Negotiating Workday Contracts: A CIO’s Playbook
Workday contracts can lock in significant long-term costs and commitments. As a CIO, you need a blunt, no-nonsense strategy to negotiate new Workday deals, module expansions, and renewals.
This playbook covers pricing benchmarks, contract structures, hidden “gotchas,” renewal traps, negotiation levers, data/exit terms, support SLAs, and how Workday positions its newest products. Use these insights to secure the best terms for your enterprise.
Pricing Models and Benchmarks
Per-Employee Pricing (FSE Model): Workday uses a “Full-Service Equivalent” (FSE) metric – essentially charging per employee (or worker) under management. All core modules (HCM, Finance, etc.) are typically priced annually on a per-FSE basis, often expressed as per employee per month (PEPM). For large enterprises,
Workday is one of the priciest SaaS options: software fees can run $34–$42 monthly at scale (i.e. ~$400–$500 per employee annually). Smaller organizations (<500 employees) might pay ~$150K–$300K/year, and those with 500–2,500 employees around $300K–$500K/year for HCM & Payroll. These are big numbers – global enterprises with tens of thousands of employees easily see multi-million $$ annual subscriptions.
Tiered Volume Discounts: Workday pricing is tiered by contract size – the more employees or modules you commit, the lower the per-unit rate. For example, Workday has different list prices for different FSE band ranges, though they aren’t public. Ensure you negotiate volume discounts upfront. Don’t accept “one-size” pricing if your employee count puts you in a higher bracket; push for the next tier’s pricing. Real-world range:
One company’s HCM quote was $100 per FSE/year vs. another’s $45 for a similarly sized workforce—a huge gap showing how much savvy negotiation and benchmarking can save. Arm yourself with benchmark data on price-per-FSE for each module to know what “good” looks like.
Module and SKU Pricing: Workday sells a broad suite (Core HCM, Payroll, Recruiting, Learning, Finance, Adaptive Planning, etc.) and often bundles modules into one all-in price. Be aware that bundling can obscure individual module costs. Demand line-item pricing transparency – know the list price and discount of each module/SKU, even if the deal is bundled. This prevents overpaying for components you might not fully use.
Also, beware of “one module too many” in initial deals. Workday might tempt you to include extra modules at a slight discount; only pay for what you truly need in the near term. (We’ll revisit this under Hidden Costs and Negotiation Levers.)
Pricing Benchmarks: Use external benchmarks aggressively. Knowledge is power – knowing what similar enterprises pay (on a per-employee, per-module basis) gives you leverage. However, ensure comparisons match your context (company size, module mix, deal timing).
Workday’s pricing evolves yearly, so a 2020 benchmark may be outdated for a 2025 deal. Insist that any “competitive upgrade” discounts or promotions be documented, and retain rights to those rates for future expansions (e.g., negotiate a price hold for 12–24 months on modules you defer for now).
Upfront Implementation Costs: Unlike subscription fees, implementation is not included—it’s a separate cost that often blindsides customers. Plan for roughly 100% of first-year subscription fees as implementation costs. In other words, a $500K annual Workday deal can mean another ~$500K in one-time implementation services.
Workday only handles ~20% of implementations; certified partners do the rest. You can negotiate who performs implementation and at what rate. However, Workday won’t usually discount its software for using their services (they often don’t push their implementation teams for large enterprises).
However, you could leverage implementation spending in the overall negotiation—e.g.,k for subscription fee concessions in exchange for going with Workday’s preferred (or their own) implementation approach.
Common Contract Structures
Term Length: Workday regularly signs 3-year contracts as the standard initial term. That first term flies by, and you’ll return to the table before you know it. Some enterprises opt for longer deals (5+ years) to lock in rates, but be cautious: longer terms = less flexibility if things sour unless you secure strong protections.
Workday often agrees to 3-year renewals, though they may propose 4, 5, or even 6-year renewal terms if it benefits them. As the customer, you should decide based on your roadmap – e.g., if you plan to adopt major new modules in 2–3 years, a 3-year term gives you a chance to renegotiate with that expansion in mind.
