Procurement Is Losing the SaaS War
Spiraling software costs in 2025 reveal just how broken procurement’s approach has become - and why vendors are winning.
Procurement doesn’t just have a cost problem. It has a credibility crisis.
SaaS spend is exploding across every industry. Budgets are ballooning. Contracts are bloated. And most procurement teams? Still asleep at the wheel.
Tom Mills recently dropped a blunt warning about the growing chaos of software contracts in 2025. No fluff, no spin - just a list of painful red flags and the recurring mistakes that keep showing up in SaaS deals.
The post triggered a flood of stories, confessions, and frustrations from procurement professionals around the world. What emerged wasn’t just a list of bad practices—it was a hard look in the mirror for an entire function.
Tom's list of red flags was a wake-up call. But what followed in the comments was even more telling: a chorus of agreement, frustration, and a few hard truths about why this keeps happening. And who’s really to blame.
Let’s unpack it.
SaaS Is the Fastest Growing Cost in the Business. And No One Owns It.
One of the most striking takeaways from the discussion wasn’t about the contracts - it was about ownership.
Procurement doesn’t own SaaS.
IT doesn’t own SaaS.
Finance doesn’t understand SaaS.
So it floats in limbo: ungoverned, unchallenged, and usually unmanaged. As one commenter put it:
“Everyone’s buying tools. No one’s managing the portfolio.”
That’s not just bad governance. It’s operational negligence.
In 2025, SaaS isn’t “indirect spend.” It’s infrastructure. If your company doesn’t have a single point of ownership for it, you're already bleeding margin.
Red Flag #1: Staggered Start Dates, Unified Billing
Tom’s first example was as simple as it was frustrating: you sign a master contract in January, but users only start onboarding in April. You’re still billed from day one.
This is more than a paperwork oversight. It’s systematic laziness.
One reply highlighted a €400K loss because licenses sat unused for over five months—during a phased Salesforce rollout. Procurement “didn’t think to question the start date.” IT “assumed billing would start on activation.”
Guess who got blamed?
Red Flag #2: No Outcome-Based Clauses
Software is often sold on outcomes: adoption rates, efficiency gains, uptime. But procurement rarely ties payments to results.
One VP in the comments shared a case where their HRIS vendor promised a 60% self-service adoption in year one. Actual adoption? 19%.
Refund? None.
Response? “We met our obligations.”
Tom’s point: if there’s no shared risk, there’s no partnership. One procurement leader commented bluntly:
“We need to stop being afraid of SLAs. You’re not offending anyone by expecting value.”
Red Flag #3: Long-Term Lock-In With No Exit
A common thread in the comments was the 3-year contract trap. Lock-ins made sense during the pre-cloud era. But with SaaS, change is faster, and priorities shift quickly.
One comment told the story of a fintech startup that signed a 3-year ERP license at enterprise pricing—right before pivoting their entire business model.
They couldn’t use half the features but paid anyway. $1.2M burned. “We treated it like buying servers. It wasn’t.”
Red Flag #4: Auto-Renewals Without Notification
This one sparked the most outrage.
Procurement pros shared stories of missing renewal windows by days, resulting in automatic rollovers—with double-digit price hikes.
“We got caught on a 28-day notification clause that was buried in a footnote. Renewed at +18%. Legal didn’t catch it. Procurement didn’t follow up. Vendor didn’t remind us—on purpose.”
Several suggested using contract management tools with automatic alerts. But one CPO pointed out:
“Even when we have the alerts, we ignore them. The problem isn’t tools—it’s discipline.”
Red Flag #5: Uncapped Usage Clauses
Some vendors insert vague clauses allowing them to charge for “excessive usage” or “expanded API calls.” Most procurement teams don’t even know these exist.
One comment shared how a marketing automation tool billed an extra $75K after a one-time campaign “breached the contact cap.” The clause was on page 14.
Another example involved a supply chain SaaS charging based on “platform activity.” No one defined what that meant. They only found out after a surprise invoice.
Why Procurement Keeps Getting Outplayed
Here’s where the post went from helpful to uncomfortable.
It’s not that SaaS vendors are evil. It’s that they’re better prepared. They know their contracts. They use their data. And they understand internal politics.
Procurement, on the other hand, is often slow, under-informed, and sidelined.
A recurring theme in the comments: procurement is brought in too late—after the demo, after the “business case,” often just to sign off.
As one frustrated professional wrote:
“By the time we get to negotiation, the internal buyer is emotionally sold. We’re the only ones saying no. And that makes us the villain.”
The Cultural Problem: Procurement Is Still Seen as Tactical
This debate revealed a bigger truth: software procurement isn’t failing because of tools. It’s failing because of mindset.
Many procurement teams still act like clerks, not strategists. They process requests, rubber-stamp contracts, and measure success by savings—not by value, usage, or risk mitigation.
One of the best comments came from a senior IT procurement lead:
“If we want a seat at the table, we need to stop acting like we're booking flights. These are strategic partnerships. They need strategic scrutiny.”
So What Needs to Change?
This article isn’t just about red flags. It’s about a system that keeps rewarding short-term wins and ignoring long-term waste.
From the comment thread, five practical ideas stood out:
Centralize SaaS governance. Create a cross-functional team to review new tools, renewals, and performance.
Standardize contracts. Force vendors onto your terms. Use a playbook.
Measure outcomes. Tie part of the payment to actual adoption, uptime, or ROI.
Kill shelfware. Audit usage quarterly. Cut what’s not being used.
Train stakeholders. Teach marketing, HR, and ops how to challenge SaaS vendors.
But more than anything: procurement needs to lead. Not react. Not approve. Lead.
SaaS Is a Battlefield - And We’re Not Fighting Back
Tom Mills started the conversation. The comments deepened it. But the conclusion is clear. SaaS vendors aren’t beating us with better products. They’re beating us with better preparation.
And procurement is letting them.
This isn’t just about cost. It’s about competence.
If procurement wants to stay relevant, it needs to own software, speak the language, challenge assumptions—and stop signing bad deals because someone in marketing “really liked the demo.”
Because if we don’t start pushing back, SaaS won’t just drain budgets. It’ll drain the credibility of procurement itself.
What do you think? Have you been caught out by these SaaS traps? What tactics have worked - or failed - in your company?
Comment below. Let’s stop normalizing this and start fixing it.
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