SaaS Contract Management: What You Need to Know
For decades our most important documents packed rooms of filing cabinets to the brim. Not only did it take fumbling through rows of folders to find the right agreement; it also took countless hours to hunt down the terms that define how we conduct business.
Software as a service (SaaS) companies rely on technology platforms that keep pace with the constant onboarding of new clients. This guide focuses on the importance of choosing the right SaaS contract management software so your platform can keep up with the pace you set.
We’ll describe what SaaS contract management can do for your business, why it’s so necessary for managing your relationships with your customers, and the challenges it helps you overcome.
Understanding SaaS Contract Management
SaaS contract management involves the process of drafting, storing, and executing contracts. But it’s so much more than just following these steps. No longer are contracts a static record of your agreements. With today’s technology, your contract is a wealth of valuable data and insights to use for actionable business decisions.
What Is SaaS Contract Management?
A SaaS contract is an agreement between a software provider and their customer. SaaS contract management covers the entire lifecycle of that contract, from origination until it’s time for renewal.
SaaS contracts can be uniquely challenging to draft and uphold because they involve more than just terms for products and services. Software developers have to consider their business model, including:
How customers purchase or license the software
Whether the customer chooses between multiple tiers
If it is sold outright or licensed for use through a subscription
What a license permits the user to do with the software
Why Is Saas Contract Management Important?
Effective SaaS contract management can help you grow and maintain revenue. Therefore, it’s pretty critical to your overall success. Let’s discuss the specifics of why proper SaaS contract management is so important.
Clarity Can Help You Retain Customers and Drive Upsells
Author and speaker Ruth Saw wrote, “Like a diamond, the more clarity we have, the more value we bring.” Clear terms that define purchase or subscription options help ensure your users understand what they are paying for. Your CLM platform can send you alerts regarding customers who might upgrade their subscription to a higher tier or purchase additional features for your products.
Clauses Protect Your Rights
SaaS contracts protect your intellectual property (IP). In SaaS contracts, that property is the unique software itself. Proper contract management includes making sure users abide by those clauses that protect the use of your software. And considering patent litigation costs companies an average of $80 billion annually, it’s well worth the investment of a solid SaaS contract up front.
Automation Gives You a Bird’s Eye View
Without automation, the administrative tasks of parsing out SaaS products with multiple tiers or feature sets are impossible feats. Now, you can set alerts or even automate offers to your customers.
How Does Saas Contract Management Help Businesses?
Your contracts are an extension of your operations — you just didn’t know it until now. With better visibility comes better decision-making. Alerts to renewals and individual customer data mean greater overall efficiency and more opportunities to profit.
The SaaS Contract Lifecycle
The SaaS contract lifecycle refers to the various stages a SaaS contract goes through, from the initial negotiation phase to the termination of the agreement and everything in-between. SaaS lifecycle management typically includes the following stages.
Your agreements should include important details you can standardize to use across future agreements.
Not every SaaS model is customized to the client. If contracts are individualized, alerts will help you track performance and negotiate the best terms when it’s time to renew.
At this stage, contracts are signed via eSignatures by both parties.
The bulk of your business requires keeping a sharp eye on your agreements with users, including identifying opportunities to offer upgrades and discounts for more robust subscriptions and ensuring stakeholders are upholding terms and compliance.
Contracts can auto-renew or provide the opportunity to negotiate terms, in which case renewals also offer a time to revisit previous stages and the continuity of the contract lifecycle. The renewal period is especially important, and automation is strongly encouraged so as not to miss deadlines.
In some cases, a user may choose to end their use of your service (or vice versa), in which case the contract will include the terms connected to termination, which could be as simple as allowing the term to end.
Common Challenges in SaaS Contract Management
Managing your contracts can feel like a juggling act, where every client and every detail hangs in the balance. Let’s discuss a few of the challenges SaaS companies face.
A successful SaaS company has to be able to grow, but managing complex contract terms can quickly expand beyond your capabilities if they’re not constantly organized and maintained.
Managing your SaaS contracts without a sufficient CLM platform requires long hours dedicated to the finer details. Simply staying on top of the status of all your unique client terms and renewal schedules can easily become too time-consuming.
You have to guard your intellectual property. And since contract management is about seeing you abide by all relevant laws and regulations, you also have to ensure that your software isn’t used beyond the limitations you’ve set in place.
In cases where you individualize and customize SaaS plans for large companies, renewals aren’t only about continuing business. They’re also an opportunity to look at your data and see if you would benefit from new terms. Missing that key element can mean missing significant opportunities for added revenue.
