Case Study – Salesforce Negotiation Service German Manufacturing Group Optimizes Salesforce SELA, Saving €4M and Unifying Global Usage
Background
The client is a German manufacturing conglomerate with operations across Europe, Asia, and the Americas.
With over 50,000 employees and diverse business units (automotive parts, industrial equipment, and engineering services), the group had accumulated multiple Salesforce orgs and contracts.
They primarily used Sales Cloud and Service Cloud in different divisions, and had begun deploying MuleSoft to integrate Salesforce with their SAP ERP systems. Before engaging Redress, each division had negotiated with Salesforce separately, resulting in inconsistent pricing and contract terms.
The parent company’s CIO initiated a move to consolidate into a single Salesforce Enterprise License Agreement (SELA) to cover the entire group’s usage.
Redress Compliance was brought in to advise on this unification and negotiate a cost-effective, flexible enterprise deal.
Read how to negotiate with Salesforce.
Challenges
- Fragmented Contracts and Spend: The conglomerate had five different Salesforce contracts across regions, each with a different renewal date and varying discount levels. This fragmentation meant they weren’t fully capitalizing on their collective bargaining power. Salesforce’s SELA offer to unify them was supposed to solve this, but initially it seemed to simply sum up the costs rather than truly discount them. The challenge was to turn fragmentation into leverage for a better group-wide rate.
- Over-Estimation in SELA Quote: Salesforce’s first SELA proposal included a hefty annual commitment that assumed the highest license counts from each division, plus additional growth. Essentially, Salesforce double-counted some usage and added a growth premium, resulting in a bloated number. If accepted, the group might pay for thousands of licenses that some divisions would never use (shelfware).
- Bundling of Unneeded Products: The draft SELA bundled products that were of interest to only one or two divisions. For example, Marketing Cloud and Tableau were included, even though only the retail machinery division had plans for them. This all-inclusiveness threatened to make other divisions subsidize products they didn’t need. The client needed an enterprise deal that was broad but not forcing every product on every unit.
- Internal Alignment and Visibility: Different units had different priorities – sales teams in Asia wanted more Sales Cloud features, European support teams were concerned about Service Cloud pricing, and IT departments sought increased MuleSoft capacity, among others. The CIO’s team had to balance these interests. Moreover, usage data was siloed. Obtaining a clear picture of total licenses in use, true needs, and required plans necessitated significant internal coordination, which was still ongoing as negotiations commenced. This initially made it difficult to present a unified stance to Salesforce.
How Redress Compliance Helped
- Global Usage Inventory: Redress Compliance undertook a comprehensive inventory of all Salesforce usage across the group. They collected data on the number of users of each cloud within each division, peak usage metrics, and which products were utilized. This inventory was eye-opening – for instance, they discovered that the group had a total of 8,000 Sales Cloud users (not 10,000, as Salesforce’s quote had assumed) and that one division’s “500 Marketing Cloud users” were never even deployed after a pilot. By establishing the real baseline, Redress prevented the client from over-committing to phantom usage.
- One-Team Negotiation Strategy: Redress helped the conglomerate establish a single negotiation task force, bringing together leaders from IT, procurement, and business units. They created an internal unified requirements document outlining exactly what the group needed in a SELA (and what it didn’t). This document became the playbook in discussions with Salesforce – a clear message that the client knew their numbers and would not pay for anything beyond actual requirements.
- Right-Sizing the SELA: Using the accurate inventory, Redress countered Salesforce’s proposal by trimming the license counts and products. They removed products not needed across the group from the core SELA and instead negotiated them as optional add-ons for the specific divisions that wanted them. For example, Tableau was initially offered as an optional service for the analytics team, with separate pricing, rather than being included in the main contract for all. This dramatically reduced the baseline commit. Redress also negotiated a phased ramp-up for any planned expansions – if one region was expected to add 200 users next year, those licenses would be priced now but not charged until they were deployed.
- Discount Consolidation and Benchmarking: Redress leveraged the fact that previously, some divisions had secured decent discounts (say 20-25%), while others had very poor terms (5-10%). In a unified deal, Salesforce initially offered around a 20% discount across the board. Redress pushed back hard, presenting benchmark data for large enterprise deals and highlighting the total contract value the group represented. They argued for top-tier enterprise discounts (in the 40%+ range) given the multi-product, multi-year nature of the SELA. After tough negotiations, Salesforce agreed to significantly improve the rate, particularly on the core Sales Cloud, which accounted for the bulk of the spend.
