Renewing or Exiting a Salesforce SELA:
As a Salesforce Enterprise License Agreement (SELA) nears its end, CIOs and IT procurement leaders must decide whether to renew on similar terms or transition to a more flexible licensing model.
This article guides enterprises through end-of-term planning: assessing the current SELA’s value, evaluating alternatives, and preparing for robust renewal negotiations (or an exit strategy).
Evaluate Your Current SELA Performance
Before making decisions, perform a comprehensive assessment of how the SELA worked out:
- Usage vs. Entitlement: Compare the products and user counts you committed to with actual utilization. Identify major gaps. If your SELA included 1,000 Platform licenses but only 400 are in use, that’s a significant overcommitment. Understand where you overpaid and where you fully utilized the license.
- Cost vs. Benefit: Calculate your cost per active user or product under the SELA. Determine if it was higher than expected (perhaps paying for unused capacity) or if it delivered value (e.g., allowing a wider rollout of tools). Document the major benefits and inefficiencies to inform your next move. Also, gather qualitative feedback from business units and finance about what worked well and what didn’t—their input adds context to the numbers.
Consider Your Post-SELA Options
With a clear picture of past performance, decide on the path forward:
- Renew the SELA: If it provided strong value and high adoption, you can consider renewing, but renegotiate it. Don’t simply roll it over; use your usage data to drop unused components, adjust user counts, and push for deeper discounts now that you have real usage experience.
- Switch to Standard Licensing: If the SELA resulted in a lot of waste or your needs have changed, moving back to Salesforce’s standard subscription model can save money and increase flexibility. Often, companies find they only fully use a subset of the SELA’s products – it may be cheaper to license those few individually. (Salesforce won’t suggest this option, but you can raise it.)
- Hybrid Approach: As a middle ground, you could negotiate a smaller ELA or a short extension. For example, keep an SELA for your most critical products but handle lesser-used products with standard licenses, or do a one-year bridge contract while transitioning. The goal is to right-size the deal rather than make an all-or-nothing choice.
Read Managing a Salesforce SELA: Maximizing Value and Avoiding Pitfalls During the Term.
Prepare for the Renewal Negotiation
Start renewal preparations well in advance (6–12 months before expiration):
- Internal Alignment: Brief your executive sponsors and budget owners on the plan (whether you intend to renew the SELA or exit, and the key changes you’ll seek). Getting everyone on board early prevents internal conflicts during negotiations.
- Time Your Approach: Engage your Salesforce rep strategically. Negotiating near Salesforce’s end-of-quarter or fiscal year-end can often motivate them to offer better discounts. But also ensure you have a few months of cushion to negotiate thoroughly—don’t let the clock run out.
- Negotiate the Details: Go into talks with a clear list of changes you want. Remove any products that weren’t used, push for a better discount (or at least prevent any price increase), consider adding new products you need (at locked-in prices), and seek any clauses you wish you’d had (like a true-down right or more flexible terms). Treat this like a fresh deal – nothing is automatic at renewal unless you renegotiate it.
Recommendations
- Learn from the Past: Leverage everything you learned during the SELA term – usage data, what worked, and what didn’t – to drive a harder bargain now. You have real leverage with information.
- Don’t Auto-Renew: Approach the renewal as a new negotiation. Even if you’ll stick with a SELA, act as if you might walk away. This mindset helps you secure concessions instead of accepting the status quo.
- Consider Competitive Pressure: If feasible, solicit quotes from Salesforce competitors (or at least build an internal business case for alternatives). Just having a credible fallback can strengthen your hand with Salesforce.
- Seek Shorter Commitments: If flexibility was an issue last time, try for a shorter term or an opt-out clause in the new contract. You might give up a bit of discount, but it can be worth it if your needs are hard to predict.
- Budget for Change: If you plan to exit the SELA, prepare your budget for how costs may shift. Some components might have been heavily discounted in the SELA bundle – unbundling them could raise certain costs, so plan and negotiate to mitigate that.
- Executive Involvement: If negotiations stall, involve a C-level (CIO or CEO) to talk to Salesforce executives. High-level intervention can sometimes unlock a better deal when millions are on the line.
FAQ
Q1: How far in advance should we start preparing for a SELA renewal?
A: Ideally, start internal discussions about a year before expiration and engage Salesforce ~3–6 months before. Long lead times ensure you aren’t rushed and can evaluate all options thoroughly.
Q2: Will Salesforce give us a better deal if we threaten to leave the SELA?
A: Very likely – if you present data (even competitor quotes) showing you’d save by leaving, Salesforce will often counter with a better deal. But you must be ready to follow through if they don’t improve enough.
Q3: What if we want to renew the SELA but our budget is lower?
A: Tell Salesforce about your constraints and show your usage analysis. You may have over-bought last time. Propose a scaled-down SELA that fits your new budget (fewer products or users). Salesforce would prefer to keep you as a customer on a smaller deal than lose you entirely.
Q4: Are there any penalties for not renewing the SELA?
A: No financial penalty for ending at the contract’s expiration. Ensure you follow any notice requirements (e.g., giving 30 days’ notice of non-renewal if the contract stipulates that). Otherwise, you simply revert to no SELA when it ends.
Q5: Can we negotiate a trial period or short extension instead of a full renewal?
A: Yes. You can ask for a short extension (say 6–12 months) if you need more time to decide or align budget cycles. Salesforce might agree to a bridge extension, though possibly at less generous terms. It’s also possible to renew only part of the SELA for a short term while deciding on the rest.
Q6: What if we want to drop one of the products bundled in our SELA?
A: You absolutely should negotiate that at renewal. If a product wasn’t used, tell Salesforce it must be removed (unbundled) in the new deal. Ensure dropping it doesn’t affect discounts on the remaining items – insist on standalone pricing for each component.
Q7: Is it difficult to switch from a SELA to individual licenses?
A: It requires planning, but it’s manageable. Work with Salesforce beforehand to sign new Order Forms for the specific products/users you need after the SELA. Coordinate the start date of those new subscriptions to begin right when your SELA ends, so users experience no disruption.
Q8: How can we avoid a big cost spike after the SELA?
A: Negotiate to keep your new per-user prices close to your effective rates under the SELA. Also consider phasing changes (drop some products now, others later) to spread out any cost increases and avoid a sudden budget spike.
Q9: Should we consider a different type of enterprise agreement instead of another SELA?
A: Possibly. Salesforce might offer alternative constructs or custom deals. If a full SELA was overkill, you could explore a smaller-scale enterprise deal or multi-year discount program. Don’t hesitate to ask Salesforce for creative options – they often prefer to find a compromise rather than lose your business.
Q10: What if someone else acquired our company during the renewal process?
A: Try to include flexibility in the new contract to handle that. For example, negotiate an assignment clause (so the agreement can transfer to a new owner) or even a right to terminate if your company is acquired. These terms can protect you in an M&A scenario. Involve legal teams to ensure any renewed SELA can adapt to such a major change.
Read about our Salesforce Negotiation Service.
