What Is Necessary for Managing a Salesforce Audit for Software Buyers?

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Executive Summary

This article addresses one of the most critical factors for managing a Salesforce audit.

Introduction

Considering the problems or issues in dealing with a Salesforce audit is crucial.

Issue #1: How Salesforce Takes Advantage of Setting Customers Off-Balance With the Salesforce Audit

Audits effectively put customers at a disadvantage because Salesforce begins with an information advantage. Salesforce has an audit team that specializes in audits, whereas Salesforce customers typically do not have a specialized team that works to defend against audits. And this means that to fight an audit, the customer needs to allocate people who are nearly always working full-time to cover the audit response partially.

Issue #2: The Short Timeline Imposed by the Salesforce Audit

Salesforce customers find audit letters very threatening. Salesforce takes advantage of this and heightens the tension by placing tight deadlines, often a month or less, on the Salesforce customer. There is no other reason for this timeline except to pressure the customer. However, when asked why the deadline is so restrictive, the only answer you can expect is that it is “standard.” Standard is a term often used by Salesforce where no logical reason can be given.

This condensed decision-making requires the company to make several decisions under time duress.

Issue #3: The Salesforce Audit as a Way of X-Raying the Customer’s Salesforce Environment

Salesforce audits have several purposes. Naturally, they are always motivated to make more money from Salesforce, but their actual intent differs from their declared intent. Audits are about the assigned sales rep getting more information about the account. Audits are a perfect cover story to obtain this information. The presented intent is innocent; Salesforce is.

“Only trying to make sure there is no underlicensing.”

The Benefits to Salesforce are the Following

Salesforce does not have to say they want information they can use to sell more Salesforce products.
Salesforce does not have to admit they are unhappy with the revenues from the account.
Audits are the ultimate cloaked passive-aggressive move against the customer.

Issue #4: The Salesforce Audit as a Way of Salesforce Using a Stick Instead of the Carrot

This is one reason why audits are more common for customers that fall into the following categories.

Customers that are viewed as not sufficiently open to the sales rep.
Customers who are not buying the number of Salesforce products and licenses the sales rep expects them to (given the company’s size, the experience of the sales rep, and other factors). Salesforce knows how much has been sold to the account by date. Sales reps can query the database to see which customers are behind in expected revenue.
Customers that are not responsive to sales reps’ attempts to contact the customer. We had even heard sales reps declare that a company had come under an audit when they had not returned the customer to the sales rep.

Salesforce accounts run a spectrum of those with good relationships with Salesforce to those with bad relations. Audits are far more common for those customers towards the bad end of the Salesforce relationship spectrum. A Salesforce audit communicates to the customer that the carrot approach to making more software sales has not borne fruit and that Salesforce is moving towards the stick. For example, audits are far more likely if the Salesforce customer has not renewed their Salesforce support and either brought support internally or gone with a third-party support provider. If audits are merely an attempt to determine if there is under licensing, why do audits so frequently follow nonrenewals of support? Salesforce sales reps have a distaste for customers dropping support for the following reasons.

Salesforce receives over a 90% margin on support. Therefore Salesforce support sales are a type of “free money” for Salesforce.
Salesforce stops receiving information about the account that sales can use when support is severed.
It is viewed as a sign of disloyalty to Salesforce. Salesforce sales aggressively push Salesforce support, so the action of not renewing support illustrates to Salesforce that the customer is beginning to get wise to their game.

This is why audits cannot be thought of as what software vendors say they are, which is an attempt to determine whether there is under-licensing.

Issue #5: The Salesforce Audits As a Combination of Intimidation and Information Gathering

The intent is most certainly to intimidate the account. Still, in addition to this, the Salesforce sales rep is not only looking to know the license situation of the account that is under audit but to gain information about the customer that they could not obtain without the audit. This information will subsequently be used to sell more Salesforce products into the account, and this is generally not acknowledged in the official definitions of a software audit. Let us look at an example.

See this explanation of a software audit in the following quotation.

The primary benefits a corporation receives from performing a software licensing audit are greater control and various forms of cost savings. The audit is used both as an efficiency mechanism to improve software distribution within an organisation and as a preventative mechanism to avoid copyright infringement prosecution by software companies. Software licensing audits are an important part of software asset management, but also serve as a method of corporate reputation management by ensuring that the company is operating within legal and ethical guidelines. – Wikipedia

And this quotation.

A software audit is an internal or external review of a software program to check its quality, progress or adherence to plans, standards and regulations. The process is conducted by either internal teams or by one or more independent auditors.

