The SaaS usage costs contradiction

  1. Procurement has a target of shaving off costs from initial offers.
    The involvement of the procurement department leads to reduced license costs which in itself is great, obviously. However, the first requirement SaaS vendors set is that the number of licenses needs to be fixed usually followed by the second requirement of a minimum initial duration of the contract of three to five years.
  2. The purchasing departments’ budget needs to be clearly identified a year upfront.
    Budgeting cycles in enterprise environments usually don’t leave room for fluid future budgets. The costs need to be clearly identified upfront to allow validation in the process.
  1. Start using some licenses and start small, but start! Having started will provide you insight in what works and what not both for your company and for your customers.
  2. Calculate what your costs would have been based on your volumes over the last two or three years and estimate the most likely scenario and calculate the costs involved.
  3. Take your finances department with you along the journey. Train them in the happy implication of being successful. Again: selling more means more costs are made but as long as the margin stays intact, what’s wrong with that. Then align with your finances department on how to manage your SaaS usage costs in an appropriate way with regards to budgeting and forecasting cycles.
  4. Negotiate rates for larger usage with the vendor of your choice but stay away from deals for many years when you are starting using SaaS products — don’t push yourself into a corner without knowing whether you like that corner.

--

--

--

Senior Digital Architect - Guiding organizations through their digital transformation & avid windsurfer

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

LeetCode 430. Flatten a Multilevel Doubly Linked List

Introduction to HTML and CSS for Web Development

Alphr Weekly Report #19

Introduction to UiPath OpenCV

MOST USED DevOps TOOLS AND THEIR KEY FEATURES

Card Processing: Approve or Deny Every Transaction in Real Time

Going codeless — a short story about me and the Robots

8 Steps To Become A Web Developer Without A Degree

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Remco Stolp

Remco Stolp

Senior Digital Architect - Guiding organizations through their digital transformation & avid windsurfer

More from Medium

SaaS marketing: setting targets for subscription businesses

How PageCloud did $1M in sales before launching their SaaS product

SAAS — The Tools Running Startup

How to calculate active users in a saas startup

How to calculate active users in a Saas