Procurement Process

Each year, nearly $1 trillion is wasted in inefficient or shortsighted procurement practices. This loss occurs because finance and procurement teams struggle to navigate a complex landscape filled with multiple vendors, shifting renewals, and complex contract terms. They often rely on inefficient manual tools like spreadsheets and email for approvals, slowing down processes.

To combat this waste and gain control over spending, we need advanced procurement processes. Processes that unify buying activities, improve visibility, and prove centralized control over all stages, from approvals to renewals and payments. Going digital comes with the added benefit of unbiased supplier intelligence and on-demand benchmark pricing, through which finance and procurement leaders can negotiate smarter contracts, avoid overpaying for goods and services, and discover new opportunities for savings.

What Is Procurement?

Procurement is the process through which organizations acquire the goods, services, or technology necessary to fulfill their operational needs. It focuses on stages such as identifying specific requirements, evaluating and selecting suppliers, negotiating favorable contract terms, and managing purchase orders. Procurement also involves maintaining effective vendor relationships and ensuring that acquired goods or services meet quality standards, timelines, and budget constraints. 

Stages of the Procurement Process

The SaaS procurement process involves several key steps to ensure that the selected software aligns with the organization’s needs, compliance standards, and budget.

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1. Sourcing

The first step in the SaaS procurement process is identifying the organization’s specific software requirements. This includes defining the functionalities needed to meet business objectives, such as workflow automation, team collaboration, or data analytics. Additionally, security standards, compliance requirements, and integration capabilities with existing systems must be clearly outlined. Once these needs are established, organizations can evaluate potential vendors by comparing their features, pricing models, customer support offerings, and security protocols. Vendor reputation, customer reviews, and scalability are also critical factors to ensure the software can grow with the organization’s future needs.

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2. Contracting

Contracting involves conducting a comprehensive risk assessment to address concerns related to security, privacy, and compliance, which is especially critical for organizations operating in regulated industries like healthcare or finance. During this phase, organizations negotiate contract terms, including pricing structures, service-level agreements (SLAs), and conditions surrounding data ownership, termination, and renewal. It is crucial to involve legal and compliance teams to ensure the terms align with organizational policies and regulatory obligations, mitigating potential risks associated with software adoption.

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3. Purchasing

Once the software and vendor are selected, internal approvals and budget confirmations must be secured. This step typically involves collaboration with key stakeholders, including IT, legal, and finance departments, to ensure the purchase aligns with organizational objectives and financial plans. Given the recurring cost structure of SaaS products, it is important to assess both the immediate financial outlay and the long-term budget implications. This includes understanding subscription tiers, potential hidden costs, and opportunities for discounts, such as annual prepayments.

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4. Pay

Managing the payment process efficiently is crucial for successful SaaS procurement. Organizations need to establish recurring payment methods that comply with accounting practices while ensuring proper expense tracking for transparency. This may involve integrating payments into existing financial systems or platforms to streamline the process. By setting up systems for expense tracking, companies can prepare for renewal periods and conduct cost-benefit analyses to optimize their software investments.

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5. Manage

After purchasing the software, it is essential to oversee its implementation and integration with existing workflows and systems. This includes configuring the software, onboarding users, and providing the necessary training to maximize adoption and productivity. Organizations should establish key performance indicators (KPIs) to monitor the software's performance, usage patterns, and overall value over time. Regularly collecting user feedback and addressing issues promptly ensures the software remains effective in supporting organizational needs.

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6. Scale

Scaling focuses on evaluating the software's performance before renewal. Organizations should reassess its effectiveness, considering how well it has met business objectives and adapted to changes. This step often involves renegotiating terms with the vendor, such as pricing adjustments or feature enhancements, to ensure continued value. Depending on usage patterns and future growth projections, organizations may scale up by upgrading plans or adding users, or scale down by reducing features or user counts to align with current needs.

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A well-managed SaaS procurement process ensures the chosen software meets the organization’s strategic requirements while minimizing risk, controlling costs, and maximizing return on investment. By following these steps, businesses can build a robust framework for acquiring and managing SaaS solutions effectively.

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Can Software Streamline Your Procurement Process?

