So your company signs up for a new SaaS tool, uses it for a few months, and then forgets about it—until an unexpected renewal charge shows up. Meanwhile, different teams purchase similar software without coordinating, leading to duplicate subscriptions and wasted spending. By the time finance steps in, the budget is already out of control.

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In fact, statistics reveal that more than 30% of the total SaaS spending in large enterprises goes to unused licenses and features. This is a classic example of what a chaotic SaaS procurement process could lead to. 

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SaaS procurement is meant to simplify software purchasing and management, but it can quickly get out of hand without the right processes. Hidden costs, auto-renewals, Shadow IT, and compliance risks make it challenging for procurement teams to keep up. Left unchecked, these issues can drain budgets and expose businesses to security risks.

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Here, we will break down the 10 biggest challenges in the procurement process and how to solve them.

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Understanding Procurement Challenges

SaaS procurement is different from traditional procurement in one major way: different departments can simply buy software separately. Unlike physical assets or large IT purchases that go through rigorous approval processes, SaaS tools are easy to acquire—which is both a benefit and a challenge.

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Without proper controls, companies end up with:

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‒ Decentralized purchasing: Different teams buy software independently, leading to redundant subscriptions.

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‒ Lack of visibility: Finance teams struggle to track who owns what and how much is being spent.

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‒ Complex vendor contracts: Pricing varies widely, and vendors often lock businesses into rigid, long-term agreements.

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‒ Auto-renewals & unused licenses: Companies pay for software they no longer use simply because no one cancels the subscription.

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The result? Wasted spending, compliance risks, and an inefficient software stack. Overcoming these procurement challenges is important for your business to gain a competitive advantage, negotiate for the right solutions, and foster stronger vendor relationships. 

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The Impact of Procurement Challenges on Business Operations

The effects of poor SaaS procurement go beyond just overpaying for software. It creates operational inefficiencies that ripple across multiple departments.

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1. Uncontrolled spending

When different teams purchase software independently, finance teams lose visibility into SaaS expenses. This leads to budget overruns, duplicate purchases, and unplanned costs, all of which impact financial forecasting.

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2. Compliance & security risks

Unapproved SaaS purchases introduce security vulnerabilities. Without proper vetting, businesses risk storing sensitive data in software that doesn't meet security and regulatory requirements.

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3. Employees deal with tool overload

Too many overlapping tools lead to confusion and inefficiencies. If marketing uses one CRM while sales uses another, data gets fragmented, and workflows suffer.

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4. Vendor relationships become harder to manage

When multiple teams negotiate contracts separately, businesses lose their bargaining power. Better-negotiated contracts can lead to major cost savings, but only if procurement is centralized and strategic.

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‍Why Addressing Procurement Challenges is Crucial for Success

As businesses grow and become more dependent on SaaS, addressing the key challenges in the procurement process is important for improving financial health, security, and overall productivity.

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‒ Better financial control: Centralizing procurement and streamlining processes helps eliminate redundant tools and optimize software spending.

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‒ Stronger security & compliance: Standardized procurement processes ensure vendors meet security requirements.

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‒ More negotiating power: When procurement is centralized, businesses can leverage their buying power to secure better pricing and flexible contract terms.

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‒ Increased operational efficiency: Employees work more effectively when they have the right tools, without duplicates or unnecessary complexity.

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A structured approach to SaaS procurement helps businesses cut costs, reduce risks, and create a more scalable software strategy.

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Best Practices for Continuous Improvement in Procurement

Managing SaaS procurement requires an ongoing strategy to keep spending, compliance, and vendor management under control. Here's how businesses can continuously improve their SaaS procurement processes:

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1. Centralize procurement under one system

Instead of allowing different teams to buy software independently, create a centralized system and approval workflow where all purchases are tracked and managed in one place. This improves visibility and prevents duplicate purchases.

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2. Standardize vendor evaluation and security checks

Not every software purchase should be approved instantly. Implement a vendor evaluation checklist that includes the following:

• Security and compliance processes
• Contract flexibility
• Pricing models
• Integration with existing tools
• User experience and accessibility
• Scalability and performance

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3. Negotiate smarter contracts

SaaS pricing is highly negotiable, but businesses often accept the first offer. To negotiate smarter contracts, go through your vendor evaluation checklist, compare different vendors, and leverage data to compare pricing across multiple vendors.

