Workday recently announced the renaming of the Workday Cloud Platform (WCP) to Workday Extend and made it generally available to all customers. They also announced that Workday Extend and Workday Integration Cloud are now under one portfolio. This new platform-as-a-service (PaaS) offering allows businesses to build custom applications and extensions on top of their other Workday capabilities.
This announcement comes as businesses are facing the unprecedented challenges of the COVID-19 pandemic and seeking quick solutions to adapt to the new ways of working and doing business. If you are considering a purchase of Workday Extend, making the effort to negotiate certain items in your agreement is critical to maximizing the value you receive from the solution. Even if you are eager to make the purchase and get started with Extend, we recommend you take the time to request the following from Workday.
1. Pricing Transparency and Discount Extension
For most of its existing products, Workday uses a unique pricing metric that requires you to determine your number of Full-Service Equivalent (or FSE) workers. However, the pricing metric for Workday Extend is “Data Usage” and is based on a specified number of GB used per year. We recommend that you ask Workday to provide pricing transparency with Extend which should include list price, net fees, and the associated discount based on the estimated data usage quantity for your organization.
2. Price Hold
Even if you are not interested in purchasing Workday Extend in the short term, you should still request the level of pricing transparency mentioned above. It’s best to have the information on hand for when you need it.
In addition, we recommend going a step further and requesting a price hold for a specified period of time. If you decide to make this purchase in the future, you can budget appropriately and avoid any surprises when it comes to price.
3. Rebundled Functionality
Renaming product bundles, removing specific features, and rebundling are common tactics deployed by SaaS and IT services providers to spark confusion and create new sales opportunities. When a bundle is renamed or discontinued, your previously negotiated discounts and price protections are rendered irrelevant unless you negotiated specific commercial terms to protect you from these types of changes. If a feature is removed from your bundle, you may be required to purchase the separate feature and ultimately pay more to retain the same level of functionality.
This is why we recommend Workday customers address software repackaging. It is one of the top commercial terms to negotiate with Workday. We have seen Workday remove features from one product and turn those features into their own standalone product. A well-known example of this is Workday Project which used to be included in Workday’s core HCM product but was later removed to be sold as a separate product.
As a new SKU, Extend’s functionalities could also be subject to rebundling in the future. Therefore, we recommend asking Workday to provide contractual rights that entitle your organization to any renamed, repackaged, or relicensed functionality at no additional fee. This will protect your organization in the event that Workday removes functionality in future versions of Extend.
4. Quantity Adjustment Based on Actual Consumption
Your consumption may vary during the subscription term. For example, you may see the number of employees using Workday products decrease as a result of layoffs triggered by a business downturn. In this case, the number of FSE workers might drop below the baseline FSE worker count you had at the time of purchase. When that happens, you are stuck paying Workday for an FSE worker count higher than what you actually need.
As previously mentioned, Extend’s metric isn’t like other Workday SKUs because it is based on the number of GB used per year rather than the number of FSE workers you have. However, the concept of decreased utilization in the event of a business downturn still applies.
To protect your company from paying for more data than you are actually using, we recommend asking Workday to allow your organization to lower the volume of GB used per year (should the need arise) with an associated decrease in subscription fees. This right should also apply to the potential decrease in volume of GB at renewal without impact to your renewal protections.
5. Consulting Services
Workday has several implementation partners but Workday itself can also implement their own solution. This is why we always recommend obtaining cost predictability associated with Workday’s consulting services and more precisely, their consulting and training rate card.
Regardless of whether you are ready to purchase and implement Workday Extend, having this information in your pocket will make it easier to budget the potential cost of a Workday implementation and allow you to avoid the need to enter into a new sales cycle with Workday’s Consulting Services team.
In addition to getting Workday’s consulting and training rates, we recommend asking Workday to price hold those rates for a period of time. You may also want to consider Workday’s Customer Success Packages. These packages can provide significant value and reduce risks during the implementation of Workday’s solution within your organization. Considering Workday Extend is a new solution, having access to some of the deployment and post go-live capabilities provided by the Customer Success Package could be deemed valuable.
Workday’s new PaaS solution, Workday Extend, is part of Workday’s plan to increase their footprint within your organization. As your organization’s HCM, and potentially, financial processes become further dependent on Workday, it is highly recommended to address these key commercial items early on. Even if you are not considering a purchase of Extend in the near future, requesting Workday provide cost predictability at the time of your next purchase will offer you the highest leverage to obtain competitive commercial terms for Extend moving forward.
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