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Salesforce users: Big contracts signed early may get you special discounts, but watch out after that

Katherine Noyes | Nov. 6, 2015
Be prepared for price hikes of as much as 5 percent annually, a report suggests.

"If you don't need the functionality or users, there is a big risk in signing on for it, since it will be hard, if not impossible, to scale down from there," she said.

Such tactics are not unlike those commonly employed over the years by traditional software vendors, noted Frank Scavo, president of IT consultancy Strativa.

"Software-as-a-service is architecturally different from on-premises systems, but SaaS providers often behave a lot like the old players they claim to be disrupting," Scavo said.

"My advice to software buyers is the same, whether SaaS or traditional license," he added. "Don’t buy things you don’t need right away, just because the vendor is offering a discount; don’t pay for services up front; and be sure your contract stipulates how much the vendor can increase the price at renewal time."

Besides helping Salesforce ensure fuller buy-in to its whole suite of products, the strategy also makes sense in terms of making sure customers think in terms of whole customer processes, said Denis Pombriant, managing principal at Beagle Research Group.

Many companies that use only Salesforce's SFA sales automation tool, for example, "would have a hard time maximizing the benefit of process automation if they don't already have marketing," he explained. "Much the same can be said of service, too."

Of course, "Salesforce has a year-end coming up," he added, "so this kind of tactic makes some sense for that reason, too."

 

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