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This also includes negotiating for flexible renewal terms and performance benchmarks to ensure you're getting the best out of your new SaaS solution.

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4. Automate renewals and approval workflows

Set up renewal alerts so teams can review contracts before auto-renewals kick in. Automating approval workflows also helps streamline procurement and prevent unnecessary delays.

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5. Track & optimize SaaS usage

Regular audits help identify underutilized tools and unused licenses. So, it is important you:

• Monitor real-time usage data
• Cut down on tools that aren't delivering value
• Reallocate unused licenses to teams that actually need them

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This will allow you to keep SaaS procurement efficient, cost-effective, and secure instead of letting it spiral out of control.

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10 Common Challenges in Procurement

SaaS procurement seems simple—identify a vendor, subscribe to a tool, get the job done, and move on. But behind the scenes, hidden costs, auto-renewals, vendor requirements, and compliance risks turn it into a complex and costly process.

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Here are the 10 biggest challenges in the procurement process and how to fix them.

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1. Lack of visibility into SaaS spending

Procurement and finance teams often don't have a clear picture of how much is being spent on SaaS tools. With different teams purchasing software independently, costs quickly add up, often with overlapping tools and duplicate subscriptions.

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This can be inefficient, especially when accurate budgeting is important for a successful procurement process. So, to ensure better visibility into the finances, consider maintaining a centralized SaaS inventory with real-time spending data, create a systematic approval workflow so that no new purchase slips through, and use a procurement platform like Spendflo that gives visibility into all active subscriptions.

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2. Shadow IT

A major procurement challenge for businesses is shadow IT. Employees often sign up for software without involving procurement or IT. For perspective, an enterprise uses 270 to 364 SaaS subscriptions on average, of which 52% are unsanctioned by IT.

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These "rogue" purchases lead to security risks, compliance issues, and unplanned budget overruns. This makes it important to implement a clear approval process for all software purchases and use automated SaaS discovery tools to identify untracked software expenses.

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3. Auto-renewals leading to unnecessary costs

Many SaaS contracts renew automatically, and businesses forget to cancel subscriptions they no longer need. By the time they realize it, the company has already paid for another year. Here, regular SaaS usage audits can help evaluate SaaS requirements in the company to cancel unused or redundant tools.

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Plus, setting up auto-renewal alerts at least 30–60 days before renewal dates and negotiating contracts with flexible cancellation terms can help them stay on top of SaaS renewals and avoid long-term commitments.

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4. Overlapping or redundant tools

Different teams often purchase similar tools without realizing it. For example, sales and marketing teams might be relying on different tools with the same data and similar features, leading to duplicate spending on CRM software.

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This can be a common challenge in the absence of a centralized system, as employees won't know if someone else is already using a similar SaaS solution they have requested. This eventually affects the procurement process due to miscommunication.

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To fix this, you can conduct quarterly SaaS audits to identify redundant tools and standardize software usage across teams to reduce tool duplication. Additionally, a central procurement solution like Spendflo will help you automate approvals for new software purchases and keep a repository of all the requests, ensuring complete visibility into your tech stack.

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5. Poor vendor negotiation leading to high costs

SaaS pricing is a complex zone, with vendors offering different pricing plans based on customer size, features, contract duration, add-ons, and so on, making it hard to benchmark pricing. 

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And if a business offers the first quote without negotiating or using market insights, they often overpay for software. This makes it important for SaaS buyers to evaluate the pricing structures and benchmark pricing against industry standards before purchasing.

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Plus, it will also help to negotiate discounts for multi-year commitments or bulk licenses to get the most out of your SaaS purchase. Finally, working with a procurement solution like Spendflo can help you compare multiple vendors and negotiate contracts to secure the best deals.

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6. Complex and confusing pricing models

SaaS vendors often use complicated pricing structures, which can include hidden fees, per-user costs, additional costs for premium features, and unclear terms. Businesses struggle to compare pricing across vendors and often end up paying more than expected.

