Top 5 Best Practices to Manage SaaS Renewals

As organizations scale and experience rapid growth, the need to adjust SaaS spending accordingly also increases. Gartner reports that end-user spending on SaaS will reach $295.08 billion by 2025, making SaaS the most significant contributor to the cloud service market. 

Like any other subscription, SaaS renewals are critical for running streamlined operations and staying compliant. The inability to renew SaaS subscriptions on time translates into disrupted services and operational delays. What should you do as an IT decision-maker to ensure timely SaaS renewals? This blog explores some factors you should consider for efficient SaaS renewal management. 

What are SaaS renewals? 

SaaS renewals refer to repurchasing software after its initial payment cycle expires. Continued access to software means timely execution of critical projects and even routine tasks that define significant workflows. 

SaaS renewals are of two types: Automatic and Manual. Automatic renewals entail automatic subscription renewal when the time nears. Manual renewals require activation and approval on the user’s end before the subscription cycle expires. 

SaaS renewals often involve upgrading to a higher or lower package, depending on organizational needs. Over time, some organizations want to upgrade or downgrade their existing subscriptions to accommodate their evolving structure, and that’s where SaaS renewals play a crucial role. 

Challenges associated with SaaS renewals

IT managers often face challenges while managing SaaS renewals, including a lack of insights into contract expiry, approvals from upper management, and non-compliance issues. In certain instances, organizations must decide whether to process a renewal based on factors impacting the whole organization, such as a departmental budget or a change in company vision.

Here are some challenges IT managers face while managing SaaS renewals:

1. Missed renewal dates

If an organization does not use a dedicated platform to track its software, it will likely miss renewal dates. This usually happens when software procurement is not recorded or recorded manually, leading to the loss of critical renewal information. 

Several organizations use a mix of SaaS tools without a centralized register to record software purchases and lifecycles. Not updating this data regularly reduces visibility and hampers IT managers’ ability to renew software on time. 

2. Inaccurate software inventory

Organizations find it challenging to track software expiry if they do not use an IT asset repository. These repositories enable organizations to store essential software details, including software name, procurement date, cost, expiration date, and payment due date. This way, IT managers know what software is about to expire so they can take action on time. 

Sometimes, organizations use obsolete systems that do not allow automated creation and updating of recent data. This hinders overall organizational effectiveness, as there is no way to track where and how specific software is being used. 

3. Operational downtime

Operational downtime is a notable outcome of delayed or missed SaaS renewals. Several software companies restrict system access without any prior notice if the payments are not cleared after a specific time. This leads to data loss and a significant delay in operations that can impact everyday workflows. 

No or delayed payments can lead to permanent data loss and might require an additional fee to continue the subscription. IT managers rely heavily on specific software to manage IT assets and execute other tasks. If software isn’t available when needed, your IT manager may encounter significant challenges in implementing IT strategies effectively.

4. Automatic renewals

Insufficient planning can be a significant roadblock to your organizational efficiency! Proper SaaS renewal management is essential for financial planning and forecasting. Without close tracking of software renewals, organizations might continue paying for unneeded software, which adds up to the expenses. 

You might be charged for software you no longer want to use, and the refund process can be tricky! These unexpected charges can impact your budget and financial planning, disrupting the overall IT operations management. 

5. Complex licensing models

Some software providers have intricate licensing models that can be difficult for their customers to understand. These models complicate the purchase for a user, who may find themselves at a crossroads regarding whether to use specific features or not. 

Organizations can also misjudge the need for licensing, leading to over or under-licensing. They might purchase more licenses than needed or under-purchase, which can create compliance risks. These challenges, coupled with complex cancellation policies, can waste the IT manager’s time and effort in claiming refunds. 

SaaS management for supercharged IT operations

Having a SaaS renewal strategy is the backbone of hassle-free IT operations. By identifying unused software on time, organizations can cut down on costs and invest their funds into revenue-generating projects. Here’s how you can benefit from quality SaaS renewal management: 

1. Data-driven procurement 

A well-thought strategy involves data-driven analysis to better assess the need for software. Platforms supporting data extraction help IT managers make data-based decisions and justify spending on software renewals. Software license management is also simplified as organizations know what software is already licensed and available to use for longer. This way, IT managers can ensure that no extra software is purchased when the existing contracts are underway.

