Case Study – Salesforce Negotiation Service Australian Telecom Company Wins 30% Salesforce Savings and Unprecedented Flexibility in SELA
Background
The client is a major telecommunications company in Australia, providing mobile, internet, and TV services nationwide.
With 25,000 employees and a vast consumer and enterprise customer base, the company relies heavily on Salesforce: Service Cloud for customer support (utilizing thousands of call center agents), Sales Cloud for B2B sales teams, Marketing Cloud for campaign management, and MuleSoft to integrate Salesforce with billing and provisioning systems.
A few years ago, the telco entered a 5-year Salesforce Enterprise License Agreement (SELA) to cover its array of products.
As they approached the mid-term point, they recognized that some assumptions had changed (like a recent acquisition increasing user counts in some areas but plans to decommission a legacy system, reducing needs in others).
They engaged Redress Compliance to renegotiate and restructure the SELA to better fit their new reality and to extract more value as they headed into the latter half of the term.
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Challenges
- Locked-In All-You-Can-Eat vs Actual Usage: The existing SELA was based on a “fill the bucket” model – it covered up to X thousand Service Cloud and Sales Cloud users, Y million Marketing Cloud messages, etc., at a fixed price. Two years in, the telco realized that in some areas, they had overestimated usage (e.g., Marketing Cloud was only using 50% of the allotted messages), while in others, such as Service Cloud agents, they were nearing the cap and would have to pay overages or upgrade to increase capacity. The one-size SELA wasn’t aligning with the nuanced reality, leading to shelfware in one product and shortfalls in another.
- M&A and Organizational Changes: The company had acquired a smaller regional telecom, which brought in additional Salesforce users. At the same time, it planned to spin off one of its non-core business units, potentially reducing the number of users. The SELA did not have provisions for such true-down or reallocation – it assumed a static or growing usage in all categories. Without adjustment, the telco risked paying for licenses of spun-off employees who wouldn’t be with the company, while scrambling to cover new users from the acquisition.
- Dependency Clauses in Bundle: The initial SELA had some fine print: for example, the high discount on Service Cloud was contingent on maintaining a certain amount of Marketing Cloud spend. This bundling dependency meant if the telco wanted to cut back on Marketing Cloud (where they had excess), it could lose discounts on Service Cloud (which they heavily needed). This lack of decoupling effectively handcuffed their ability to optimize costs across product lines.
- Limited Exit Options: The SELA was a 5-year term with significant penalties for early termination or reduction. The telecom board was uneasy that they were over-committed in an industry that evolves quickly. If a new technology or vendor emerged, they felt stuck with Salesforce, regardless of whether it was a good fit or not, and the cost. They wanted more agility in vendor management, even within the Salesforce ecosystem.
How Redress Compliance Helped
- Mid-Term SELA Renegotiation: Redress Compliance launched a strategy to renegotiate the SELA mid-term (at the 2.5-year mark). While Salesforce is not always open to revisiting signed deals, Redress leveraged the client’s significant spend and upcoming needs as pressure points. The argument was that it was better for Salesforce to adjust terms and keep a happy client for the remaining term (and beyond) than to have a dissatisfied one considering alternatives at term end. Redress prepared a detailed usage vs allocation report to make the case undeniable – showing clearly where the telco was overpaying and where they needed more flexibility.
- Rebalancing the Allocation: In the renegotiation, Redress achieved a rebalancing of the SELA allocations. They negotiated to transfer a chunk of the unused Marketing Cloud contact/messages allotment value into additional Service Cloud agent licenses, where the client was short. Essentially, Salesforce agreed to let the telco swap value between products to better match actual usage (a testament to the client’s leverage and Redress’s negotiation). This meant no extra cost for the newly acquired users – the telco could absorb them under the SELA by utilizing the slack from another area.
- True-Down and Exit Clauses: Redress’s biggest coup was inserting flexibility clauses into the revised SELA. They secured a true-down clause allowing the telco to reduce up to 10% of the contract value if a business unit divestiture occurred (which covered the planned spin-off scenario). They also negotiated an opt-out option at year 4 with minimal penalty, giving the company an earlier exit point if they chose to pivot their strategy. This was highly unusual for a Salesforce ELA, but Redress argued that the telecom industry’s rapid change warranted it. The threat that the client might otherwise not renew anything after year 5 loomed in the background.
