Case Study: Optimizing Software License Spend Management with Salesforce as an Example

Problem: Escalating Software License Costs

A leading Silicon Valley company was facing escalating software license costs, particularly in managing its Salesforce licenses. The company had two main user groups:

1. External Users: 95% of users, with 80% accessing Salesforce only once a year to renew contracts, and the remaining 20% accessing it on a monthly or quarterly basis.
2. Internal Users: 5% of users, with 80% accessing Salesforce only once a quarter to review sales goals, and the remaining 20% accessing it more frequently (weekly or monthly).

The company struggled with over-provisioning and underutilization of Salesforce licenses, leading to significant costs. The organic user growth of 1,200 new external users per week only added to the issue, further exacerbating licensing inefficiencies.

Challenges:

• Manual License Management: The IT team attempted to reduce license costs by deactivating users who were inactive for 12 months. However, the process was manual and led to inefficiencies, as licenses had to be reassigned or reactivated when users returned. This resulted in operational overhead and delays in contract renewals.
• Inefficient License Allocation: Over-provisioned licenses and underutilized users were causing unnecessary costs across the company.
• Increased Operational Costs: The manual process created additional support cases, delays in turnaround times, and user frustration, ultimately impacting timely contract renewals.

Solution: Streamlined Software License Spend Management

To address these challenges, we implemented a comprehensive software license optimization solution, using Salesforce as an example of best practices for managing software spend across multiple platforms.

Implementation Steps:

1. Data Analysis: We conducted a detailed analysis of three years of historical usage data to identify patterns and inefficiencies in license allocation. The data revealed key trends in user behavior, which helped pinpoint over-provisioned and underutilized licenses.
2. Automated License Reclamation: A system was implemented to automatically deactivate licenses for inactive users, freeing up resources and eliminating the need for manual reactivation.
3. Dynamic Provisioning: Licenses were allocated dynamically based on actual usage, ensuring that only active users had access to the platform, and automatically reallocating licenses when users returned.
4. Real-Time Monitoring & Reporting: We introduced continuous monitoring of license usage, enabling proactive identification of trends and usage spikes. This allowed for real-time adjustments to ensure optimal license allocation.
5. Vendor and Contract Management: We assisted in renegotiating third-party software contracts, including Salesforce’s AppExchange package, optimizing the licensing terms to further reduce costs.

The Impact:

By implementing a proactive approach to software license spend management, the company achieved significant improvements:

• Cost Savings: The company saved $250k per quarter on Salesforce licenses, including a reduction in third-party AppExchange package costs.
• Reduced IT Overhead: Automation eliminated manual license management tasks, freeing up IT resources for more strategic initiatives.
• Improved Vendor Contracts: Renegotiating the third-party AppExchange security package reduced annual licensing fees from $300k to $50k.
• Enhanced Operational Efficiency: The automated provisioning, reclamation, and real-time monitoring process reduced support cases, improved response times, and ensured timely contract renewals.
• Optimized Software Spend: This solution not only optimized Salesforce license spend but also created a scalable model for managing software spend across other platforms, ensuring long-term cost sustainability.

Conclusion:

This case study demonstrates how a structured, data-driven approach to software license spend management can deliver significant savings, improved efficiency, and enhanced ROI. By automating license management, optimizing resource allocation, and renegotiating vendor contracts, businesses can maximize the value of their software investments while controlling costs.

Let’s Optimize Your Software Spend

If your organization is facing challenges in software license management or seeking to reduce unnecessary licensing costs, we can help. Contact us today to learn how we can help optimize your software spend and drive greater value from your technology investments.