License Counts and Minimums: Your contract will commit to a baseline FSE (employee) count. This is effectively a minimum billable headcount. Even if your employee count drops, you pay for the committed minimum – there’s typically no “true-down” until renewal. Negotiate the baseline carefully using Workday’s own categories: Workday allows different worker types with different weighting (e.g. part-time workers might count as 0.25 of a full FSE).
Insist on including all relevant worker categories (seasonal, part-time, contractors, etc.) at appropriately reduced percentages to avoid overcounting. This can dramatically reduce your licensable FSE count – for example, adding categories for field or seasonal workers at 50% or 15% weight can cut thousands off. Nail this down before signing; it’s hard to change later.
Also, consider negotiating a “growth band” – e.g., if you exceed your baseline by >10%, you get a pre-negotiated discount on the overage. Workday has offered growth event discount tables (e.g. 10% over baseline yields 2% discount, 50% over yields 10% discount) – but you must ask for it; it won’t be in their initial draft.
Co-Termination of Modules: As you expand your Workday footprint (say you add Recruiting or Learning mid-term), co-term all new modules to the master renewal date. This means new SKUs are prorated for the first partial term and renewed simultaneously with your core. Co-termination prevents a staggered contract hell where you’re always in negotiations for one module or another.
Workday typically supports co-terms, but make them explicit. If they ever propose a different term for an add-on (to, say, lock you in longer on that piece), push back. Align everything to one end date for maximum negotiation leverage when that date comes.
All-Inclusive vs Modular Contract: Workday historically prefers a big bundled contract – a unified bill for the suite. In the past, they resisted highly modular, a la carte agreements. Recent master agreements clamp down on dropping modules mid-stream. Be aware: if you sign up for a bundle of modules, you may be unable to cancel one underperforming module until the term ends, and even at renewal, Workday may push to keep the bundle intact.
Clarify your ability to reduce scope at renewal (e.g., carve out a module if you find a better point solution). If Workday’s new terms forbid dropping a module, negotiate an exception or at least ensure you’re not stuck with one you don’t need in the first place. In short: commit to modules you’re confident about and structure the contract so you’re not handcuffed to unwanted components.
Future Expansion Terms: If you know you’ll likely add a module (Adaptive Planning, for instance) in a year or two, negotiate pricing now and include it as a future option. For example, get a written addendum to add Workday Adaptive Planning next year at $X per FSE with the same discount %.
This price protection saves you from renegotiating from scratch later when you have less leverage. Also, align expansion timing with renewals when possible: “If you’re looking to expand, time your expansion around your core renewal to lock in the most favorable terms”.
In practice, that might mean co-terming an expansion to sync with renewal or even pulling it forward into the renewal negotiation to bundle for a better deal.
Hidden Costs to Watch For
Buying Workday is not just about the subscription fee. Hidden and ancillary costs can inflate your TCO significantly:
- Implementation and Configuration: As noted, initial implementation can cost as much as the first year’s subscription fees. Large enterprises often spend seven figures on deployment services. This is paid to a Workday-certified integrator (or Workday’s services) and is often non-negotiable in the amount of work – but you can negotiate who pays for delays or overruns. Insist on a clear Statement of Work if using partners, and consider implementation credits or penalties if timelines slip. (While not in Workday’s contract, this can be negotiated with the implementation vendor.)
- Integrations: Connecting Workday to your other systems (payroll providers, benefits, ERP, etc.) can incur development and maintenance costs. Workday provides integration tools (Workday Cloud Connectors, APIs, etc.), but you may need additional middleware or pay for certified pre-built connectors. These costs often lurk in implementation SOWs but not the Workday subscription contract. Tip: During negotiation, ask if any needed integrations (e.g., to SAP finance or a third-party payroll) require additional Workday modules or fees. If yes, negotiate those into the deal or ensure your team budgets for them.
- Sandbox and Testing Environments: Workday includes a production tenant, typically one sandbox. If your enterprise needs additional tenants (e.g., a dedicated testing, development, or training environment), that may cost extra. Ask upfront about extra environments. For example, Workday’s Extended Sandbox or Preview Tenant might be an add-on. To avoid surprises, get any necessary non-production instances included or capped in price. It’s a small line item to negotiate that can save headaches later.