- Flexibility and Co-terming Clauses: A major win was integrating flexibility clauses. Redress secured co-term alignment for all divisions with a common renewal date, simplifying future management. They also negotiated true-down rights of 10% each year – a critical provision, as some business units might shrink or divest during the term. Additionally, they included a transferability clause that allowed the company to reassign unused licenses from one division to another (or to a new acquisition) without incurring additional fees, which was crucial for the dynamic nature of their business.
- Euro Currency Protection: Given currency fluctuations (Salesforce contracts are often in USD but the client operates in EUR), Redress included a clause to cap currency risk. The SELA fees would be fixed in Euros or have an agreed conversion rate band, ensuring the client wouldn’t face a surprise cost increase due to exchange rate changes over the years – a detail particularly valuable for the German finance team.
Outcome and Impact
The German manufacturing group’s new Salesforce SELA delivered a streamlined and cost-effective solution:
- €4 Million in Savings: The final SELA contract value was approximately €10 million per year, down from about €14 million per year in the initial Salesforce quote, representing a roughly 30% reduction. Over the 3-year term, that’s €12M saved (approximately $13M) compared to what they would have paid without negotiating. This was achieved by eliminating unused licenses, removing unnecessary products from the bundle, and securing higher discounts for the volume.
- Unified Yet Tailored Agreement: All divisions are now under one master Salesforce contract, which significantly simplifies vendor management and lends the group greater influence. Yet, thanks to Redress’s structuring, the deal is tailored so that divisions only consume the products they need. Optional add-ons, such as Tableau or Marketing Cloud, can be subscribed to by interested units at pre-negotiated rates, without forcing other units to bear those costs.
- Optimized License Counts: The SELA covers an optimized license count (e.g., 8,000 Sales Cloud, 3,000 Service Cloud, etc.) aligned to current usage. With internal transfer rights, if one business unit does not utilize all of its allotment, those licenses can be reassigned elsewhere within the company, ensuring high utilization. Essentially, the group will no longer pay for one area’s shelfware while another area needs more licenses – they can balance within the enterprise allotment.
- Flexibility and Risk Mitigation: The 10% annual true-down means if the group’s overall Salesforce need declines (for example, if they divest a small product line and 500 users drop off), they can reduce the commitment accordingly at year-end. This is a safeguard against overpaying during market downturns or restructuring. The currency protection clause also gives financial peace of mind; the cost in Euros is predictable and won’t spike due to FX volatility.
- Strategic Partnership with Salesforce: By reaching a win-win mega-deal, the relationship with Salesforce has been elevated. Salesforce assigned a strategic account team to the conglomerate, including executive sponsors, to ensure they get value and potentially expand usage in the right areas. The client, on the other hand, feels in control of their Salesforce environment – they have a clear overview of what’s being used globally and a contract that supports governance. The internal collaboration fostered by this project also means the various divisions are now sharing Salesforce best practices, further boosting ROI on the platform.
Client Quote
“Redress Compliance helped us turn a scattered mess of contracts into a single, smart Salesforce agreement. We knew unifying our contracts could save money, but Redress took it to another level – millions saved, and a contract that fits how we operate. They navigated language barriers, currency issues, and our complex organization with ease. Salesforce’s first offer wasn’t great; it assumed too much and gave too little. Redress rewrote the rules of the deal. Now we have one enterprise agreement, tailored to each unit’s needs, with flexibility if things change. It’s efficient and cost-effective. We finally feel like we’re driving our Salesforce strategy, not the other way around. Redress was the catalyst in making that happen.”
– Group CIO, Manufacturing Conglomerate (Germany)
Call-to-Action
Large enterprise with multiple Salesforce contracts? Contact Redress Compliance for a free Salesforce consolidation review. We’ll show you how to leverage your global footprint to obtain better pricing, eliminate duplicate costs, and build flexibility into your Salesforce agreements – just as we did for this German manufacturing group.
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