Being cost-conscious is normal for any CFO. For startups, one of the best ways to get great ROI and limit costs is to purchase SaaS subscriptions wisely. Unfortunately, it’s easy to fall into common SaaS buying mistakes. We cover them here, giving you actionable advice on how to avoid them. Keep reading to find out 8 things CFOs should avoid when buying SaaS subscriptions in 2022.
Monthly or annual plan? Perhaps a multi-year term? There are pros and cons to each contract term. Choose wisely to avoid being locked into a lengthy SaaS subscription.
Before you decide, understand exactly how the SaaS tool helps your business, how vital it is to your functions, and how long you need it. Ashley Law-Smith, Finance Director at Bizpay, advises to conduct a free trial and walkthrough before committing to the SaaS purchase:
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Assess how suitable the SaaS tool is before committing to a longer-term contract. This way, if you are not satisfied with the SaaS performance, you can cancel the tool without incurring any major financial losses.
As you scale your company, invest in SaaS tools that can accommodate your growth. This means spending more time upfront to understand different SaaS solutions to choose the most suitable tool.
While the process is time-consuming, an upfront investment pays off over time. By getting it right on the first go, you ensure scalability and avoid multiple implementation processes. Don’t forget, the cost of SaaS doesn’t stop with the subscription price. It also includes time, effort, and resources to train staff, and implement the software.
Avoid buying SaaS based solely on the price as it's easy to end up with a tool that doesn't fit your needs. When you're choosing which software to invest in, factor in long-term ROI, not just short-term savings. This may mean choosing a SaaS subscription with a higher monthly cost, to get one with better performance that yields a greater return.
When you work in fast-growing companies, it can be hard to manage SaaS purchases. Teams get bigger and SaaS tools expand to meet each team’s needs. When SaaS tools aren’t managed under one umbrella, you could end up with overlapping and duplicate tools. This is one example of excess spending that can have a big impact on your budget and bottom line.
To avoid this, incorporate a formal SaaS buying process. Consider investing in a SaaS management tool like Hudled. Each team can view the software stack of their department and team. This ensures visibility, eliminates redundant SaaS tool, and avoids siloed purchases.
Ensure your potential SaaS purchase has adequate cybersecurity measures. Ashley Law-Smith, Finance Director at Bizpay advises:
When choosing a SaaS service, run various options by your employees to get their input. Make sure they are involved in the process, prioritising their thoughts. Ultimately, your employees will be the ones using the SaaS tool, so their input is crucial. By prioritising their say, you ensure you’re investing in the right purchase. In turn, this translates into more efficiency and productivity as the team will have chosen the best SaaS for their needs. You’ll also eliminate redundant SaaS tools.
When you’re considering a SaaS purchase, consider how you’ll measure the return on your investment. Come up with an ROI metric that you need from the product, and then set data collection processes in place to monitor performance. This will help you make sound financial decisions in the future, such as whether to renew your SaaS or try another tool.
Did you know that you can negotiate your SaaS contracts? SaaS contracts refers to the subscription plan and contract term you purchase. By contacting the sales team of a particular SaaS tool, you can discuss the terms of your SaaS contract and pay a lower price. Consider engaging SaaS buying experts such as Hudled who can negotiate your contracts for you.
Even the most experienced buyers fall into these SaaS buying mistakes from time to time. By learning the top eight mistakes CFOs make when buying SaaS subscriptions, you can build a smoother and more efficient purchasing process. The next time you purchase SaaS tools, you'll know all the mistakes to avoid. Best of Luck!