Gartner Research

Key Terms to Negotiate in Your Salesforce Master Subscription Agreement

Published: 14 April 2016

Summary

Technology procurement leaders often don't know what can be negotiated in Salesforce subscriptions. Protecting the renewal price and subscription metric, documenting what is in the various service editions, and getting SLAs with meaningful remedies are critical to contain cost and risk.

Included in Full Research

  • Key Challenges
  • Failing to Focus on Key Contract Terms When Negotiating the Initial Salesforce Deal Will Have a Detrimental Impact (Within Three to Six Years)
    • Salesforce Is One of the Largest SaaS and PaaS Providers by Revenue and Customer Base
    • Salesforce Will Negotiate Contract Terms
  • Include Descriptions of Salesforce Editions in the Contract, With Rebundling Protections
    • Service-Line Rebundling Protections Must Be Negotiated
    • Understanding and Documenting the Contractual Limitations Within Salesforce Services and Editions Is Critical
    • Negotiate Proactive Notification When You Are on the Threshold of a Limit
  • Ensure That Any Documents That Are Referenced by Website Links Are Included in the Contract and That Your Entitlements Do Not Diminish
  • Negotiate a Maximum Net Price Increase of 3% to 5% on Any Renewal Term
    • Do Not Expect to Get the Same or Reduced Pricing on Renewal Unless It Is Negotiated
  • Negotiate a Total Account Value Recognition Clause
  • Negotiate Unit-Price Reductions If Volumes Increase Significantly, as Well as Price Holds for Additional Service Lines
    • Lock in Price Holds for Adding Incremental Service Lines
  • Define the Pricing Metric, and Ensure That You Can Do at Least One Renewal Using That Same Metric to Protect Against Future Price Increases
    • Salesforce Has a Number of Different Pricing Metrics — the Mechanism Used to Calculate Fees
    • Ensure That at Least One Renewal Can Be Done Using the Pricing Metrics That Are Established, or Risk Unbudgeted Renewal Costs
    • Technology Trends Such as Smart Machines May Trigger Future Changes in Named-User Pricing Across the Industry
  • Negotiate SLAs Related to Uptime and, If Possible, Performance and Backup and Recovery
    • Salesforce Tends to Offer an Uptime SLA of 98%, Which Is Below Market Standards
    • Salesforce SLA Exclusions Are More Extensive Than Industry Standards
    • There Are Also No SLAs for Critical Elements Such as Backup, Recovery, Performance or Service and Support
  • Negotiate Effective Remedies If the SLAs Are Missed
  • Negotiate Data Extraction and Termination Clauses
    • Salesforce Will Not Negotiate Termination for Convenience
    • Ensure That Salesforce Cannot Terminate You With 30-Days' Notice
    • Ensure That Data Access Is Not Charged
    • Negotiate for 60 days to Get Your Data in the Event of Termination, Before It Is Deleted
    • As Part of Termination Processes, All Links to Third-/Fourth-Party Providers Should Also Be Terminated
    • Develop a Contract Exit Checklist
  • Negotiate Definitions of Indirect Access Clauses
    • Indirect Access Clauses in Salesforce Agreements Could Be Problematic
  • Recognize the Standard Agreements Offer No Reduction in Fees If Usage Goes Down, but Those Negotiating With High Leverage Should Strive to Address This
    • Do Not Expect All Salesforce Terms to Be Negotiable

Analysts:

Jo Liversidge Alexa Bona

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