Dive Brief:
- Businesses spend an average of 385 hours a year on SaaS and cloud contract purchase and renewal meetings, according to Vertice. The IT management solution provider analyzed procurement processes at more than 1,000 companies in the Thursday report.
- Employees in charge of SaaS purchases and renewals spent more than half of their working year on the end-to-end process of reviewing and renewing software contracts, Vertice found.
- The time burden disproportionately affects IT and finance units, which is where Vertice found the highest concentrations of software contract owners. “Finance and tech leaders need the time to focus on high-value strategic initiatives rather than being stuck in endless meetings and email chains to buy and renew software,” Vertice CEO and founder Eldar Tuvey said in the report.
Dive Insight:
Organizations pour far more resources into SaaS than what shows up on the books once the dollar value of time spent on contracts is factored into total cost.
Price is a pain point and a top consideration in purchasing decisions, according to Gartner. The analyst firm expects global commercial software spending to reach $1 trillion next year, as organizations prioritize AI enhancements and cyber upgrades.
But eliminating waste remains a priority, motivated by the $18 million tsquandered on redundant and unused applications by the average enterprise customer last year, according to a study by SaaS solution provider Zylo.
If time is money, then there’s ample room for improvement in the procurement process.
Organizations spend roughly 100 days on new purchases and 60 days on the average renewal, according to Vertice’s analysis. Each decision requires multiple meetings and demos, back-and-forth negotiations and approvals from legal, cyber and finance teams, the report said, with most buyers tabling three bids for every new software purchase.
The opportunities for optimization are manifold. Businesses renew an average of five SaaS contracts each month and manage a portfolio of 126 active contracts at any given time, the report found.
As spending on solutions grows, prices are also rising, according to a November software spending analysis by Vertice. Vendor price hikes kept the SaaS inflation rate at 8.7% last year, which was more than double the rate indicated by the consumer price index during the same period.
