WORKDAY CONTRACT RISK OVERVIEW
Workday's growth strategy is dependent on preserving annual spend levels, driving long-term costs, and locking in their customer base. As a method to support their growth strategy, Workday uses terms and conditions to eliminate the feasibility of switching solutions or reducing annual fees. In this Workday report, we dive into the top Workday contract ‘Gotchas’ used to lock in customers and continually drive cost increases. The Workday contract language that is addressed in this report include:
1. Workday Renewal Increases & Caps
Workday's renewal language is very aggressive, often locking customers into an ever-increasing annual fee that is compounded by a fixed percentage and inflation. We detail what Workday renewal cap ranges we’ve observed, what Workday contract language and specific terms pose risks at renewal, and ways to achieve protective language from unforeseen Workday price increases in this section.
2. Workday Platform Bundling
Workday purposefully bundles many of their modules together in proposals to reduce price transparency and lock-in higher customer expansion costs. If all modules are bundled together, then customers would have to buy a full bundle, even if only specific modules are needed by the business. This section provides insights on what pricing details are necessary to fully mitigate license expansion risk with Workday.
3. Workday's One-Size Model
Workday licenses their product based off a custom user metric called "Full-service Equivalency" or FSE. This metric defines the volume of licensing that needs to be purchased in a Workday deal. Workday's custom licensing metric is not always clear on how many FSEs are appropriate for a customer's environment, often leading to over-purchase by the customer. This section details the risks related to this licensing model and ways to minimize cost by identifying excess licensing that Workday make push in their definition of an "FSE" in your proposals.
Workday contract terms and conditions are an integral part of their supplier strategy. Workday will not concede to competitive terms without a strong negotiating position, because its success is tied to maintaining their standard contract language. To execute a successful Workday deal, negotiators need to be wary of all Workday contract risks and ways to protect their organization from future cost increases. For additional assistance on your Workday purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.