- Upgrades & New Features: Workday’s updates are included (it’s true multi-tenant SaaS), so you won’t pay for “version upgrades.” However, new products or modules (like new functionality carved out of existing modules) might cost extra. For example, if Workday spins out a new Talent Optimization module from core HCM, you might have to license it separately. Keep an eye on Workday’s product roadmap; if something currently included could become a separate SKU, try to lock in access now or ensure favorable terms if that happens.
- User Training and Change Management: While not a contract term, remember that complex HR/Finance systems carry training costs. Workday offers training services and Success packages at an additional cost. You might negotiate free training hours or executive onboarding sessions as part of the deal. At minimum, ensure you budget for training (either via Workday or internal) – many failed implementations trace back to skimping on this.
- Workday Extend Development: If you plan to use Workday Extend (the platform to build custom apps), note that Extend requires a license (not a free feature) and likely a partner to build your first app. That means extra cost for the Extend add-on plus development services. Treat this as a separate project cost – and if Workday is encouraging Extend, see if they’ll include some Extend licensing or support in your deal to sweeten it. (We’ll discuss Extend more in the new products section.)
- Integration Users / API Calls: Ensure the contract doesn’t limit your API usage or charge separately for “integration user” accounts. Workday’s standard policy is to allow reasonable API use as part of the subscription. However, if you have extremely high integration volumes, confirm that you won’t hit any unseen thresholds or need to buy an “integration package.”
In summary, surface these hidden costs early. During negotiation, explicitly ask: “What other costs will we incur when using Workday in production?” Then, negotiate or budget accordingly. A seemingly cheap subscription can balloon once these extras are accounted for. No CIO wants a surprise 50% cost overrun because of add-ons.
Renewal Traps and Gotchas
Renewals are where SaaS vendors often make their real money – and Workday is no exception. Beware these renewal traps:
- Automatic Renewal & Notice Periods: Check if your contract auto-renews by default. Workday contracts typically require you to give notice (e.g., 60-90 days) before the term ends if you intend not to renew or to negotiate changes. If you miss that window, you could be locked in for another year (or whatever renewal term the contract stipulates) at the preset terms. Diary the date years in advance and send a timely intent-to-renew (or intent-to-negotiate) letter to avoid an unintentional renewal. Even if you fully plan to stay with Workday, formally signaling that you want to discuss terms is important – otherwise,e the vendor may assume you’ll roll over.
- Steep Price Escalations: Workday often builds in annual price increases tied to an “Innovation Index” plus CPI. For instance, a standard contract might say your fees increase yearly by CPI (inflation) + ~4% innovation uplift. In low-inflation years, that might have been ~5% total, but with recent inflation spikes, you could see near 10% yearly hikes if unchecked. That compounds brutally over a 3-5 year renewal term (e.g., a $750K/year base could balloon to $1.15M by year 5 without a cap). Negotiation 101: Cap the increases. Push for a flat or capped renewal rate – e.g., “no more than 3% per year” regardless of CPI. Many enterprises successfully negotiate 3-5% capped annual increases instead of open-ended CPI+Index. Do this in the initial deal if possible; it’s harder once you’re locked in, but still attempt it at renewal. Example: One company negotiated Workday to a max 3% annual escalation (vs ~9% originally), saving nearly $800K over 5 years.
- “Blend and Extend” Bundles: At renewal time, Workday might propose a bundled renewal – for example, renewing your existing subscription plus adding new modules, all rolled into one new annual fee. This can obscure how much of the cost is the renewal of existing vs. net-new spend. Don’t let them hide the ball. Insist on seeing the as-is renewal price (just what you have now, renewed) separate from any expansion. Bundling can be advantageous (you might get a discount on new stuff), but you need clarity first. Also, ensure any multi-module bundle has co-termination and coterminous pricing protections – you don’t want a scenario where dropping one piece at the next renewal blows up your discount on everything else.
- Double-Digit Renewal Hikes: Enterprises often see double-digit percentage increases at renewal, especially if no protections were set initially. Workday knows switching out a full HCM/ERP is painful for you so that they may be aggressive. Be prepared: start renewal prep early (12+ months out), assess your current usage vs. contract, and identify leverage points (e.g., lower headcount, competitive alternatives for certain modules, etc.). If Workday’s initial renewal quote is unpalatable, don’t be afraid to push back hard – they will negotiate if they risk losing some business.