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Before choosing a SaaS solution for your business, you need to ask vendors for a clear breakdown of costs and compare different pricing models (flat rate, per-user, feature-based) to find the best fit.

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It is important to choose software with transparent and predictable pricing to avoid unnecessary costs in the future.

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7. Security and compliance risks

SaaS tools store sensitive business and customer data, but without proper security checks, businesses risk data breaches, non-compliance fines, and legal issues.

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Not to mention, the regulatory landscape is complex for companies operating in different regions and countries, each with its own compliance requirements. So, it becomes crucial to choose SaaS tools that prioritize data security and compliance.

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Use a vendor risk assessment process to evaluate the vendors' security processes and compliance requirements before approving new software. Conducting regular security audits on all SaaS tools and vendors will also help ensure data protection at the company level.

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8. Difficulty managing vendor contracts

Procurement teams often handle dozens (or even hundreds) of SaaS contracts, each with different renewal dates, pricing terms, and compliance requirements. Without proper tracking, contract management becomes a nightmare.

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What you need is a centralized system to keep all vendor contracts in one place. Such a system can also automate contract tracking and renewal alerts and standardize contract negotiation processes to ensure consistency.

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9. Slow and inefficient approval workflows

The SaaS buying process often gets stuck in approval loops, with multiple stakeholders and various steps involved. Delays in approvals slow down operations and frustrate teams that need new tools quickly.

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A good way to manage this is to implement automated approval workflows to speed up decision-making, with clearly defined roles, such as who has purchasing authority to prevent bottlenecks. 

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At the same time, it is important to oversee the approval hierarchy to ensure no employee is skipping any process, as it can lead to investment in poor-quality software, compliance headaches, and even duplicate or redundant subscriptions that don't meet the organizational requirements.

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10. No Strategy for optimizing SaaS usage

As your business grows and so does your tech stack, SaaS spending, and usage can become less transparent. You might know which tools different teams are using, but do you know how effectively they're being used? 

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For instance, are all the features in your SaaS tool actually useful? Is your sales team utilizing the premium features that were negotiated for? If not, you might continue paying for underutilized software instead of optimizing your tech stack.

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To overcome this, it is critical to monitor real-time SaaS usage data to identify underused tools. Additionally, conduct quarterly software audits to assess ROI, cancel subscriptions you no longer need, and reallocate unused licenses to teams that actually need them.

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How Spendflo Can Help Overcome Procurement Challenges

Spendflo is your one-stop procurement management solution that simplifies and optimizes SaaS procurement by:

• Providing full SaaS spend visibility so you can track all software expenses in one place.
• Negotiating the best deals by leveraging data-backed insights to secure better pricing.
• Automating renewal tracking with real-time alerts before auto-renewals to prevent unnecessary spending.
• Standardizing vendor compliance by ensuring all SaaS purchases meet security and legal requirements.
• Streamlining approvals by reducing approval bottlenecks with automated workflows.

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With Spendflo, businesses can gain control over SaaS procurement, reduce costs, and ensure compliance—all without the manual hassle.

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The AI-driven platform streamlines end-to-end procurement, from intake and bid analysis to contract negotiation, renewal management, and documentation.

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Check out our website to know more about the solution and book a free spend analysis today!

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FAQs

What is the biggest challenge in procurement processes?

One of the biggest challenges in procurement processes is a lack of visibility into SaaS spending. Without a centralized system, businesses struggle to track software costs, leading to redundant tools, unnecessary renewals, and budget overruns. 

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What is the hardest part of SaaS procurement?

One of the hardest parts of SaaS procurement is managing vendor contracts and renewals effectively. With dozens of tools in use, keeping track of renewal dates, pricing changes, and compliance requirements becomes overwhelming. Auto-renewals, poor visibility into software usage, and lack of standardized approval processes often lead to unnecessary costs and security risks.

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What's the best way to optimize SaaS usage after procurement?

Businesses should track real-time usage data, conduct quarterly SaaS audits, and reassign underused licenses to teams that need them. This ensures maximum ROI on every subscription.

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