Case Study

Salesforce and ServiceNow: Applying Category Management in the Cloud Software Market

Censeo used our market-leading IT Category Management framework to guide a Federal department through two complex cloud software acquisitions, unlocking over $40M in savings.

Situation

A prominent Federal department with thousands of employees and global stakeholders developed a high-level plan to migrate several critical software applications to the cloud. They sought out Censeo’s expert support to ensure that they were acquiring these new cloud resources at optimal cost, quality, and terms.

The Federal department wanted to establish Enterprise License Agreements (ELAs) with two cloud providers, ServiceNow, and salesforce.

Due to Censeo’s immense experience in software Category Management, the department called upon our team to help them with a wide array of critical activities including, but not limited to, collecting requirements, conducting market research, devising an acquisition strategy, facilitating vendor discussions, and negotiating a win-win contract.


Approach

The team deployed Censeo’s proven framework for software Category Management and infused the process with rigorous research and analysis into the cloud computing markets for Customer Relationship Management (CRM), Service Management, and Workflow Automation platforms.

  1. Collected Requirements: Censeo’s leadership of this engagement began with a detailed needs assessment across every sub-organization in the department. To accomplish this, they created a customized demand planning survey in which the customer organizations could estimate their relevant needs for the future, should these cloud platforms be available. The Censeo team collaborated with IT and Acquisition executives at the client organization to ensure the survey was sent out to the proper groups and that the importance of this initiative was communicated so that the customers prioritized filling the survey out in a timely fashion.
  2. Analyzed Requirements: Once the demand surveys were collected, Censeo met with key stakeholders at each of the customer organizations that responded and discussed their answers in detail to ensure there was a common understanding of not only “what” was required but also “why.” As part of these discussions, Censeo was able to get a sense of how much flexibility there was in these requirements and how many of them were truly critical versus nice-to-have. After speaking with each of the customer groups, the team reviewed the results in detail looking for trends, overlaps, and opportunities.
  3. Identified Funding Options: One of the most complicated aspects of negotiating a software agreement that crosses multiple offices or bureaus is that there is often confusion or misinformation about who will be footing the bill. Sometimes there is a central pot of money managed by the CIO shop that supports common resources and strategic investments, while other situations involve more fragmented funding mechanisms. In this case, the department wanted to utilize a combination of central funding and individual bureau contributions. In this situation, it was important for multiple parties to receive regular updates on the expected cost of the acquisition, how much they were responsible for paying, and when the funds would be required. Censeo helped formulate an approach to how the cost could be shared equitably and played a key role in facilitating the exchange of budget information across relevant parties.
  4. Conducted Market Research: The two cloud providers of interest, salesforce, and ServiceNow, are part of a rapidly evolving market. Although each of these vendors specializes in unique solutions, they have continued to expand into several overlapping markets as well. In the cloud computing market, there are often incentives on the vendor side to win new customers and convert single-product customers into multi-product customers. Being keenly aware of these incentives and the specific products that vendors are hoping to expand within the Federal market is critical to building a win-win agreement. In this situation, Censeo supplemented their existing expertise in the cloud IT market with targeted research into these two players to ensure the department was armed with all necessary information when heading into vendor discussions.
  5. Facilitated Vendor Discussions: One of the most common pitfalls that Federal customers have in IT acquisitions is that they fail to engage proactively with vendors to fully understand their offerings, pricing models, and common deal structures. Often, the first communication that a federal customer has with the vendor is a formal solicitation for products or services. At that point, the vendor must respond with exactly what the government asked for without being able to explain the nuance as to why a term or requirement would be ill-advised and would significantly drive up the total cost. To avoid this pitfall, Censeo collaborated closely with the client, in this case, to carefully incorporate vendor meetings into the process of developing an acquisition strategy. [1]
  6. Supported acquisition package completion: Synthesizing all the information learned throughout the demand planning, market research, and vendor engagement processes, Censeo supplemented much of the client’s heavy lifting in drafting documentation required by the federal department to complete acquisitions of these sizes and scopes. Censeo provided high-quality technical writing and ensured that all the requirements and assumptions were communicated properly. This minimized the risk of surprises or protests as the acquisitions moved forward.

Results

The Return on Investment (ROI) of Censeo’s support to this Federal department was extremely significant. Because of the team’s guidance over 9 months, the department unlocked over $40M in savings across the two initiatives compared to what they would have paid for these products had Censeo not deployed their unique approach. Furthermore, Censeo’s project management expertise and close collaboration with client stakeholders helped ensure that these acquisitions were completed on time and within budget.

[1] Note: When done properly, meeting directly with a vendor to conduct market research before releasing a solicitation is not only allowed but encouraged by Federal Acquisition Regulations (FAR). See FAR Part 10 for more information.

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