For more insight into this topic, check out our blog post, “Goals and Challenges in Contract Administration and Vendor Management.”
Benefits of SaaS Contract Management Software
SaaS contract management software streamlines your processes by bringing you contract intelligence. Below are some of the key benefits you gain from such elevated technology.
See All of Your Contracts in a Centralized Repository
A quality SaaS contract management system is centralized on a dedicated and secure cloud-based platform. It provides a repository for all parties to view — a single source of accurate data on all of your contracts visible to every stakeholder according to their administrative access.
Collaborate with Confidence
All parties can use the same platform to communicate with everyone involved. No more endless email chains or out-of-date spreadsheets. Negotiations, approvals, eSignatures, and every detail throughout the contract lifecycle can be seen and communicated quickly and efficiently.
Eliminate the Time Spent on Redundant Tasks
Automating renewals, simplifying data search, and numerous other CLM features save you an immense amount of time. There used to be no way around redundant tasks, but your contract software wins back countless hours you can apply to growing your business. And according to Forbes, this can also save your organization up to $4 million annually.
“If you consider that the conventional work week is 40 hours, the data reveals that automation will save employees 6 weeks of time per year, and a full 9 weeks of time for business leaders — all of it time that professionals can reinvest into career development and personal growth opportunities,” writes Forbes contributor Jeff Wald.
“Let’s suppose the average department at this Fortune 500 company has 500 employees, with an average of 3 business leaders for each respective department. Those employees make an average of $77,000 per year (or $38.50/hr), while the business leaders earn $155,395 per year (or $77/hr). The magic of math reveals that employees who save 240 hours/year offer their employers $9,240 in savings annually, while business leaders who save 360 hours per year generate $27,720 in savings. Total savings for the average department: $4,620,000 (employees) + $83,160 (business leaders) = $4,700,000.00. In one year.”
These types of solutions are saving time, money, and opening up the door to further innovation or employee development opportunities. Talk about a no-brainer.
Gain Data Insights Enhanced by Artificial Intelligence (AI)
Historically, critical document details were buried in the fine print and had to be hunted down. With today’s SaaS CLM software, the platform can intelligently extract the data you need to see, making it readily available when you pull it up for viewing.
5 Best Practices for SaaS Contract Management
Use your SaaS contract management software to your advantage with these five best practices.
1. Standardize the Terms You Want Set in Stone
Your central repository includes templated terms of agreements you’ve prepared and scrutinized under the lens of law and regulation.
2. Monitor Contract Performance
With AI-based contract intelligence, extract the data most meaningful to your bottom line. Your CLM software can help you consistently track, share, and analyze important data.
3. Set Alerts
Use your CLM platform to notify you of agreement renewals so you can negotiate terms with time to analyze performance data.
4. Automate Contract Management Processes
Take advantage of the ability to eliminate inefficient, repetitive tasks while improving accuracy at the same time.
5. Communicate with Your Customers and Stakeholders
Whether it’s siloed departments within your SaaS-based business or the customers who use your products, using your platform to communicate and share visibility about contract terms and approvals builds relationships that help your business grow.
Terzo’s SaaS Contract Management: Software Backed by AI
Terzo’s AI can extract important metadata from your contracts instantly. If you need other custom data points, our machine learning (ML) can be trained to discover, isolate, and extract that data as well.
AI efficiently and accurately hastens redundant tasks while offering instant access to performance metrics and contract terms. You remain aware and in control of your agreements with the ability to analyze where you can concentrate efforts for improvements.
Terzo’s AI uses natural language processing (NLP), so it isn’t just automating tasks — it’s comprehending the importance of the data you need and how the metrics of that data can benefit your business.
Other Features from Terzo’s SaaS Contract Management Platform
With the power of AI, instant search functions, communication across channels, and alerts, Terzo provides you with the most advanced contract management platform. Our feature set is varied and valuable.
Integrating with Your Other Tools and Systems
If you’re already accustomed to working with SAP, Oracle, ServiceNow, Coupa, and other platforms, you can instantly aggregate that data into our system to gain actionable insights.
Centralizing Your Data
You’ll have a single repository (sometimes referred to as a “single pane of glass” or “single source of truth”) where all of your contract data is stored, with a unified dashboard providing data insights.
Automating Your Contract Renewals
Contract renewals can be set to alerts so you can analyze data from clients and position yourself to renegotiate custom terms.
Try Terzo Today
Are you ready to connect your business to Terzo’s powerful contract management software platform? Try Terzo today to learn how we can help you optimize your contracts today!