Workday Implementing Workday: Pricing Model Options and What to Ask For in 2021


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There are many System Implementation (SI) firms that can implement Workday in your organization.  One of your options is Workday themselves who is often willing to accommodate similar commercial terms as some of the other large SI providers such as Accenture, Deloitte, IBM, etc.

Below are the three most common pricing models most implementation partners offer as well as some key commercial asks to include in both your proposal request to Workday and your Statement of Work (SOW) if you choose them as your implementation partner.

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Implementation Pricing Models and Resource Chart

In general, all major SIs offer a few different pricing models to choose from.  Though Workday would be implementing its own system in this situation, you should still approach the RFP and negotiation process as you would with any other SI.  Therefore, we recommend you ask Workday to provide you with the choice to choose from the following implementation pricing models:

1. Fixed-Price

A fixed-price model is a very common pricing arrangement and typically the easiest for organizations to manage.  Before signing, both the client and the implementation partner agree upon a project outcome and an overall cost to achieve that outcome.  Fixed-price contracts represent insurance that the deployment costs will not exceed the SI’s proposed cost.

However, a fixed-fee price often includes a contingency that may end up representing a significant part of the overall project cost.  This contingency is usually a percentage added on top of an SI partner’s estimated cost for the project to protect the SI in the case that they require more time or resources than they projected.  So, fixed-price contracts can be more costly than other options since you are paying a premium for the convenience and cost predictability that the model provides.

2. Time and Materials (T&M)

A T&M model provides greater transparency into the overall cost of the project.  With this model, you and your SI will agree on predetermined resource rates for time and materials and then only pay for the labor and resources actually spent on the project.

This model requires more managing than a fixed-price model and it may be subject to additional costs and change orders if the project is poorly managed.  Change orders are likely to increase the number of hours for the SI’s resources and therefore, result in additional fees not included in the initial T&M estimate.

In this model, it is highly recommended that you request comprehensive cost transparency that comes with a “time and materials” estimate.  We would expect Workday to provide a detailed view of the resources assigned to your project, the estimated number of hours per phase (if applicable) and finally, the total cost based on the resource rates.

3. T&M with Not-to-Exceed

In a T&M with Not-to-Exceed (NTE) model, an SI would provide the same level of transparency associated with a T&M model in addition to a commitment that the total cost of the project would not exceed a specific amount, the NTE.  This amount is usually the T&M plus a contingency percentage.  Here, you get the benefits of a T&M agreement with the added protection of a cap on cost.

Staff Loading Chart 

Regardless of which of the above pricing models you choose, you should absolutely ask Workday for a detailed staff loading chart that breaks down the cost estimate on a resource line-item basis for the entire project.

Rate Cards

1. Rate Card Transparency

As part of the staff loading chart, we recommended you ask Workday to include a comprehensive rate card for the onshore and offshore consulting resources that they expect to leverage as part of your implementation project.  Be sure to ask for Workday’s comprehensive rate cards that include both resources in- and out-of-scope of the project.  It is highly recommended you request Workday provide full transparency on their rate card which would include the list, net, and associated discounts for all resources.

2. Rate Protections

In addition to requesting rate card transparency, you should also ask Workday to lock the rates for a period of time along with putting caps on subsequent annual increases.  This might be hard to achieve but it will provide you with cost predictability in the event that you need to deploy additional products after your initial project.

Estimated Hours

To provide you with greater cost transparency into the staffing model associated with your specific deployment, the staff loading chart should also include Workday’s estimated level of effort in hours from Workday, your team, and any third-parties that might be involved. Here is a list of what you should specifically ask for:

1. Workday Hours

  • Hours for each resource on the project
  • Hours for each deployment wave (if more than one wave)
  • Hours for each project phase per wave as follows:
    • Project plan
    • Architect
    • Configure
    • Test
    • Deploy
    • Postproduction support

2. Third-Party Hours

If any third-parties are involved, ask for Workday to include the same information they provided on their own hours to be provided for the third-parties.

3. Client Hours

Ask Workday to provide their estimated participation roles and number of hours required for your team during the project.

Project Timeline

In addition to the total number of estimated weeks Workday expects the project to last, you need to ask for the number of weeks for each phase of the project identified above.

RACI Matrix for Customer and Workday Roles

A responsibility assignment matrix, or RACI matrix, describes the participation of various roles in completing tasks or deliverables for the project. This is a key part of creating transparency in the project and holding the responsible parties accountable throughout the implementation. This should include a list of the tasks and deliverables in scope including the following info:

  • Project phase
  • Task or deliverable name
  • Task or deliverable description
  • Who is responsible for each task or deliverable between Workday, your organization, and any potential third-parties you have working on the project

Development Object by Complexity

We recommend asking Workday to insert tables into the cost estimate proposal and into the SOW that include all the development items (i.e., workflow, report, conversions, integrations, etc.) and their specifics such as the development object type, description, estimated hours per object and the complexity level.

Assumptions

There are many assumptions that go into estimating any implementation project and it is beneficial for everyone to be on the same page as to what those are. We recommend asking Workday to identify all the assumptions used in developing their estimate.  Examples of those assumptions include:

  • In-scope SKUs and associated FSE workers per SKU
  • Tools required
  • Governance model
  • Assumed level of any third-party support involved
  • Assumptions regarding conditions and availability of your legacy systems and testing environments

Change Order Protections 

While asking for some of the items listed above may potentially reduce the number of change orders you face, it is not possible to completely prevent change orders from happening so negotiating change order protections is a must.

1. Errors and Omissions

To protect your organization from costly change orders in the event that Workday’s assumptions about your project are inaccurate, we recommend asking Workday up front to commit to allocating the resources necessary to meet the project timeline and delivery requirements at no additional charge to your organization (by not issuing a change order). Unless the inaccuracy is directly attributable to the performance or information provided by your own team, you should not have to incur the costs of a change order.

2. Notice and Cure

While there is no sure-fire way to completely avoid change orders, being alerted to any issues that can lead to a change order in the near future will give you the opportunity to address the situation and potentially avoid that specific change order.  Therefore, it is recommended you request that Workday provides your organization with advanced written notice of your failure to meet their obligations, so you have a chance to correct those performance issues prior to Workday issuing a change order.

Include Everything in the SOW

Not only should you ask for the information above as part of the cost and effort estimate during the negotiation, but it is absolutely critical to have Workday include these as part of the SOW.  Having these items in the SOW will be invaluable as the project moves forwards.

For example, in the event of a request for a change order, you will be able to refer to that information to identify if a change order is a result of an inaccurate estimate from Workday (in this case you should not be charged for the change order) or if it came from a false assumption or scope change that your organization made.

Overall, if your organization is considering having Workday implement your Workday solution, asking for these key commercial asks to be included in your SOW will help you achieve better implementation cost transparency and price predictability in addition to potentially limiting the number of change orders that occur throughout the project.

Follow me on Twitter @ErwannCouesbot, find my other UpperEdge blogs, and follow UpperEdge on Twitter and LinkedIn.  Learn more about our Workday Advisory Services.

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