Software audits may be conducted for many reasons, including the following:

to track and report software use, including frequency and who is using the software;
to verify licensing compliance;
to monitor for quality assurance (QA);
to comply with industry standards; and
to meet legal requirements. – TechTarget

Notice that in both explanations of software audits, there is no discussion of any other topic but the interest of the software vendor in determining license compliance. These explanations are what software vendors would like software buyers to think is the extent of the purpose of an audit. Notice there is also no discussion around the coordination between sales and the audit team in this quote.

And that is the critical thing to understand — audit teams share everything with the sales rep, which is not discussed with the account, and the Salesforce license audit team maintains a pretense of independence from sales. However, Salesforce audits are fundamentally part of the sales process.

Issue #6: How Salesforce Will Undermine the Principle Customer Audit Contact

During the initial purchase negotiation, the Salesforce audit and sales teams do not want to deal with experienced negotiators or those experienced with Salesforce audits. Salesforce’s way around this is to go over the heads of the person assigned to manage the audit. If they can do this, they can undermine this person’s position. The executives, who are not in a place of domain expertise to manage a Salesforce license audit defense, will be in the position to do so. Salesforce knows that the more the executives get involved, the more reactive the audit becomes, and the more Salesforce can benefit from the audit.

Therefore, Salesforce audits are a battle between Salesforce, which is trying to negotiate directly with the executives, and Salesforce customers, which is trying to have people with expertise in the topic defend the audit. However, many executives cannot resist the bait put out by Salesforce. This is particularly true if the Salesforce audit team or Salesforce sales rep can successfully undermine the person assigned to manage the audit or scare the executive into thinking they need to get personally involved.

Issue #7: The Discrepancy in Audit Experience Between Salesforce and the Customer

The Salesforce license audit team audits companies for a living. The Salesforce sales rep will typically have participated in several audits already.

This means they both are good at putting the screws on customers and manipulating the audit to the best possible outcomes for Salesforce. Before the audit, the Salesforce sales rep would have shared much information about the customer before the customer ever met the audit team. Furthermore, the consulting partner constantly shares news with the sales rep without informing their client that they are doing so. Even if the sales rep has not been on site for a year or more, in many cases, the Salesforce consulting partner has been there every workday. All of this means that the audit team knows the internal political environment of the customer while they pretend only to carry forward a technical audit.

The customer, on the other hand, only occasionally deals with audits.

Reasons Salesforce Customers Should Not Go It Alone With Audits

IT departments are configured and staffed to “keep the lights on,” not to manage audits.
This is why it usually is not a good idea for Salesforce customers to deal with audits independently without availing themselves of support from those with far more experience in the area.

Now that we have discussed some of the significant issues with Salesforce audits let us discuss the two major stages of a Salesforce license audit.

Stage One: About The Salesforce Software License Usage Analysis

One topic is what software to use to record the usage of the Salesforce systems, and the other is what support to bring in to help defend the audit. Another is using the usage diagnostic transactions that are within Salesforce.

In addition to areas where the company may be under-licensed, there are invariably areas of purchased license that are over-licensed.

Determining usage versus licensing is only one part of an effective audit defense.

Option #1: No Shortfall is Found

In some cases, there is no licensing shortfall, Salesforce has no leverage to force a purchase and leaves with a large cache of information they did not previously have.

Option #2: Under licensing is Discovered

However, in cases under licensing, the typical result will be for the Salesforce customer to buy a product. The Salesforce sales rep, who has been in contact with the auditing team throughout the audit, will press for the Salesforce customer to purchase a Salesforce product, particularly one pushed by their sales management. And this gets into the topic of whether the customer will implement this product or only buy the product to satisfy the current under licensing. This is another important topic that must be analyzed.

Stage Two: The Negotiation

Once the state of license usage has been ascertained and agreed upon by the Salesforce customer and Salesforce, the following process is all about negotiating the outcome.

At this point, many customers are depleted. They have spent so much time worrying about the implications of being under-licensed, combined with consolidating the information about system licensing and usage — and of course, under time duress, that they are often unprepared for what is perhaps an essential part of the audit process — which is the negotiation on remediation.

What We Do

Providing excellent software license consulting support for a Salesforce license audit is understanding the technical, political, negotiating aspects of a Salesforce audit, and being able to use this information to keep Salesforce controlled during the audit process, and using the proper “judo” to keep Salesforce from dominating the situation.

We have covered Salesforce licensing from many dimensions, with audit defense just one of many. This allows us to take a holistic view of each Salesforce license audit. And because we are used to audits, we won’t be put off-balanced by Salesforce’s tactics as we have seen them before.