Situation
A multinational pharmaceutical and consumer goods company, with about 351,000 employees and $61.6B in annual revenue, had a long-standing relationship with Microsoft and sought to renew its Enterprise Agreement. Client had several impediments to overcome in order to achieve a positive outcome, including:
- Limited leverage due to the sole-source environment with Microsoft, as the incumbent provider
- No benchmarks from which to assess the pricing and commercial terms of the proposed license, premium support and consulting services renewals
- Lack of a cohesive game plan for optimizing the go-forward licensing while simultaneously improving the level of discounting
- Inability to properly identify the required level of support services
Action
UpperEdge provided end-to-end support during the negotiation process, offering strategic guidance and intelligence at every step. Specifically, UpperEdge did the following:
- Developed a negotiation strategy that was highly tailored to client’s specific needs and objectives
- Provided a detailed financial and commercial assessment of client’s expiring agreements
- Completed in depth analysis of the proposed renewal terms and pricing
- Utilized precise benchmarks for all proposed pricing and commercial terms offered by Microsoft to enable client to take aggressive but realistic negotiation positions
- Provided iterative coaching and analysis throughout the entire negotiation process
Results
Utilizing UpperEdge’s best practices and negotiation experience with Microsoft, the client achieved substantial improvements to its existing commercial structure. Among the various benefits realized throughout the engagement, the client:
- Achieved a 22% overall cost reduction without any material changes to the agreement
- Reduced the scope of services while concurrently increasing the discount levels
- Right-sized the product support commitment to align with client’s actual requirements
- Improved client’s relationship with Microsoft and carried forward the most favorable custom terms from the existing agreements
