A software buying guide: 9 steps to SaaS success

Key takeaways:

• As software spending increases yearly, the role of software buyers is becoming increasingly more influential. 
• There are nine steps to the software buying process, each essential to buying the right solution for your business's software needs. 
• When buying SaaS, do your homework, develop specifications, request proposals, create a shortlist, request presentations, contact references, select a winner, negotiate and sign agreements, and create a check-in schedule.
• It is OK to modify the software buying process to meet the unique needs of your business. 

If you're responsible for purchasing software, you've got one of the most exciting and influential jobs in your company. Yes, you heard me right. Exciting and influential may not be words you would have previously used to describe your procurement role, but by the time you finish reading this guide to SaaS software buying, I'm confident that you will. 

In 2020, the SaaS market spend was around $120 billion and is predicted to hit over $171 billion in 2022. But the real kicker is that the spending has more than doubled since 2017. That means the role and influence of software buyers has changed exponentially even in the past three years, and it isn't stopping any time soon.

Want to learn how to become a pro at software buying, or perhaps just brush up on your skills a bit? Keep reading. I'll cover the steps to SaaS buying along with some expert tips that can deliver limitless value to your business.

9 steps to buying software

There are nine essential steps to the software buying process. As you read through each step, think about your company's software needs and how you can use each step to achieve those needs. 

Step 1: Do your homework

Ready to start software shopping? Not so fast. Before you begin the quest for the best software for your business needs, you should do a few internal things. 

Do market research

Many companies prefer to get the decision-making buy-in first, and that is OK. However, I challenge you to consider doing market research first. This doesn't make getting the buy-in any less critical, but it makes you more prepared for the questions and obstacles you may encounter while seeking that buy-in. If those you're seeking approval from ask questions, you need to have answers, right? So do some general research of software companies and solutions in the market.

Important details like SaaS availability, cost ranges for budgeting purposes, and the nature of the market's competition are things you can quickly uncover with a bit of market research homework.

Ensure alignment of business needs 

Another essential part of step one is to ensure internal stakeholders are "on the same page." Achieving this type of alignment will help you get buy-in from decision-makers, but it will also help to ensure a successful software buying process. 

Here are some questions to consider when assessing the alignment of stakeholders and business needs:

• Why are we buying this software?
• Is there current software we intend to replace?
• Is this enterprise software?
• What is the timeline for this new software?
• Are there internal resources available to assist with implementation and deployment needs?

Get company buy-in

Getting the buy-in from the organization's decision-makers and stakeholders is critical. So much so, you should not proceed to any other step without it. Otherwise, you may go through an entire software buying process only to get a big rejection when you're ready to sign on the dotted line. By then, many people, both internally and with suppliers, will have invested a lot of time and resources. Set the company up for success by getting the first two of the four yeses from the department head and finance. You'll get the final two "yeses" later. 

You may wonder how you can get budget approval if you don't yet have proposals and pricing. This is where your market research homework steps in. Remember how you did some research to determine a general range of what to expect for the cost of this software product? Use it now. 

Step 2: Develop required and desired specifications

For software buyers, this is one of the most challenging parts of the software buying process. During step two, you'll work with the internal stakeholder team to create a list of specifications. During this step, you can also get your third "yes" by involving someone from your company's security team in the process. 

If there is a whiteboard available for all to see, create two columns. One column is for required specifications, and the other is for desired specifications. Beside the columns, write some categories where each specification may fit. Of course, yours will vary, but here are some examples:

• Functionality 
• Technical 
• Legal 
• Support
• Implementation
• Cost

Each time a stakeholder mentions a specification, the goal is to determine first if it is a required or desired specification. To do that, ask the question, "If a software solution checks every other box except this one, will this be a dealbreaker?" If yes, this specification goes under required, and if no, list it under desired. Next, identify the category it fits in.

Expert tip: Be super careful that the team does not create specifications that instantly exclude otherwise qualified suppliers. An example of that might be company age. Where SaaS products are concerned, the market changes rapidly, and new suppliers and startups enter the market almost daily. So if you require 10 years of company or product history, you'll potentially be excluding some of your top candidates. 

When the specification list is complete, work with the team to assign some weights to each category. In other words, what are the most important categories to your company? 

Congratulations. Now you've got a detailed specification list that you can quickly turn into a request for proposal.

Step 3: Request for proposals

Now it's time to put the request for proposal together, publish it, and send it to potential suppliers. In my software buying experience, most SaaS suppliers prefer a month to submit their proposal, if possible. Whether or not yours will need that amount of time will depend on the amount of legal paperwork included in the request, as well as the volume and complexity of the specifications.

