Spend Matters welcomes this guest article by Gregg Spivack, director of client services at NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.
The SaaS HR management systems market is heating up – both in terms of revenue growth and competition. A recent report from Forrester (Forrester Wave™: SaaS HR Management Systems, Q4 2014) indicates a growing number of vendors competing for market share. These range from the “old guard” like Oracle and SAP to new(ish) players such as Workday – which Forrester has named a leader in the space.
In 10 short years, Workday has leveraged the cloud to catapult the company into the big leagues. As the company approaches $1 billion in annual revenue, there’s no denying Workday has emerged as a heavy hitter – for many customers, its cloud-based delivery model is a welcome break from traditional on-premise software implementations and upgrades.
While each contract situation is unique, following some basic tenets can help optimize your outcomes:
- Despite being a SaaS solution, the Workday implementation often requires heavy lifting and can lead to 7-figure professional services expenditures. Getting the best deal during the initial purchase is critical to keeping these costs in check.
- Workday relies on certified partners to handle nearly 80% of implementations. That’s not a bad thing, but consider utilizing Workday's native delivery assurance services to perform checkpoints and ensure a successful implementation.
- If you're up for a renewal, expect to be presented with a new master agreement (MA). Two areas to pay special attention to are limitation of liability and less flexibility to carve out any unneeded modules.
- Workday regularly agrees to 3-year terms, and at renewal time, double-digit increases are not uncommon. Workday will consider renewal terms that can govern 4,5 or 6 years – so be sure to consider that in your contract discussions.
- Workday continues to enhance its offerings beyond core HRM/HCM. If you’re looking to expand your Workday deployment to include these new enhancements, time your expansion around your core services renewal to lock in the most favorable terms.
Most importantly, remember this: Workday’s terms and flexibility are evolving as the company faces pressure to continue its growth trajectory. What constituted an optimized purchase for your business 3 years ago may look a bit different today. Taking a long-term view of how Workday’s business and product strategy aligns with your own IT strategy is critical to establishing an agreement that is optimized for its duration.
Editor's Note: An earlier version of this contributed column suggested Workday was approaching $7B in annual revenue. This is incorrect. The corrected revenue estimate has been updated by Spend Matters.