NSW govt extends $110m Salesforce deal

The New South Wales government has prolonged the life of its cloud software deal with Salesforce ahead of the state election, providing agencies with access to the arrangement for another four months.

The state government struck the deal back in July 2018 to deliver greater savings to agencies when buying Software-as-a-Service products from Salesforce, by exploiting their “collective buying power”.

The arrangement with built-in pricing review mechanisms – which is already estimated to have cost the government $110 million over the past five years – was slated to expire at the end of this month.

But last week the deal was extended for a further four months by the Digital NSW arm of the Department of Customer Service.

A spokesperson said the department had used “four months out of the available 12 months extension option” to extend the deal until the end of June. The terms of the deal are unchanged.

“The extension will provide… NSW government agencies, state-owned corporations and local councils the opportunity to procure cloud-based services from Salesforce,” the spokesperson said.

“This will allow them to manage customer relations, leverage the pricing and other terms and conditions negotiated at whole of government level.”

“Eligible customers are not locked into this agreement and will have the flexibility to choose the providers.”

It is unclear why the government has opted for only a four-month extension. The extension leaves eight months beyond the new July expiry for the next government to negotiate and refresh the deal.

According to analysis by procurement experts Tendertrace, state insurer icare has inked $8.3 million worth of Salesforce contracts since 2020 – more than any other NSW government entity.

Transport for NSW, the Department of Planning, Industry and Environment, the Department of Customer Service, and HealthShare NSW are other big users.

Last month, Salesforce announced it would make 8000 employees – or around 10 per cent of its global workforce – redundant. The cuts are estimated to have impacted 300 local staff.

The Australian arm of the company’s venture capital firm, Salesforce Ventures, has also recently been axed. It came in the same week that the firm announced its backing of local startup Q-CTRL.

Salesforce Ventures is now planning to monitor and invest in Australian opportunities from the United States.

Do you know more? Contact James Riley via Email.

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