For example, all SaaS RFPs should include a SaaS security and risk questionnaire. Again, this is something above and beyond responding to specifications that suppliers will need time to complete. 

Expert tip: Include a Q&A deadline in the request for proposal. I recommend at least one week for suppliers to review the RFQ and respond with any questions. Then, work with your internal team to answer those questions and reply promptly. 

Some of the biggest mistakes in software buying include not allowing enough time for the purchase and, as a result, making a pressured and hasty purchase. Planning can help you to avoid this, but it also allows you the freedom of giving your potential suppliers the time they need to submit high-quality proposals. 

High-quality proposals = easier selection process = better SaaS solutions

Step 4: Create a shortlist

Using the specifications and weights the team previously agreed to, review the proposals and then hold a meeting to discuss. That meeting aims to create a shortlist of suppliers and solutions that will make it to the next round. 

Step 5: Request presentations

During step five, you'll reach out to the shortlist suppliers and request presentations. Supplier presentations are my favorite part of software buying. Why? They give the buying company a front-row view of the products and a chance to ask tons of questions, but also because it just may be the first meeting with a future strategic alliance supplier. Such an opportunity! 

As a SaaS buyer, I always requested in-depth (on-site or virtual) presentations that included at least one technical representative from the supplier. If the RFP was for an enterprise, high-dollar, or unusually complex solution, I’d set aside three hours for each. Believe it or not, it was rare for a supplier to end their presentation early. A shorter amount of time may be adequate for smaller-scale solutions. I also recorded the presentations (if the supplier approved) so the stakeholder team could refer back to them during the selection process. 

If you're crawling out of your seat right now thinking about multiple three-hour presentations, I get it. It can be incredibly daunting if you've got multiple software buying processes going on at one time. But if your stakeholder team needs that type of detailed presentation to make the right buying decision, then it's critical to the software buying process that they get it. 

Step 6: Contact customer references 

If you requested some comparable references in your RFP, you can use those now. But if you didn't or if they just aren't comparable enough to give an adequate reference, it is acceptable to ask shortlisted suppliers for a listing of customers that are similar in size and business. 

Contact references as a team. Doing so gives all stakeholders a chance to ask questions and avoids references being potentially contacted by your company more than once. 

Expert tip: After you've scheduled the reference calls, send the reference a list of questions they can expect to answer. This helps the reference prepare and to ensure the proper representatives are on the call.

Step 7: Select the winner

Does your stakeholder team now feel informed and confident to make a supplier selection? If so, you're ready to roll on to step seven.

You and the stakeholder team have done a lot of work to get to step seven, where you'll select the winner. But because of all the preparation work done, this should be the easy part. 

Each scoring member of the selection group of stakeholders should now independently score the finalist suppliers using the categories and predetermined weights. After collecting all scores, compile them and look for any red flags, like significant score variances. If there are none, average all the scores and determine the winner. 

Step 8: Negotiate and sign agreements

Procurement negotiation can be intimidating, but with the proper preparation, it doesn't have to be. Step eight includes negotiating with your selected software supplier and then reviewing and signing agreements. Things you might negotiate with the SaaS supplier on:

• Licensing model
• Cost
• Maintenance increase caps
• Support levels
• Paid-for attendance to the supplier's annual user conference
• Service level agreement
• Use of logo/brand for marketing 

During this step, you'll also get your fourth "yes" by including your company's legal team when reviewing the agreements. 

Step 9: Implement a "check-in" schedule

If you’re using a contract management solution, like SirionOne by SirionLabs Inc. for example, you can add this project there or wherever you track agreements.

Since you'll want to check in on this contract periodically, I recommend setting reminders twice a year, at minimum, to check in with the supplier, the end users of the software solution, and Security to see if any security needs have changed. This is also a great time to review the success of the software purchase and its return on investment (ROI) by looking at key performance indicators (KPIs). 

One of those check-ins can be right before the renewal period, so you can address them before renewal if any matters arise. 

The software buying process simplified

I'm not here to tell you that software buying is easy. Buying the right software to meet and exceed your company's needs is a complex and challenging process. You can, however, simplify things following the steps we've covered here and thoughtfully modify them to accommodate your unique business needs. As a software buyer, no one expects you to be the expert on each business software solution, but it certainly pays to be the expert on the software buying process. 

Need more time to focus on software buying? Vendr can help by taking care of your SaaS vendor management, so you don’t have to. Tell us about your buying process and see how we can help.