Vamsi is a senior director of engineering at AtoB, a Series B fintech startup. He leads product engineering and infrastructure engineering.
Modern tech startups use a lot of SaaS products to manage functions such as collaboration, execution management, customer relationship management, marketing, sales, human resources, software infrastructure, risk management and many others. Companies that have 50 to 99 employees use 24 SaaS products, on average, and companies with over 1,000 people use 177 SaaS products, on average. Managing all of them is key to the overall success of a company.
There are many things you need to effectively manage the lifecycle of your company’s SaaS products:
• Oversight: Startups need an overall catalog of all the SaaS products that are being used, including information such as the cost per license, number of licenses, term of the contract, status of integration, etc.
• Procurement process: It is crucial to establish a process for bringing in new vendors and performing necessary steps such as security evaluation, contract negotiation and budget allocation.
• Integration tools: Once a startup has many SaaS tools, it is important to transfer data and functionality between them. Tools such as MuleSoft and Zapier allow for managing SaaS integrations easily.
• Identity management: Provisioning and access management to these tools becomes a challenge, so startups should use a single sign-on tool such as Okta or Rippling to centralize security credentials and enforce multifactor authentication.
• Ongoing budget evaluation: Startups should periodically review their SaaS spend across various divisions (sales, marketing, operations, risk management, engineering, finance, human resources, etc) and adjust the spend according to the needs and the position of the company.
Engineering teams can play a crucial role in managing SaaS products. Ideally, they should own the process, the tools and the overall responsibility of managing these products. If that is not possible and if there is a separate business systems management team, then engineering should work very closely with them.
Engineering should own the integration of these products with internal systems, whether it is to communicate data, make it seamless to manage the customer lifecycle or provide a better product experience. Engineering should be a key stakeholder in the procurement process, providing input into the security, ease of integration and complexity of the product. Engineering can also own the integration tools to help manage the deployments, upgrades and maintenance of these software products. Finally, engineering can help create abstractions over some of these SaaS products so that they can be replaced easily and the startup can avoid vendor lock-in.
Here are some tips and tricks that startups can use to reduce costs, minimize complexity and have a better experience with managing their SaaS tools:
• Negotiate: Many SaaS products have a pricing page and provide a standard pricing structure depending on the usage and the features. But they also provide special pricing when negotiated. Talking to their sales teams can be very helpful.
• Use free trial or free credits: For startups, many SaaS companies provide special credits or a free evaluation period. Taking advantage of this can help with both the evaluation as well as reducing the price.
• Look for open source alternatives: In many areas, there are strong open source alternatives that are high quality, feature-rich and free to use. Leveraging such tools can significantly reduce cost and also help with establishing a faster go-to-market strategy.
• Avoid bulk purchases to get discounts: Committing to a minimum spend or buying more licenses than needed to get discounts can get startups into trouble when they find it challenging to meet those quotas or if they are not growing as planned.
Startups typically have a limited budget, limited resources, lack of experience, limited knowledge in the market and limited bargaining power when it comes to buying and managing SaaS products. Given these challenges, it is important for startups to have a well-defined process, tools and oversight to help manage it better. Engineering teams can play a critical role in this either by directly owning the process or by being key stakeholders in it.
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