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Leadership / Strategy

How to Bring Sanity to Your SaaS Procurement

Engineering teams want the latest and greatest SaaS tools so they can ship more software, faster. Finance departments, on the other hand, must keep the budget in check. It’s a tension as old as time—or at least as old as the App Store. So how do both sides achieve their goals without blocking each other?

There are ways engineering teams can work with—not against—their organization’s finance department to get what they need and still reduce the overall software spend.

Rob Duffy, CEO, soda

Rob Duffy, CEO and co-founder, sodo, recently spoke with VendorHawk (which was recently acquired by ServiceNow) CEO Patrick Lowndes about how organizations can make this a reality.

Lowndes’s company helps organizations find dozens, sometimes hundreds, of subscription-based tools they have forgotten about, so they can streamline their toolbox and cut costs.

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Patrick, you’ve mentioned that sometimes organisations have hundreds of subscriptions they are no longer using. That’s the kind of out-of-control spending that can kill an engineering department’s credibility with the finance department…

The challenge is that the best, newest tools don’t always fit into a budget cycle or the corporate buying structure. Engineering teams can conduct a self-audit to see just how many tools they have amassed over time, or, better yet, they can invite the controller in to do an audit. That olive branch starts the conversation and signals openness to a frank discussion about spending.

It’s also important to be realistic about the true needs. When trying to justify expenditures, teams must be judicious when using the phrase “mission-critical.” Honesty builds credibility, which is essential to getting on finance’s good side.

Is it necessary for the finance department to understand the value of the engineering team’s tools?

We like to bring visibility and then actually try to help DevOps leaders work with finance and IT to really make sure there’s agreement about the tech stack that they’re using. Teams need to coach the finance department on what the tools are, demonstrating what the stack is and why they have it, then delineate which are the top-priority tools.

What kind of reaction do you get when you help these people realize that they have five times as many tools as they thought they did?

There’s definitely an “oh crap” moment of, “I didn’t really realize that there’s this much going on behind my back.” Many companies are going to have stuff that they just forgot about, which is okay. But that’s when they need to be ready to level with finance and demonstrate how it will be controlled and tracked in the future.

What does the average finance department think of engineering teams and their desire for more tools?

“Desire” is probably too weak a word. I think they would call it “an infatuation with the shiny thing.” The perception is that they’re pretty careless when it comes to spending. There’s some work that the engineering teams need to do to build back trust and

PAtrick Lowndes

credibility. A self-audit helps. But what really impresses finance is to say, “Can you come in and audit us? Can you show us what we’ve been spending money on?”

Do you find that people are a little hesitant? Once they let the finance team peel back the layers, maybe they’ll lose some of that flexibility they’ve had in the past?

It’s two sides of an issue. Engineering has to convince finance that they’re a good steward of the budget. I think it’s a combination of getting the right level of trust but also demonstrating, “I have knowledge about these tools and why we need them.” You have to find that delicate balance.

Any final thoughts about what someone in a tech leadership role would want to do to get out ahead of this instead of waiting until it’s out of control?

Definitely. Do a self-audit. Then, organize a view of the tools in a spreadsheet that everyone can collaborate around. If there is a trial for something for six weeks or 14 days, know how the team is checking in with that. Doing those two things alone — checking what’s been done and having it planned for where the team is headed — will go a long way for engineering departments to really build up their reputation of being financially responsible.

See also: IT Procurement: “Still the Wild West and It Favours the Vendors”
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CBR Staff Writer

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