A thoughtful and strategic negotiation approach led by UC Systemwide Procurement’s (SWP) IT Strategic Sourcing, along with UC Legal and IT partners, helped UC secure better discounts, new benefits, and a stronger overall partnership with Google.
Laying the Groundwork for a Better Deal
In 2021, the University of California (UC) signed a five-year agreement with Google Cloud Platform (GCP) and took a significant step forward in advancing the system’s cloud computing capabilities. When UC fulfilled this contract’s total spend commitment early, it presented a golden opportunity to renegotiate and achieve expanded value beyond pricing.
UC’s renegotiation was backed by thorough market research, competitive benchmarking, and an in-depth analysis of UC’s cloud usage trends. Also crucial to this effort was early engagement with key stakeholders, including IT leadership, legal, cybersecurity and finance teams. Aligning on goals and priorities early helped UC ensure a strong negotiating position.
Fair but Firm Negotiations
UC combined assertiveness with a collaborative mindset, employing these key negotiating tactics:
- Executive sponsorship – Engaging and aligning Chief Information Officers to present a united front and provide escalation backup.
- Data-driven discussions – Leveraging UC’s cloud usage data to make informed demands.
- Highlighting options – Demonstrating that UC had alternatives to increase bargaining power.
- Anchoring high – Starting with ambitious demands to allow room for concessions.
- Pre-negotiating key terms – Addressing critical elements before finalizing the agreement.
The result was a fair but firm negotiation process that emphasized UC’s value as a long-term partner rather than just another customer.
Key Wins for UC
This renegotiated amendment delivers significant benefits that support UC’s future cloud strategy, including:
- Enhanced support & incentives – Secured improved technical support and expanded sales team support, with additional incentives including dedicated funding for professional services, AI, and training.
- Egress fee waiver – Eliminated fees for transferring data out of Google Cloud, reducing research and operational costs.
- Greater compliance & security – Strengthened compliance and security contractual protections.
- Better discounts across an expanded portfolio – Secured increased discounts on GCP services over a broader portfolio including storage, and new services such as Looker, Apigee, Chronicle, and Mandiant SaaS.
- Cost predictability – Includes a Public Sector fixed-fee subscription option to balance cost stability with scalability.
- Cost savings – Achieved an estimated $1.5 million in cost reduction over the amendment term.
A Partnership Beyond Pricing
This negotiation was not just about cost-cutting—it was about deepening UC’s relationship with Google in ways that benefit students, faculty, and researchers. The new agreement includes commitments to:
- Workforce development – Investments in AI training and student impact programs.
- Innovation support – Scalable infrastructure, expanded sales and technical team, dedicated funding and training to accelerate adoption and innovation.
- Research collaboration – Expanded opportunities to leverage cloud computing for academic research.
A Blueprint for Future Success
This successful outcome highlights key takeaways that will inform UC’s approach to future agreements:
- Early engagement is critical – Bringing Legal, Information Security, and IT Leadership and IT Business Leaders into discussions early streamlined the process and avoided last-minute roadblocks.
- Executive alignment strengthens negotiations – Senior leadership involvement signaled a united front and maximized UC’s negotiation power.
- Collaboration across UC drives better outcomes – Informed stakeholders ensured a coordinated and more strategic approach.
- Data-driven decisions lead to better contracts – Leveraging market benchmarks and internal usage analytics helped secure the best possible deal.
By positioning itself as a strategic partner rather than just a customer, UC not only secured better terms for its Google Cloud services but also set the stage for continued collaboration and innovation. The success of this contract renegotiation is an excellent example of how Procurement delivers broader strategic value and benefit to the UC system.