The rise of Salesforce.com is nothing less than mind-blowing. It could be argued that Salesforce invented Software-as-a-Service (SaaS). After all, the company was founded in 1999 by a few guys who believed software could be better delivered if the barriers to entry, ongoing maintenance and platform complexity were removed. At the time, the concept was revolutionary.
Companies were quite comfortable with the status quo – investing millions in upfront costs to purchase on-site software, spending months and even years implementing the software, and hiring specifically-trained IT personnel to maintain and continually upgrade the software. The bigger companies, therefore, had the advantage as smaller companies couldn’t afford such resources.
Salesforce aimed to level the playing field and give companies of all sizes a massive break by completely reinventing how software was purchased, maintained and used. Today, the company has created an empire that will soon surpass the $400B in GDP mark. Here are a few other remarkable statistics:
- Fiscal 2017 fourth-quarter revenue is reported at $2.2B, up 27% YOY
- Salesforce expects for fiscal 2018, they will deliver more than $10B in revenue, reaching that milestone faster than any enterprise software company in history
- 58% of companies have integrated or plan to integrate Salesforce clouds
- 86% of Salesforce customers believe they can use the software to drive innovation
- 31% of IT professionals plan to invest in the Salesforce Platform in the next 12 months
But Wait, There’s More
Salesforce didn’t stop with Software-as-a-Service. They realized they could also exist as a Platform-as-a-Service (PaaS) with the invention of their AppExchange. Considered the “iTunes of business software,” AppExchange offers partners a place where they can develop their own applications and open them up to all Salesforce customers.
Then there was Apex, Visualforce, Salesforce Marketing Cloud, Salesforce1 and Einstein. The company is constantly innovating and dreaming up the next big thing. Their upcoming annual Dreamforce conference, where the company releases their new ideas, attracts close to 200,000 guests each year and celebrities with names like Michelle Obama, Alicia Keys and Lenny Kravitz. Not too shabby for a company that started in a one bedroom apartment less than 20 years ago.
Controlling the Beast
With Salesforce dominating the enterprise software space, it’s no wonder its licensing is rather expensive. It is not unusual for it to be at the top of a company’s total IT software spend. As useful and critical as Salesforce is to many companies, managing it and controlling costs is a full-time job. It also requires companies to employ dedicated, trained personnel for its administration, operation and procurement.
SaaS management software is the ideal solution for reigning in Salesforce spend and keeping the contracts right-sized. It brings transparency that administrators and business leaders require to properly manage the software and enforce governance. Here are three areas that SaaS management software directly impacts:
1. Shadow IT and Redundancy
For decentralized businesses or those with multiple locations, it is possible that individual employees or business lines have subscribed to Salesforce.com on their own – without notifying IT or obtaining any permissions. While shadow IT fundamentally introduces risk into the organization, it also increases costs and dilutes license purchasing power.
Companies can use SaaS management software to discover where Salesforce is being used (reported or not) and where an overlap in licenses exists. They can then combine those instances and broaden the number of seats needed to increase purchase power. With more oversight, companies can reduce the number of unreported and redundant instances.
Salesforce licenses aren’t cheap. Every license is worth it, only if it is being fully utilized. It’s one thing to know employees are using Salesforce. It’s quite another to know who is using it and to what degree. Companies don’t need to pay for more than what they are actually using, but they must be able to see what is actually being used in order to know if they are a victim.
SaaS management software gives companies the ability to track utilization per Salesforce product in order to identify underutilized or abandoned licenses. Those licenses can be recycled instead of users being granted additional budget. Presenting these available licenses in an easily accessible report, combined with an enforceable procurement protocol, empowers employees to get what they need without costing the company unnecessary fees.
Every year, SaaS contracts come to an end unless they are renewed. Same goes for Salesforce.com. Whether a company opts to have their contract auto-renew or they work through negotiations each year, organizations should understand if their contract(s) are still serving them well. Change is a constant, making it important to at least review contract terms and make sure they are aligned with the current and near future needs of the company.
SaaS management software arms companies with the real-time and historical data they need to justify contract negotiations that may reduce costs. The goal is to right-size the Salesforce contract so companies are paying only for what they are using now and will need to use in the coming year as they grow. Never assume any company will provide this information for you. They may have good intentions, but the burden of proof rests on the purchaser.
Don’t let the costs of Salesforce run unchecked. You need transparency into utilization in order to know if you’re getting what you’re paying for or if there is room to negotiate better terms. You can reduce your Salesforce SaaS spend by using a tool built for it. Spreadsheets aren’t adequate. An automated system that monitors all SaaS vendors, contracts and applications across the enterprise is the only way to take control of your cloud ecosystem.