Boston, MA – April 13, 2021 – UpperEdge, an independent third-party advisory company that empowers organizations to get the most value from their IT supplier relationships, launched SmartDeal, a mark-to-market assessment tool. The first agreements SmartDeal will assess are from Workday.
There are unique challenges with benchmarking your deal. While many just consider discount percentage, key benchmarking factors include the following:
- FSE Counts (or full-service equivalents)
- Mix and Number of SKUs
- Term Duration
- Total List Price
- Renewal Terms
“You also have to consider any type of payment deferral or payment ramp structure that might have been negotiated in your deal, as well as any renewal-term price protections, because all of those impact the discounting that Workday is willing to provide,” said Jeff Lazarto, Workday Practice Leader at UpperEdge.
“The other challenge with Workday is they have different list prices that apply based on the total FSE count. Those list prices are not published by Workday,” added Lazarto.
Finding similar-sized deals based on these factors for comparable data points is a challenge which requires market data.
As an example, a company may have a current Workday proposal with just HCM at $100 per FSE per year. A 2020 deal from another company may have HCM at $45 with a similar FSE size that you want to use as a benchmark. The challenge is knowing the history of the benchmark deal, as the two deals being compared could be very different.
First, the benchmark deal might not have been a net new deal in 2020. That deal could go all the way back to 2009, for example, where an early adopter purchased HCM for $35 with excellent renewal term price protections.
Alternatively, the benchmark deal may have had a subsequent renewal term price increase waived as part of a product footprint expansion, so that $45 data point may not be truly reflective of today’s market and that’s where you have to be careful with these comparisons.
Trying to negotiate a certain price point that is not realistically achievable in today’s market might result in missing out on other concessions. Having comparable data points when you benchmark need to reflect current market conditions. The quality and accuracy of your benchmark data points are critical to ensure that you are striving towards reasonable goals.
Based on the hundreds of Workday proposals and agreements we have reviewed as part of our client engagements, we have built a massive database of Workday-specific pricing and commercial term benchmarks. SmartDeal can assess the competitiveness of your Workday deal by comparing your pricing and key business terms to other relevant deals in our proprietary database.
To see if you qualify for a complimentary assessment of your deal, click here.
UpperEdge maximizes the value its clients receive from their key IT supplier relationships by helping them develop and execute fact-based sourcing, negotiation, and program execution strategies. Visit www.upperedge.com for more information