ICYMI: Insights from our Webinar ‘SaaS Buying: 3 Strategies for Winning, Data-driven Negotiations’

By design, negotiations are stressful. As Tropic’s Head of Procurement & Strategy Michael Shields says, “It requires strategy. It requires effort. There's certainly unknown variables and time pressure…all of this adds up to a little bit of stress.” It doesn’t help that suppliers often have the upper hand.

That’s why we hosted our recent webinar, “SaaS Buying: 3 Strategies for Winning, Data-driven Negotiations.” Three procurement leaders who’ve had years of successful at-bats negotiating with vendors teamed up to offer their best strategies for buyers to drive successful software negotiations:

• Kate Seagriff, Senior Director of Strategic Sourcing & Procurement Operations at Navan
• Mandy McGovern, Commercial Executive Group Manager at Tropic
• Michael Shields, Head of Procurement & Strategy at Tropic 

Here were a few of the top tips they shared at the webinar:

1. Use contract visibility to engage early and secure better deals

What’s the point of taking time to research, source, and gather data for a negotiation if you don’t give yourself enough runway to do it right? The earlier you start renewal conversations, the easier is it for you to drive cost savings.

While appropriate timelines to engage early vary among suppliers, a good rule of thumb is to start the conversation at least 90 days in advance of the opt-out date. Our proprietary insights show:

• Engaging 6 months before the renewal date can generate 39% in additional savings.
• Engaging 60 days before the renewal date can generate 22% in additional savings.
• Engaging 30 days before the renewal date can generate 14% in additional savings.

But here’s the caveat that Kate adds: “A big piece is having the visibility and data to understand when these deals are coming down your pipe.”

When you have visibility, you can proactively approach your business stakeholders and urge them to start their requests.

2. Sourcing includes rationalization and consolidation, not just migrating to a new solution

Sometimes, the best starting point to drive cost savings and find features that fit your needs is to simply rationalize and consolidate your existing tech stack first, even if you have a tempting offer from a new tool.

Especially in an environment where resources are stretched thin, rationalization and consolidation become a necessary first step when sourcing. While moving to a new supplier may be the best solution for some companies, it may not be advantageous for others who don’t have the resources to make that jump.

Consider the time, budget, and human resource implications of moving to a new supplier before deciding to migrate.

• Have you considered the migration fees?
• Do you have the internal resources to handle the implementation of a new solution?
• Have you considered the amount of hours and work it will take to train stakeholders and drive adoption of a new tool?

While the answers to these questions may vary, one thing is for certain: Sourcing takes time. Internal negotiations with key business stakeholders help determine your needs and available resources.

3. Leverage internal data to inform your negotiation strategy

Before digging into benchmarking data for a certain supplier, it’s important to gather internal insights such as utilization data and stakeholder sentiment to understand your scope.

As Kate explains, “You need to understand what you want to buy first before you get into the numbers because if what you need to buy is changing, then it's more difficult to figure out the appropriate cost for those items.”

When looking at internal contract data over the past year or two, ask questions like:

• Have we been growing?
• Have we been scaling back?
• Have we been adding SKUs?
• Does the supplier have new product offerings that we should be exploring and present a rationalization opportunity?

When looking at utilization data, you may uncover that your company is not using 30 percent of features included in a tier or several employees have not logged into this tool in the past 90 days. That’s valuable intel to help establish your scope.

Once you understand internal contract trends, utilization rates, and stakeholder sentiment for a given supplier, you can accurately determine your needs. Then it’s time to leverage external benchmark data to figure out appropriate costs and gain the leverage you need to negotiate a great deal.

Coupling internal data with external benchmarks will create meaningful savings and ensure you get exactly what you need out of a contract. 

Find out how visibility and leverage can help you secure better deals

Step 1: Follow the advice in this webinar to take procurement from the back office to the board room.

Step 2: Learn how Tropic gives you complete visibility into upcoming renewals and access to unparalleled, reliable benchmark data and insights to supercharge your negotiations.