- Removing Dependency Conditions: The restructured deal stripped out the problematic dependency clause. Redress ensured that each product’s discount stood on its own. For example, Service Cloud’s high discount would remain even if the client reduced Marketing Cloud usage. Each component was essentially decoupled in terms of commitments, which meant the telco could right-size each cloud service independently moving forward.
- Benchmarking and Assurances: Redress also cross-checked the financial terms against those of other large tech and telecom Service Level Agreements (SLAs) globally, ensuring the pricing was at or better than market rates. They used this data to push for an additional concession: a flat renewal cap. Salesforce has committed to capping any renewal or extension of the SELA term at a single-digit percentage increase, assuming a similar scope, when the term expires. This removed the fear of a huge jump later.
Outcome and Impact
The Australian telecom’s Salesforce engagement is now much more aligned with its business needs and financially optimized:
- 30% Cost Savings (Reallocation Value): By reallocating unused resources and eliminating waste, the telco effectively avoided a 30% cost increase. Concretely, they avoided spending an estimated AUD 3 million on additional licenses and overage that they would have incurred without rebalancing. Instead, that value was recouped within the existing SELA – a direct savings to the bottom line.
- Maximized Utilization: The SELA now closely matches actual usage. The company is utilizing nearly 90-95% of what they’re paying for, up from about 70% before. There’s far less shelfware. Marketing Cloud capacity was adjusted down to realistic levels (saving cost), while Service Cloud user counts were adjusted up to accommodate every needed agent without overage fees. This means every dollar (or AUD) spent is working, driving ROI.
- Flexibility Secured: The inclusion of the true-down and the year-4 exit option fundamentally changed the risk profile of the deal. If the planned divestiture occurs, the telco can reduce the SELA spend proportionately, ensuring it is not financing software for employees it no longer has. With an earlier opt-out, they have an escape hatch if Salesforce doesn’t continue to deliver value, which in turn motivates Salesforce to invest in customer success. Essentially, the company regained leverage even while in a long-term contract.
- Decoupled Product Control: Each Salesforce product can now be scaled independently. If next year the marketing team wants to try a different campaign tool and reduce their Marketing Cloud usage by 50%, they can do so at renewal without losing their Service Cloud discount. This puts decision-making back in the client’s hands – they can mix and match solutions or adjust levels without fear of a “bundle penalty.” It also fosters more honest internal cost allocation, as each department sees the true cost of its Salesforce usage.
- Future-Proofing and Relationship Reset: The renegotiation not only fixed current issues but set the tone for the future. Salesforce and the client now have a more transparent, balanced relationship. The client feels heard and valued (Salesforce showed flexibility after all), and Salesforce, having conceded these points, will be keen to demonstrate value to retain the business post-term. The agreed cap on any future price increase also means the next negotiation starts from a reasonable place, not a daunting one. This stability is critical for long-term planning in the telco’s IT strategy.
Client Quote
“We thought we were stuck with an imperfect Salesforce deal until Redress Compliance showed us we could reshape it. Midway through our SELA, our business had changed and the contract wasn’t keeping up. Redress came in with deep expertise and negotiated what I’d call a minor miracle – we got to rebalance our usage, drop what we didn’t need, and even built in an exit strategy. These kinds of concessions are practically unheard of with Salesforce, but Redress made it happen. Now our contract fits our business like a glove, and we’re saving money and headache. Redress was the advocate we needed to go toe-to-toe with a giant supplier and come out on top. We have flexibility and control that I never imagined possible in a long-term SaaS deal.”
– CIO, Australian Telecom
Call-to-Action
Stuck in a rigid Salesforce ELA or long-term contract? It’s not too late to make a change. Contact Redress Compliance for a free Salesforce contract health check.
We’ll help you identify if you’re overspending or overcommitted, and map out options to renegotiate better terms – even mid-stream.
Our independent advice can unlock savings and flexibility in your Salesforce agreements, just as we achieved for Australia’s leading telecom.
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