Insights for IT Negotiations

Salesforce’s Q3 FY23 total revenue came in at $7.84B, slightly higher than the expected $7.82B, and represented 14% growth year-over-year. However, Salesforce provided Q4 FY23 revenue guidance that came up short of what was previously expected, while also mentioning they were not yet ready to give FY24 guidance. Additionally, it was announced that Salesforce’s co-CEO, Bret Taylor, will be stepping down at the end of January 2023 (Salesforce’s year-end), stating that he wants to return to his "entrepreneurial roots.” In this podcast, our Salesforce Practice Leader, Adam Mansfield, discusses what customers should expect from Salesforce leading up to their year-end and beyond. He also shares how customers should approach Salesforce and how best to leverage Salesforce’s clear goals during their upcoming negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/2V78ADX

ServiceNow’s Q3 subscription revenue came in at $1.742B, representing 22% growth year-over-year but lower than the expected $1.85B. ServiceNow also lowered their full year subscription revenue guidance from a midpoint of $6.92B to a midpoint of $6.86B, while maintaining an expected subscription gross margin of 86%. ServiceNow now has 1,530 customers paying them over $1M per year, with the average annual spend among that group coming in at $4M. Eighteen of the top 20 deals in the quarter contained 5 or more products, which is another key metric for ServiceNow because it demonstrates their ability to sell a wide set of solutions to their customers, especially solutions outside of the core Technology Workflows product set like Employee, Customer and Creator. In this podcast, ServiceNow Practice Leader, Adam Mansfield, discusses what customers should expect from ServiceNow as ServiceNow’s year-end fast approaches. He also shares how customers can leverage ServiceNow’s clear goals during their upcoming ServiceNow renewal negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r ServiceNow Commercial Advisory Services: https://bit.ly/3ls6VDt

In their most recent earnings call, Microsoft beat revenue expectations but posted the lowest rate of revenue growth in five (5) years. Microsoft’s FY23 Q1 total revenue was $50.1B, up 11%. Microsoft Cloud revenue grew 24% to $25.7B, and for the first time exceeded 50% of Microsoft’s overall company revenue. Their go-forward success will continue to be directly tied to Microsoft Cloud, which includes Azure, Office365, LinkedIn, Dynamics 365, Power Apps, and other cloud solutions. In this podcast, our Microsoft Practice Leader, Adam Mansfield, discusses how customers can leverage Microsoft’s clear focus on getting more adoption and utilization of Microsoft’s cloud, security solutions, Teams, Dynamics 365, and LinkedIn. He also explains why more customers should push for the more costly all-in cloud bundle, Microsoft 365 E5. Lastly, he covers what customers need to do to ensure they appropriately prepare for their upcoming renewal negotiations. Host: Adam Mansfield: https://bit.ly/3rPGp8r Microsoft Commercial Advisory Services: https://bit.ly/2V78ADX

Salesforce’s Dreamforce Conference is a massive event filled with celebrity appearances, sessions, dinners, and hallway meetups. But for many attendees, it can be an overwhelming experience. In this video, our Salesforce Practice Leader, Adam Mansfield, shares his thoughts on how attendees and the companies they represent can get the most out of their time at Dreamforce while also using the event as an opportunity to gain leverage during the next Salesforce renewal negotiation. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/37hFkMV Related Blog: https://bit.ly/3d7xDj2

Salesforce reported Q2 FY23 earnings and, once again, beat revenue expected by analysts. Salesforce’s total revenue for the quarter was $7.72B, up 22%, while analysts were expecting $7.69B. Despite this continued growth, Salesforce also lowered full year revenue guidance again. They are now expecting $30.9B-$31B, which would represent 17% growth year-over-year, but previously forecasted $31.7B-$31.8B. Salesforce cited foreign exchange headwind as well as customers becoming more measured in the way that they buy as reasons for the lowered guidance. Customers buying habits include stretching sales cycles, executives scrutinizing purchasing decisions, and deal compression. In this podcast, our Salesforce Practice Leader, Adam Mansfield, discusses what to expect from Salesforce as they navigate customer sales cycles and renewal negotiations leading up to Salesforce’s year-end in January. Based on comments made during the earnings call, not only is Salesforce going to try to pull in as much net-new product adoption and growth as they can from their customer base, but they are also building plans to make up for any deal compression over the customer’s upcoming term. He also shares his thoughts on what customers should do to appropriately prepare for Salesforce’s playbook and approach to ensure they have the right deal in place before pen goes to paper. Host: Adam Mansfield: https://bit.ly/3rPGp8r SalesForce Commercial Advisory Services: https://bit.ly/2V78ADX

