place.
SaaS providers are experts in negotiation, as they start to lay out plans for each of their customers a year in advance. They gather customer-specific information, constantly improve their negotiation strategy and identify their goals including their expansion. Armed with meticulous planning and insights, SaaS providers have the upper hand, to come to deal in their favor.
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Therefore, it is necessary for organizations to have a closer look at their exact requirements from various functionalities on the SaaS platforms. The features they used on a frequent basis, and the features they can eliminate to enhance their operations and at the same time, reduce the renewal costs to their benefit.
Here are 3 Steps Enterprises’ can take to successfully negotiate SaaS Renewal:
Starting Early
Creating a favorable renewal deal prior to the expiration is necessary otherwise, CIOs may be forced to sign a deal which is not in their favor. To have all facts clear, organizations should start their negotiations process at an early stage, so they have the time to compare, choose and identify the best RoI from their options.
Additionally, CIOs should also consider their organization’s procedure as well as hurdles while negotiating, and definitely the dependability of the SaaS solution. It will help to effectively utilize the process.
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Identifying the Features and Requirements
One of the best ways to leverage negotiation to advantage is by identifying certain features and loopholes within the SaaS platform. Enterprises’ functional teams and negotiation teams can work together to then find out the pain points while using the platform and how it hampers the organization’s overall success.
Apart from the price cut and commercial terms, organizations should take a comprehensive approach that can enhance their business operation and increase their ROI. Also prioritizing certain aspects can go a long way when deciding the terms of renewal negotiations.
Perceiving the Vendor’s Approach
Vendors are always seeking to not only increase the price of their solutions but also adding new solutions that can back their claim of a hike in renewal price. Apart from these, they also have strategic goals in place if you have a presence at different geographical locations. This helps them to expand their footprint and negotiate deals to their benefit.
Vendors have a list of reasons to present the CIOs that they use to easily throw the executives and may make to agree to terms that can hamper the deal. Hence, preparing in advance for all these reasons and staying prepared to understand the SaaS providers’ different approaches, can help CIOs to devise better negotiation strategies.
Preparation is essential for everything in today’s competitive world and for negotiation, it is even more necessary. It is not about that only an organization can benefit, but also provide the SaaS vendors about their plus and minus points regarding their platforms and approaches.