Rigorous software tracking helps optimize IT costs and ensures that only the needed software is purchased. 

2. Centralized software management 

IT asset management tools enable organizations to centralize software information into one consolidated platform for speedy tracking. These software repositories make it easy to store and access essential information quickly, such as a software tool’s procurement date and license expiration dates. 

IT managers can have this information at their fingertips so that when a renewal date is nearing, they can decide to continue the subscription. 

3. Compliance with licensing requirements

Effective SaaS renewal management ensures that organizations stay compliant with software licenses. For instance, missing a license renewal date can create compliance risks. Without SaaS renewal tracking, organizations might continue using unlicensed software, which could lead to financial penalties. These risks are mitigated when the SaaS renewal process is well-defined, helping make more informed and timely decisions.

Renewing SaaS applications helps organizations ensure secure access to the latest software version. This maximizes data security while ensuring that organizations follow software usage policies. 

Best practices for streamlined SaaS renewal management

When implemented with the help of IT asset management solutions, SaaS renewal management can yield notable results for organizations. SaaS renewal is an intricate practice that requires IT managers to stay vigilant and aware of the license expiry dates. To keep track of these critical dates and manage the renewals well, here are some practices every organization can adopt:

1. Set alerts and notifications

Most IT asset management solutions are equipped with automatic alerts and notifications. The system sends alerts every time a license nears its expiration date. To keep IT managers well informed, these alerts can be sent at intervals of 30, 60, and/or 90 days. Users can also customize the number of days and alerts they should receive for enhanced visibility. 

Regular alerts and notifications significantly reduce the chances of missed renewal dates. Alerts can be sent via email or integrated tools, such as Slack. If managers miss these alerts, they will receive reminders about license expiration so they can still take corrective action. Automated alerts enable organizations to save costs associated with missed renewals and prevent unexpected operational halts. 

2. Optimize the use of licenses 

With robust IT asset management solutions, managing software renewals can be a breeze. IT managers can centralize license information into one consolidated platform. This practice entails entering license information into the platform they use once the software is procured to avoid missing the record. Details, such as software name, provider, license number, cost, payment due date, etc., can be quickly recorded and tracked. 

This way, IT managers can have complete visibility into their software landscape and know whether the license is active and when the next payment is due. 

3. Track license usage

Tracking license usage is one of the most optimal ways to reduce the costs of unused licenses. Ensure that you have just the right software for your organizational needs. Review the need for each software before each renewal to ensure you are only purchasing what’s needed. 

An ITAM tool helps eliminate license duplication, identify opportunities to let go of particular software, and give you a holistic view of your licenses so you can renegotiate better terms with your vendor.

4. Streamline vendor management

Vendor management can be better streamlined with software information centralized in one place. IT managers can know the vendor associated with each software license, so the next time a renewal is due, they do not have to look for the vendor’s details to make the payment. 

You can also keep track of all contracts associated with a particular vendor so duplicate purchases can be avoided. For instance, by maintaining vendor history, your IT manager can pull out contract terms, the associated costs, and payment terms in minutes. Optimized vendor management helps streamline the SaaS renewal process and helps organizations make better decisions regarding purchasing from a particular vendor. 

5. Manage costs

One of the most innovative ways to manage your SaaS renewals is by keeping the costs in check. All you need to do is closely monitor the costs associated with each software and record them. This can be automated with an ITAM system that enables you to track the cost per seat, the frequency of payments, and the total cost of a SaaS purchase. 

This practice helps automate the payment process, as your IT manager simply needs to check the records to ensure that the renewal payment is made. Not only this, but you can check from time to time if a payment is due, along with the amount, to evaluate your next purchase.

Optimize SaaS renewals for cost-saving

Renewing SaaS tools is one of the most notable aspects of IT asset management. A data-driven SaaS renewal strategy can help your organization not only reduce costs but increase the ROI. SaaS tools can be expensive, so tracking their usage and costs regularly is the key to preventing overspending or under-utilization of the tool.

What better way could there be than an IT asset management platform that enables you to delve deeper into the nuances of each SaaS tool and use it to its full potential? Enhance your IT infrastructure by renewing your SaaS tools on time and making well-informed decisions driven by a thorough cost analysis and usage assessment.