Oracle laid off part of its U.S. staff earlier this week as part of its plan to layoff thousands in the U.S., Canada, India, and Europe. These layoffs were primarily concentrated in marketing and the customer experience (CX) department. Oracle’s CX solutions include CRM products which compete with Salesforce, the leader in this space. Oracle Practice Leader, Jeff Lazarto, discusses what this may mean for this department moving forward. He also shares why he expects to see more layoffs tied to the massive, $28B acquisition of Cerner which was closed in June of this year. These layoffs come after talk of Oracle planning to announce an increase in support fees which would go into effect after December 1st, 2022. Host: Jeff Lazarto: https://bit.ly/37eCXdN Oracle Commercial Advisory Services: https://bit.ly/3jdtF7p

ServiceNow’s Q2 subscription revenue came in at $1.658B, representing 25% growth Year-over-Year. However, RPO (Remaining Performance Obligations) came up short of expectations primarily due to longer sales cycles and FX headwinds. ServiceNow closed 54 transactions in the quarter with over $1M in new Annual Contract Value (ACV). ServiceNow now has 1,463 customers paying them over $1M per year, with the average annual spend among that group coming in at $3.9M. They also surpassed 100 customers that are paying over $10M per year. This increased customer spend can be directly attributed to the success expanding customer footprints - in Q2, 16 of the top 20 deals contained five or more products. In this podcast, our ServiceNow Practice Leader, Adam Mansfield, discusses what customers should expect from ServiceNow over the course of the upcoming year as they work towards pulling in deals that may have slipped out and getting more products adopted as part of year-end renewals. He also shares how customers can leverage ServiceNow’s clear goals during their upcoming ServiceNow negotiations and renewals. Host: Adam Mansfield: https://bit.ly/3rPGp8r ServiceNow Commercial Advisory Services: https://bit.ly/3ls6VDt

Microsoft missed on the top and bottom lines and posted their lowest earnings growth in two years according to their recent Q4 earnings call. Microsoft’s FY22 Q4 total revenue was $51.9B, which was up 12% but lower than what Wall Street expected ($52.4B) and lower than the high end of their adjusted revenue guidance ($52.6B). Microsoft Cloud eclipsed $25B in the quarter, representing a 28% increase year-over-year. Their go-forward success will continue to be directly tied to Microsoft Cloud, which includes Azure, Office365, LinkedIn, Dynamics 365, Power Apps, and other cloud solutions. In this podcast, our Microsoft Practice Leader, Adam Mansfield, discusses how customers can leverage Microsoft’s clear need to show success in taking market share (Azure, Teams, Dynamics 365, Security, etc.), moving customers to “E5,” specifically the all-in cloud bundle Microsoft 365 E5, and accelerated revenue growth beyond the conservative guidance given. He also covers what enterprise customers should expect as they approach their upcoming renewals as well as how to prepare for Microsoft’s plan of attack. Host: Adam Mansfield: https://bit.ly/3rPGp8r Microsoft Commercial Advisory Services: https://bit.ly/2V78ADX

There has been recent talk about Oracle getting ready to announce an increase in support fees. While we haven’t yet seen Oracle documentation confirming this increase, we have heard directly from Oracle customers who received messaging about a change in support fees and an increase in Oracle’s support fee cap. UpperEdge Oracle Practice Leader, Jeff Lazarto, discusses what we know so far. Host: Jeff Lazarto: https://bit.ly/37eCXdN Oracle Commercial Advisory Services: https://bit.ly/3jdtF7p

ServiceNow rolled out the new solution, Impact, earlier this year. If you are a ServiceNow customer, you have likely been pitched it and experienced an aggressive push to get it into your renewal. In this podcast, ServiceNow Practice Leader, Adam Mansfield, covers: • What is ServiceNow Impact • Why Impact is so important to ServiceNow • What comes with each of the four (4) available packages • How it is priced • What concessions and commercial terms (discounting, protections, etc.) should be addressed Host: Adam Mansfield: https://bit.ly/3rPGp8r ServiceNow Commercial Advisory Services: https://bit.ly/3ls6VDt