Procurement management tools can automate manual processes and identify opportunities to reduce spend. Modern procurement practices are gaining traction because 80% of procurement professionals recognize the need to use digital tools to be more efficient and make better decisions. For these reasons, investments in procurement automation are increasing, with the procurement software market growing to $8.03 billion in 2024 and is expected to reach $18.28 billion by 2032

The effect is clear when we look at real-world examples of how procurement software is transforming businesses:

• A healthtech company used a new procurement system to achieve a 50% reduction in approval times.
• A global benefits platform was able to use unified contract management to handle over 50 negotiations and saved $240,000 from becoming wasted spending. 
• A workforce management solutions company used procurement automation to save $84,000 in less than 8 months.
• This marketing platform based out of New York City brought its $1 million-plus procurement budget to garner a 300% ROI by using procurement tools.
• An education technology company saved $300,000 and achieved 100% internal compliance for all purchases by implementing procurement automation.

Choosing Procurement Software: 5 Features That Matter

Intake–To–Procure Automation

This solution centralizes sourcing to reduce manual data entry and approval follow-ups. Simple forms help track key information. The software also includes a vendor portal, allowing suppliers to submit invoices and respond to requests in one place.

Supplier Intelligence

This essential feature helps improve decision-making by delivering precise metrics on market usage, price benchmarks, and competitor options. With a robust supplier database, business leaders can compare vendors, negotiate stronger contracts, and avoid overpaying.

Spend Analysis and Reporting

This tool uncovers hidden costs and strengthens your control over your budget. Advanced procurement software detects shadow spend (suppliers bypassing approvals) and delivers detailed reports on access and usage. This transparency shows exactly where money is spent and by whom, allowing procurement teams to plan accordingly.

Contract Management

The right tools help companies avoid scattered information in outdated spreadsheets, making it hard to avoid errors, track renewals, and seize re-negotiation opportunities. Top procurement platforms centralize all contracts (and even have automatic alerts), enabling teams to monitor renewal dates, terms, and compliance from a single source of truth. Teams can instantly view contract statuses and stages, reducing spending by preventing duplicate or excessive purchases.

Payment Automation

Payment integrations automate and track all transactions, generate orders for approved requests, and let suppliers pay. This setup reduces errors, prevents payment delays, and strengthens supplier relationships with timely payments.

Benefits of Procurement Software

Procurement software gives companies a reliable way to manage spending with clear data on each purchase. It helps teams review contract terms, manage renewals, and compare vendor prices accurately. Here are some major benefits of using procurement software: 

• Cost Savings: Procurement software helps you save money by showing you where your spending goes, makes it easy to manage vendors, stops you from repeat spending, and gives you better information to get lower prices from suppliers.
• Risk Mitigation: Automated auditing and compliance monitoring protect businesses from contract breaches, missed obligations, and regulatory risks, ensuring smoother, more secure operations
• Custom Workflows: Route all purchases through tailored approval processes and prevent bottlenecks with instant alerts to your main work apps. Set clear paths based on order size, allowing larger investments to follow a detailed process and smaller ones to move through quickly.
• Better Renewal Management: Automatic renewal calendars keep everything in one place, showing upcoming renewals and tracking deadlines. Alerts are sent directly to your team, so they’re notified in advance, giving time to prepare for reviews, negotiations, or cancellations.

Transform Procurement Process With Tropic

Experts at McKinsey write that one of the most important skills for organizations looking to achieve excellence in procurement is the better use of software tools. As they put it, “A chief advantage of specialist procurement software is that it exposes opportunities for improvement… The resulting fact-based approach combining processes, tools, and data has the power to enhance transparency and accountability and to reduce negotiation effort.” 

From increased cost reduction through greater visibility into the buying cycle to better decision-making and negotiation thanks to supplier intelligence, procurement software ensures that every purchase aligns with your business goals. 

Tropic’s procurement platform delivers the results you need, transforming how your team manages procurement from intake to renewal. Achieve end-to-end management of your SaaS purchasing with our single, unified platform and access critical insights and support so that you can save time, reduce costs, and make smarter buying decisions. 

Ready to see how Tropic can streamline your procurement? Schedule your free demo today and take control of your spending.