Salesforce.com subscriptions are widely recognized as significant expenditures within IT organizations. Salesforce offers a versatile toolset encompassing CRM, partner management, collaboration, performance management, and data management. However, managing costs can be challenging due to factors like over-provisioning, high unit license costs, complex arrangements, and inadequate license asset management.

The deployment of Salesforce across various departments exacerbates the difficulty of presenting a unified front during negotiations, with Sales, Marketing, and IT each utilizing the tool independently in some organizations.

Negotiating with Salesforce involves substantial financial considerations, given its status as a top SaaS solution provider. Preparing for negotiations requires careful planning to maximize the value of expenditures, which is why learning from others’ experiences and seeking expert advice can be beneficial.

Key lessons from our experience in Salesforce negotiations include:

 

  • Start Early: Initiate the negotiation process well in advance of receiving the renewal notice. Early evaluations of your portfolio, usage, and future business needs are crucial. Complex renewals may require six to 12 months of preparation, offering better pricing leverage than waiting until the contract expires.
  • Right-Size and Rationalize: Over the typical renewal period of two to five years, reassess and rationalize licenses to align with organizational changes. Address issues such as ad hoc additions, incorrect license assignments, and lapses in de-provisioning. This ensures a more accurate and cost-effective license structure. In one engagement, we found that our client had purchased Salesforce licenses for users of a third-party platform, not realizing that those third-party licenses do not require an incremental Salesforce purchase. These mistakes are often amplified by poor license asset management practices where licenses are provisioned but they are not re-sized as business needs evolve.
  • Get the Right Discounts: Determine appropriate discount levels based on your growing volumes. Third-party insights can be valuable in analyzing past spend and projecting future requirements. Adopt a win/win approach in negotiations, considering Salesforce as a strategic partner and assessing what preferential treatment you can offer in exchange for favorable terms.
  • Develop a Zero-Base Plan: Instead of forecasting incremental growth, start with a clean slate (zero-base plan). Assess user counts in relation to departmental needs, potentially reducing unnecessary license purchases. Evaluate Salesforce add-ons critically to avoid unnecessary expenses.
  • Consider Plan B: Explore alternative options in case negotiations with Salesforce don’t yield favorable results. While complete migration may be challenging, there are degrees of separation, such as throttling back growth or using a competitor’s product in specific applications. Having a contingency plan enhances your negotiation leverage.

Renewing a Salesforce contract demands careful consideration and preparation. Begin early, validate requirements, use benchmarks, and have a contingency plan in place. If assistance is needed in Salesforce negotiations, refer to our published newsletter or contact us at info@symphonyconsult.com.