From cloud services to accounting platforms to project management software, burgeoning businesses are reliant on a variety of services across multiple vendors to operate and grow.
That said, with so many variables impacting vendor management, it’s no surprise that many business owners can feel a bit lost and intimidated.
However, without a proper way to manage vendors throughout the vendor lifecycle, your purchases, renewals, contract negotiations and more can get messy. From overpaying vendors to buying duplicate subscriptions, you risk getting a lot of money stuck in a swamp of software-as-a-service (SaaS) subscriptions.
To help you navigate the vendor management process, we’ve put together this guide. We'll help you navigate vendor negotiations, optimize vendor spend, set up the proper systems and workflows to enable smoother vendor management and smarter decision-making.
Vendor management is the sum of processes and practices that businesses implement to regulate partnerships with vendors and procure the products, supplies, and services needed to operate a business. A top-notch vendor management program will effectively allow you to:
Furthermore, an effective vendor management program will shield your business from the common downsides of scaling with multiple vendors:
A proper vendor management process from vendor selection and onboarding to relationship management and analysis will take you far. All you need is the right support. Here’s how to manage all the components of a vendor management process in a way that works.
One of the most crucial facets of well-designed vendor management is control over spending patterns, SaaS procurement, and licenses. Here’s why strategic vendor relationship management is ideal for any business:
Alongside added spending control, vendor management grants you a top-down view of existing licenses and policies within your company and helps improve profitability.
A business that spends effectively will also know how to manage existing software licenses and acquire new ones as they grow.
Vendor management helps companies consider how many licenses they own at the time of a given purchase and compare it to how many they may need in the future to meet business goals. This process is especially vital when a business is:
Doing so is crucial to keeping license acquisition under control. However, because SaaS tools are easy to procure and purchase, businesses quickly end up with a high volume of SaaS vendors to track, manage, and pay. These tasks typically fall to finance teams, who often have to sift through multiple sources of information just to find out when a single contract is up for renewal.
In response, organizations are searching for a more central source of truth of all vendor data like Ramp, which provides customers with a single, holistic view of their vendor spend and contracts. Ramp also automatically captures important contract details and allows admins to set automated 30 and 60 day reminders to get alerted when a contract is coming up for renewal.
Top-notch vendor management means you only pay for what you actually use. And best-in-brand license monitoring makes sure you’re using everything you pay for to its fullest potential.
Vendor management offers unprecedented visibility into a rapidly-growing spending category in most businesses. In fact, 38% of companies run almost entirely on SaaS, with SaaS spending projected to double by 2020 across multiple verticals.
With the right vendor management system (VMS), you’ll have the visibility you need to gain valuable, money-saving insights like:
Visibility is only useful when it’s easy to access and easy to understand. The ideal vendor management platform will keep all relevant vendor data in a central location and make them user-friendly and searchable.
While some companies are thriving under almost entirely cloud-based operations and vendor management software, most still rely on vendors outside the digital world for support. These areas may include supply chains, consulting services, transportation, food services, and more. That’s why your vendor management strategy can’t stop at SaaS.
When vendor risk management crosses over into the non-software world, it not only becomes about visibility and control, but also about human interaction. Make sure you adhere to these vendor management best practices:
Applying these best practices is a good first step, but it’s critical to equip yourself with current pricing insights for each vendor you work with. To accomplish this, Ramp customers leverage our Price Intelligence feature, which automatically extracts contract details and benchmarks the price. Businesses using Ramp make purchasing decisions with more confidence, thanks to trusted data contributed to the platform by their peers.
Visibility and control of your SaaS spending are your lemons. Now, it’s time to make lemonade.
A well-designed vendor risk management system will also feature automated controls and communication programs that allow you to optimize your spending based on the vendor information at your disposal.
The first and best feature? A vendor management system attached directly to your corporate card.
When you find a corporate card program with a built-in spend and vendor management, suddenly, your financial world opens up. Here’s what makes integrated vendor management ideal for businesses: