Software Sourcing vs Procurement for Modern Business

At first glance, "sourcing" and "procurement" might seem like the same thing. However, they're distinct and vital steps in the SaaS industry.

Sourcing is the strategic selection of SaaS providers that mesh well with a company's long-term digital transformation goals. On the other hand, procurement entails selecting the appropriate software vendor, negotiating contracts, handling payments, and managing the legal and financial details of the acquisition process.

Gartner found that 60% of software buyers regret purchasing software within the 12 to 18 months. By grasping the differences between sourcing and procurement, businesses can optimize their buying process and acquire an edge in this competitive market.

What is strategic software sourcing

Strategic software sourcing is the first step of the purchasing process. This involves selecting the right solutions backed by data from various sources like past performance, market condition, and much more.

Sourcing professionals or anyone who’s responsible for sourcing, perform a thorough analysis of the business's needs, examine the software market, and assess vendor capabilities.

The goal of strategic sourcing is to establish strong, value-adding relationships with software providers so that they can const-effectively scale and customize solutions to meet evolving business demands of the future.

What is software procurement?

Following strategic sourcing, software procurement is concerned with the technical aspects of purchasing, focusing on transactional processes such as negotiating contracts, managing licenses, and ensuring compliance with company policies and legal standards. 

Software procurement aims to efficiently manage the acquisition process to secure the necessary tools at the best possible price. The process also ensures that the selected tools are integrated smoothly into company systems. It involves close coordination with vendors to clarify specifications, terms, and delivery timelines, ensuring that the procured software promptly meets the immediate operational needs.

The process in strategic software sourcing

Successful software sourcing is methodical and strategic. It involves several critical steps to ensure the software not only fits the company’s current needs but accommodates more use cases, and reduces the need to use multiple tools.

Here’s a breakdown of the key elements in the strategic software sourcing process:

• Clear approval workflow: Establish a defined approval process that involves all relevant stakeholders to streamline decision-making and avoid bottlenecks. This workflow should clearly outline who has the authority to make decisions at each stage of the sourcing process, ensuring that approvals are obtained efficiently and transparently.
• Analyzing spends: Conduct a thorough analysis of current and historical spending to identify trends, opportunities for consolidation, and areas where costs can be optimized. This analysis helps in understanding the financial impact of software investments and assists in negotiating better terms with vendors.
• Procurement terms and guidelines: Develop and standardize procurement guidelines that outline how to evaluate vendors, negotiate contracts, and manage software licenses. These guidelines should be aligned with the strategic goals of the organization and serve as a reference point throughout the sourcing process.
• Sourcing and procurement mistakes to avoid: Recognize common pitfalls such as inadequate vendor assessment, poor contract management, or failure to align software capabilities with business needs. By identifying these potential errors early on, organizations can develop strategies to avoid them, ensuring a smoother sourcing process.
• Adherence to compliance standards: Ensure that all software sourcing activities comply with relevant laws, regulations, and industry standards. This includes data protection laws, intellectual property rights, and any sector-specific compliance requirements. Adhering to these standards helps mitigate legal risks and protects the organization’s reputation.

Introducing assisted buying by Spendflo

Managing SaaS expenditures efficiently is critical for maintaining operational agility and optimizing cost efficiency. Spendflo’s assisted buying feature is specifically designed to address these needs. It’s a comprehensive solution that simplifies the SaaS procurement process and ensures businesses get the most value from their software investments.

Here are a few key features of assisted buying by Spendflo:

• Dedicated buying experts: Spendflo assigns experienced procurement specialists to each client. These experts not only facilitate the procurement process but also ensure that businesses achieve the best possible terms on their SaaS purchases.
• Real-time concierge services: This feature enables businesses to place procurement requests easily through a user-friendly platform. Spendflo's experts are available to provide immediate assistance, guiding clients through every step of the procurement process, from request to final purchase.
• Streamlined communication: Spendflo integrates with Slack to provide updates and facilitate communications directly within your existing workflow. This integration allows for seamless interactions between your team and Spendflo’s experts. This ensures that you are constantly in the loop and can make quick decisions based on real-time information.
• Cost and time savings: With Spendflo’s Assisted Buying, companies can expect to save up to 30% on their SaaS expenses. The expertise and efficiency provided by Spendflo not only reduce costs but also significantly cut down on the time spent managing SaaS tools, allowing teams to redirect their focus towards strategic initiatives.
• Enhanced compliance and security: Spendflo helps ensure that all SaaS procurements are compliant with relevant regulations and security standards. 

With Spendflo's assisted buying, companies can optimize their SaaS stack effectively and make data-driven decisions with help from the right experts. Spendflo ensures that businesses pay only for what they need and eliminates wasteful expenditure. Additionally, the proactive management of renewals and contracts prevents last-minute urgencies and fosters a more strategic approach to SaaS management.

Key takeaways

Mastering both sourcing and procurement is key for any business reliant on SaaS solutions. By combining strategic insights with efficient operations and innovative tools like Spendflo, companies are not just keeping up with digital transformation but are set to lead it. With Spendflo’s dedicated team at your side, you’re well-equipped to excel in this dynamic and competitive environment.

Wondering how to get started with Spendflo? It’s simple. Book a call with us and let’s start redefining successful procurement together.