SaaS Procurement Guide: Platforms, Processes and Best Practices

What is the SaaS procurement process?

The SaaS procurement process, distinct from traditional procurement, has four key stages:

1. Planning & Partnering

The process begins with the generation of strategic ideas to enable business goals. This involves planning for procure-to-pay subscription activities.

A critical step at this stage of the SaaS procurement process is to identify the specific business needs that the SaaS solution will fulfil, and an extensive understanding of your organization's current processes, gaps in functionality, and business requirements is vital.

2. Source to Contract

At this stage, you will be defining business requirements, engaging the market using methods like RFP, RFQ, RFI, etc., and selecting potential SaaS vendors. Commercial negotiations and contracting also fall under this stage.

It involves exploring many SaaS solutions and analyzing their features, costs, customer service, and other significant factors. The goal here is to find the best solution that fits your organization's needs and purposes.

3. SRM & Contract Management

The next stage involves managing contracts, administering and executing contracts, and managing SaaS vendor relationships. Once you've selected a suitable SaaS solution and vendor, the next step is to ensure that the SaaS tool is implemented properly and the vendor relationship is maintained effectively.

In the long run, this stage is essential for maintaining strong vendor relationships and ensuring the optimal performance of your SaaS solutions.

4. Requisition to Pay

This final stage involves completing subscription purchase requisitions/orders and invoicing. After the contract has been negotiated and agreed upon, you can proceed with the implementation of the SaaS solution.

This part of the SaaS procurement process includes setting up user accounts, securely transferring data, and training staff on the proper use of the new system.

Beyond these core stages, the SaaS procurement process should also include diligent management of the service. Regular monitoring of data backups, user activity, and system performance can help maintain control over your IT infrastructure and preempt potential issues.

What is e-procurement?

E-procurement, becoming increasingly prevalent in the current technology landscape, is a business-to-business (B2B) process where companies buy and sell goods and services via the internet.

This procurement method encompasses SaaS procurement and other types of e-procurement and is particularly relevant to businesses striving for a more efficient procurement process and better inventory management. 

What’s the difference between procurement and purchasing?

It’s common for the terms “procurement” and “purchasing” to be used interchangeably, but they’re not synonymous. For starters, let’s cover some quick definitions:

• Procurement: “the process by which an organization buys the products or services it needs from other organizations.” This refers to a company’s multistep, strategic process to acquire goods and services before creating a purchase order.

• Purchasing: “the activity of buying supplies for a company.” Purchasing covers the actual buying process activities such as ordering, expediting, and paying suppliers. There may be some research involved before choosing a product or service, but a formal process doesn’t exist.

The difference between procurement vs. purchasing comes down to this: Procurement covers the full, end-to-end process – pre, during, and post – of procuring goods and services. Purchasing refers only to the activity of actually buying goods and services.

Procurement is the pre, during, and post-process of goods and services. Purchasing is the activity of buying goods and services. Procurement is a big umbrella term and purchasing is just one aspect of its wider function and broader process.

In many ways, procurement and purchasing need each other for a well-rounded organization and strategy.

Often, in early stages of a company's growth, many people do SaaS procurement – for example, the marketing department buying a CRM. As the company team grows, it's important to centralize procurement for subscriptions to ensure efficiencies and optimal pricing.