WORKDAY DEAL SIZING OVERVIEW
Total Workday cost is dependent on two variables: price and quantity. Too often customers believe price alone is what prevents them from reducing their Workday costs. The reality is that Workday product quantity is equally important in the total cost equation and Workday sales reps are skilled at manipulating volume to drive additional costs in negotiations. To justify any Workday deal, we need to ask ourselves “do we need the licenses we’re purchasing?”
This Workday rightsizing report focuses on key buying techniques to mitigate purchase risk and effectively reduce Workday costs:
1. Workday's FSE Licensing Model
Workday has a unique licensing model that calculate costs off of a customized user metric called “FSE.” Workday’s custom FSE licensing metric shifts buying power towards the supplier, as many customers are often unaware of the specifics that go into the FSE calculation. This section outlines the definition of a Full-Service Equivalency (FSE) and how understanding this metric is pivotal to sizing your deal correctly.
2. Workday License Over-Purchase Risk
Over-purchasing on licensing is common for many Workday customers due to the complexities of Workday’s custom licensing model. In fact, ClearEdge has found that roughly half of new Workday customers over-purchase on licensing. This section details the impact that over-purchasing can have on your Workday spend.
3. The 4 Key Areas of Over-Purchase
Workday sales reps are experts at inflating demand profiles, leading customers to buy more than they need. This section details the four most common ways that Workday forces you to over-purchase, and the impact over-purchasing has in a recurring SaaS pricing model. We observed the following tactics:
Workday Bundling: Workday bundles their licensing to obscure pricing and force customers into higher expansion costs due to the inability to purchase add-ons “a la carte." This section details why customers adopt product bundles and the effect it has on Workday costs.
One-Size-Fits-All Workday Licensing Model: Customers commonly apply their total FSE count to all product modules purchased, though not all FSE workers need this level of access. Learn why this is not best practice in setting up best-in-class cost outcomes within your Workday deal.
Workday Ramped vs. Non-Ramped Cost Roll-Out: Implementing Workday takes time. When customers do not negotiate in ramped cost models, they incur costs when the solution is not even implemented. We highlight how you can use implementation time to your advantage in reducing your total Workday costs.
Commitment to Future Employee Growth: It’s common in other supplier negotiations to use growth it as a bargaining chip in negotiations. With Workday, this typically leads to over-commitment in licensing. This section highlights the risk in forecasting growth with Workday and what the less risky alternatives are for your business.
Workday beats customers in negotiations not only through price, but through inflation of demand profiles. Over-buying causes long term cost risk, so creating an accurate demand profile is essential for achieving a successful Workday deal. For additional assistance on your Workday purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.