SALESFORCE CONTRACT RISK OVERVIEW
Salesforce’s growth strategy is dependent on preserving annual spend levels and deterring attrition of licenses. As a method to support their growth strategy, Salesforce uses terms and conditions to eliminate the feasibility of switching solutions or reducing annual fees. In this Salesforce report, we dive into the top Salesforce contract ‘Gotchas’ used to lock in customers and continually drive cost increases. The Salesforce contract language that is addressed in this report include:
1. Salesforce Renewal Increases and Caps
Salesforce renewal language is very aggressive, often locking customers into an ever-increasing annual fee and limited flexibility to feasibly decrease Salesforce license counts. In this section, we detail what Salesforce renewal cap ranges we’ve observed, what Salesforce contract language and specific terms pose risks at renewal, and ways to achieve protective language from unforeseen Salesforce price increases.
2. Salesforce License Swap Rights
Many customers are unaware that they can negotiate with Salesforce to include language in their contract allowing for the swap of unused licensing for new licenses. However, when customers do achieve this language, it’s common for Salesforce contract loopholes to be included that limit the customers ability to effectively swap necessary licensing. In this section, learn all of the restrictions and loopholes Salesforce uses to swap rights and ways to achieve competitive swap rights to protect your future license flexibility.
3. Salesforce Audit & Restricted-Use Licenses
Though audit risk isn’t prevalent with SaaS suppliers, Salesforce contracts detail strict compliance rules related to their “restricted-use” licenses. These “restricted” licenses are priced at a fraction of the cost of a full-use license, but aren’t actually limited in any way. The price and usage restrictions are agreed upon only in the Salesforce contract, requiring the customer to enforce the restrictions manually. When many of these licenses are scaled in an organization, it becomes increasingly difficult to maintain compliance amongst users, thus opening the door to expensive true-up premiums on all restricted-use licenses. This section details where these Salesforce audit terms are hidden and the competitive contract language to include to protect yourself if Salesforce compliance is ever compromised.
Salesforce contract terms and conditions are an integral part of their supplier strategy. Salesforce will not concede to competitive terms without a strong negotiating position, because its success is tied to maintaining their standard contract language. To execute a successful Salesforce deal, negotiators need to be wary of all Salesforce contract risks and ways to protect their organization from future cost increases. For additional assistance on your Salesforce purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.