How SaaS Adoption Changes the World of Contracting

How SaaS Adoption Changes the World of Contracting

Software as a Service (SaaS) solutions have been around for years and organizations are starting to move on a larger scale to business software through the SaaS model. Based on a business case at one of the largest global organizations we provide insight into what the impact of adopting SaaS is on the procurement process. More specifically we will present an approach on how various functions can and should work together to ensure SaaS contracting is done in a compliant and secure manner.

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Once upon a time the world of IT contracting followed a clear process. A business analyst was assigned to identify the business needs and requirements and the IT department would function as a bridge between the business and IT vendors. IT vendors were more than pleased to build whatever was needed; the sky was the limit. The business was in a strong position to negotiate, often playing off the potential vendors against each other who were standing in line to win the project. Custom-made solutions or customized standard solutions where the standard.

This approach to contracting also came with a price as custom solutions tend to be more expensive than standard solutions (assuming a solution is delivered to the business). Pricing of the solution seemed straightforward since during the contract phase the license fee was negotiated by the Procurement team and was agreed for a longer period. Scaling down the license fee, however, appeared to be more challenging as time went by.

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Source: Compact 2016-3

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