If you’re a Salesforce customer, there is a good chance you will be renewing your agreement with the vendor within the next six months. That makes now an ideal time to strategize how you can save on your Salesforce renewal – a solid strategy is most certainly required.
Salesforce claims to be the fastest-growing enterprise software company in the world. In its last fiscal year, the company’s revenues grew 24 percent to $21.3 billion. Customers include over 90 percent of the Fortune 500. Like a lot of IT vendors, Salesforce largely benefitted from the pandemic as companies leaned into investing in a remote, connected workforce. Furthermore, acquisitions like Tableau, MuleSoft and Slack have enabled the vendor to expand its enterprise footprint. The end result is what IT vendor executives’ dreams are made of – deep customer entrenchment and a clear path to doubling revenues in the next five years.
But the company’s appetite for growth has been costly. Internal pressure to increase profitability on every customer transaction is unusually high. Acquisition absorption has made pricing more inconsistent. And as Salesforce becomes more ingrained in the enterprise, many customers are losing sight of what they “own,” what’s actually being used, and how licenses are being managed.
This brings us to an irrefutable point – customers must go into their next Salesforce renewal more prepared than ever and with full visibility into the blind spots that lead to overspending. To accomplish this, customers need to focus on two cost-saving activities.
#1 – Assess Actual Usage to Identify Opportunities to Right-size or Liberate Licenses
As discussed in this white paper on how to eliminate toxic spend on large SaaS estates, SaaS cost waste is a pervasive problem – particularly for Salesforce customers. Reasons range from shadow IT to poor license management to ineffective SaaS management tools.
Another reason? Renewals tend to happen on autopilot. Customers rarely validate renewal requirements based on actual usage. They simply renew what they have and buy more. Inevitably, customers end up with bloated Salesforce estates and costs that grow exponentially from renewal to renewal.
A license optimization assessment is the first step in breaking the cycle of overspending. It thoroughly assesses your current state of usage to identify licenses that can be terminated or harvested for redeployment (thus avoiding/minimizing the need to purchase new licenses). Cost savings are typically identified in two areas:
- Rightsizing license assignments for certain users. Instead of defaulting to a standard license type (which typically offers more functionality than many users need), customers can identify opportunities to switch to more cost-effective license types.
- Liberation of license currency. Visibility into usage data helps customers spot inactive licenses that can be terminated or redeployed. These can be no-pulse users consuming valid licenses (a printer or coffee machine – yes, it happens!), former employees and contractors, users assigned to multiple active licenses or inactive users.
#2 – Optimize Licensing, Pricing and Terms within Your Salesforce Renewal Agreement
Now that you have a fact-based usage baseline for demand definition, it’s time to optimize your Salesforce renewal agreement accordingly. Which mix of licensing options will best fit your verified usage requirements and projected future demand? What are the cost implications for different licensing scenarios? What licensing strategy is optimal for your technical and business requirements over the full term of your agreement? Answering these questions will ensure you buy only what you need and select the best-fit license types for your user profiles and business model.
Another component of this exercise is building in protections that reduce cost risk over the term of your Salesforce agreement. It starts with performing IT price benchmark analysis to make sure you’re being quoted pricing and discounts that are either at or better than fair market for all the unique components of your renewal. Business terms such as compliance-related language, SLAs, data ownership, etc. are also areas that need to be optimized for cost avoidance.
Attack Your Salesforce Renewal with Confidence
There are two assumptions baked into Salesforce’s revenue model. The first is the complexity of the customer’s footprint – the bigger it is, the harder it is to manage. The second (a byproduct of the first) is most customers will approach their renewals with some degree of overwhelm or apathy.
The strategy outlined above neutralizes these assumptions and charts an easy road to savings. Here are a few examples of how NPI has helped customers save on their Salesforce renewals:
NPI’s SaaS License Optimization Assessment and Enterprise Agreement Renewal Optimization services can help you eliminate cost waste across your Salesforce estate. If you have a Salesforce renewal coming up, let us know.
- Bulletin: 9 Salesforce Negotiation Tips for Purchases & Renewals
- Webinar: Why Large SaaS Software Estates are Rife with Toxic Spend
- Blog: SaaS Subscription Management: Eliminating Toxic Spend
- NPI Service: SaaS License Optimization Assessment Services
- NPI Service: Enterprise Software License Optimization Consulting