The hidden cost of software: Senior finance & tech leaders stuck in contract management merry-go-round
- Businesses are wasting 385 hours every year in meetings to buy or renew SaaS – which equates to 26 hours per month.
- Employees in charge of buying, managing and renewing SaaS contracts at work – from Salesforce and Canva to Xero – are spending more than half (61%) of their working year doing so.
- Software contract burden hitting senior finance (36%) and tech (32%) leaders the most.
06.03.24 London: Businesses are wasting 385 hours every year in meetings to buy and renew software contracts, according to new research from Vertice, the world’s only integrated SaaS and cloud spend management platform.
Vertice has today launched its “Beyond the Numbers” report, which analysed data from 1000 businesses globally to uncover the hidden pitfalls of software management and its impact on productivity – with senior finance and tech leaders losing the most time to lengthy purchase and renewals processes.
Key findings include:
Contract management is never ending
The report found that companies have an average of 126 SaaS contracts active at one time, which includes the likes of Salesforce or Zoom, and businesses are renewing an average of five SaaS contracts per month. Those 126 SaaS contracts are only the “official” ones, without counting Shadow IT – the use of software, services and devices that are unauthorised for use by the business. 80% of workers admit to using Shadow IT, which means there are many more contracts on the table that require management.
The average end-to-end process to purchase a new tech product takes 100 days Additionally, the report found that purchasing a single piece of software is taking employees an average of 100 days, whilst renewing a SaaS license takes an average of 60 days end-to-end. That means, if a buying and renewals process happened back-to-back, contract holders would spend 61% of their total working year in software contract management processes.
Software burden hitting senior leaders across finance and tech the hardest Finance (36%) and tech (32%) were the departments found to have the highest concentration of software contract owners, with senior leaders impacted by sprawling SaaS contracts the most – 30% of contract holders sat at manager level and 29% at director level.
Overwhelming amounts of administration in every process
The research found that companies are, on average, renewing five contracts per month. These contracts all require meetings, emails, informal chats, demos, zoom calls and back-and-forth negotiations. Plus involvement and sign-off from legal, IT security and finance teams.
To purchase a new piece of software, Vertice found that three bids are tabled for every purchase. Which means three sets of meetings, emails and demos to bring this to conclusion – unlike traditional vendor processes where all vendors get a time slot to pitch their solutions one after the other.
It also found that there are 2.8 meetings per process, 8.6 emails for a renewal, and 5.2 emails per new purchase.
Internal decision makers can block a procurement process
The report found that SaaS contracts take approximately seven days to be checked by legal teams and internal decision makers are prone to hitting progress with unexpected delays, emergency stops and even U-turns.
Eldar Tuvey, CEO and founder of Vertice, said:
“With the majority of enterprises focused on cutting costs and increasing efficiency, our research shows that the task of managing SaaS and cloud spend poses a serious threat to business productivity. It is particularly concerning that the burden of contract management is hitting those in senior level positions the hardest. 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.
“We’re calling on businesses to recognise the hidden cost of SaaS and the toll that contract management can have on employees. Companies looking for productivity gains should look to reinvent their software management processes and take advantage of technology that makes buying and renewing software more streamlined and efficient.”
