By Sven Lackinger, Co-Founder, Sastrify

On their journey to disrupt industries and create innovative solutions, startups tend to have two key priorities: scaling fast and keeping costs low, all while staying return-on-investment (ROI) positive. Most early-stage startup teams are small, and many business leaders turn to technology vendors to substitute missing manpower and improve disparate team collaboration. 

As a result, it is estimated that over 99% of businesses use at least one SaaS tool, with the average tech stack being much larger. For context, the average Sastrify customer uses 96 SaaS tools. Whilst the concept of having automated functionality in your business sounds exciting and logical, all too often, CTOs simply don’t have the time to ensure their tech stack is running as efficiently as it should be and for the right price. We discovered that 78% of businesses overspent on SaaS in 2022 – often by up to 7 figures. For a startup trying to make sure every penny counts, this could be critical. 

Thankfully, there are a few tips that CTOs can implement to overcome these pain points to scale quickly. 

Streamlining tool usage

Seventy percent of CIOs claim agility and scalability are the top motivators for using SaaS tools. However, having too many applications can have the opposite effect. Too often, we find that startups suffer from tool functionality overlap, are running multiple licences for the same tools or pay for tech services that are not utilised to their full capacity. Without a clear view of how tools are being used and by whom though, it’s very difficult to ensure these problems don’t occur. By centralising decision-making data and visualising usage, businesses can achieve a streamlined and cost-effective tech stack without losing out on functionality.

Choosing the right tools

According to Statista, over 25,000 SaaS products exist. Choosing the right one for your business is not always a straightforward process. Before starting your SaaS implementation, it’s important to get clear on your company goals and align with the expectations across all departments. Think about what you are trying to achieve and which particular application or function can help you get there.

It’s also helpful to weigh different options. It’s often easier to save time by going with the first available or recommended option. However, you might be paying for a SaaS product that is less customisable than its competitor or has more functions than your business actually needs. Spending a bit more time to test and compare all tools available will help save money (and time) in the long run. SaaS procurement platforms can be really useful here – providing access to benchmarking data that enables quick and easy tool comparisons.

Negotiating the right deals

Our research found that SaaS negotiations can take up to five hours out of someone’s day. This, multiplied by the extensive number of SaaS tools an organisation might be running, can leave IT teams overwhelmed by multiple application options and product demos, as well as a lack of visibility into pricing models. 

Successful negotiations do take time, though, so keeping track of your SaaS contracts and renewal dates ahead of time (ideally up to 90 days ) will give you more room to negotiate the best deal for your company..

Planning can play a huge role here, too, especially if your company is growing. If you’re able to forecast the number of licences you’re going to need for the next contract term early on, then you’re in a much stronger position for negotiation with a vendor later down the line. There’s usually a significant discount for upfront payments on software subscriptions, so if you can forecast effectively, you’ll often get a better deal overall. 

Bear in mind that generally, SaaS vendors need you more than you need them. Therefore there is always room for negotiation. Many SaaS vendors can offer up to 20% discounts to win your business, which is significant. 

Finally, make sure not to fall into the trap of auto-renewals, as you might be missing out on better deals or overlooking a cost increase.

Finding trusted partners

It’s clear from what we’ve discussed so far that finding, negotiating and managing a business’ tech stack is a big job. With over 50% of IT teams spending too much time manually managing all of their tech applications, having a trusted procurement partner that can source, implement and manage the best tools at the right price for your business can be worth its weight in gold. 

As the global Supply Chain Management market looks to exceed $11 billion by 2023, tapping into this industry will help you stay several steps ahead of competitors that are still using spreadsheets to track and manage their SaaS tools. By centralising all your SaaS tools into one procurement platform, you will be able to consolidate vendors, streamline contracts, and create automated renewal alerts, budget reports and spend overviews which will improve the visibility of the services used and handle all the processes and implementations for you. It will dramatically cut the cost, time and stress involved in managing those tools and optimise business operations. 

Startups usually don’t have unlimited time to generate ROI, and spending that valuable time trying to discover, curate, and procure technology adds an unnecessary burden to the process. Having a trusted partner that can help you deliver on your needs and vision, save you money and ensure that you spend your time where you need it the most – hyper-scaling your business effectively – is a win-win.

About Author:

Sven Lackinger is Co-Founder at Sastrify, the digital procurement platform for Software-as-a-Service products. Founded in summer 2020, the firm already supports numerous well-known digital-first companies in buying and managing their SaaS solutions. Before Sastrify, Sven Lackinger founded evopark, the market leading provider for SaaS solutions for parking operators.