- No Reduction for Downturns: A hidden trap is that if your employee count decreased over the term (say, due to a divestiture or layoffs), you might still be stuck paying for the old higher count. Workday contracts often lock your minimum FSE. Try to negotiate a provision at renewal to reset the baseline to current employees or at least allow a % reduction. If Workday resists, leverage the fact that a competitor’s quote would naturally be based on your new, lower count. Even if they won’t reduce license count mid-term, you can sometimes negotiate some price relief or service credit if a drastic change happens (this requires goodwill and leverage – your mileage may vary).
- Master Agreement “Resets”: At renewal, Workday sometimes presents a new Master Subscription Agreement with updated legal terms. Be vigilant: Newer terms might include stricter clauses (e.g., limiting liability or the earlier-mentioned bundling language preventing module drop). Don’t assume you must accept all new terms—you can negotiate the Master Agreement, too. Compare it line-by-line to your original. Especially watch for any auto-renew language, fee escalation clauses, or termination rights that have changed.
- Shelfware and Unused Modules: If you purchased a module and haven’t deployed it fully by renewal, Workday might argue it’s “part of the bundle” and expect you to renew it regardless. This is where earlier diligence (not buying unnecessary SKUs) pays off. If you end up with shelfware, consider negotiating a swap – e.g., “We haven’t rolled out Learning as planned; can we exchange it for another module or remove it with minimal penalty?” Workday’s answer will depend on your leverage, but it’s worth asking, especially if you’re willing to commit those dollars to another Workday product they’re pushing.
Bottom line: Never treat a Workday renewal as a rubber stamp. Treat it like a new negotiation – because it is. Review usage, get fresh benchmarks, and challenge any increases or terms that don’t make sense.
Workday’s growth targets (they’re publicly aiming for revenue increases each year) mean they will try to extract more from you. It’s your job to keep those increases within reason and tied to real value.
Negotiation Levers for Enterprises
When negotiating with Workday, especially as a global enterprise, use every lever in your arsenal:
- Leverage of a New Deal: Your first Workday deal is your strongest moment of leverage. As one advisor said, “your initial Workday deal is where you have the greatest negotiation leverage since Workday is uncertain they will win your business”. If this is a new deployment, make it a competitive process. Even if Workday is the front-runner, keep viable alternatives (SAP SuccessFactors, Oracle Cloud, Ceridian/Dayforce, etc.) in play to keep Workday uneasy about the win. The “no deal” threat is most credible before you’ve signed. Use that to extract better pricing and terms up front – it sets the precedent for all future dealings. Don’t be shy about telling Workday, “Vendor X is offering 20% lower for similar scope” – whether or not entirely apples-to-apples, it signals that Workday must compete.
- Timing (End-of-Quarter/Year Pressure): Enterprise sales reps are slaves to their quotas. Quarterly results and annual targets drive Workday’s sales org (like most SaaS firms). Time your negotiations to hit their pressure points. Often, Q4 of Workday’s fiscal year (which ends Jan 31) or even the end of Q1 can be leverage opportunities since they want strong close rates. The rep will be motivated to offer extra discounts or concessions to book the deal in their quarter. Use this: for example, “We could consider signing by the end of January, but we’d need an additional 5% off to justify moving now.” You might be surprised how quickly they “find” that discount if it helps them hit their quota. (Of course, don’t let timing force you into a bad deal – but if you’re ready, leverage their urgency.)
- Deal Size and Volume: The more modules and users you buy, the more leverage you have. A global enterprise deploying HCM, Finance, Planning, and more is a massive win for Workday – they will fight hard for it. Use that clout: push for Best-in-Class pricing. If your spend will be $2M/year, ask for pricing that other $2M+ customers get (this is where benchmarks help to know what discounts are typical at that spend). Also, if you’re rolling out in phases (e.g., 50k employees now, could be 70k in 2 years due to M&A), let Workday know – growth potential can justify a better price now. Conversely, if your user count is very high, ensure you get the max volume discount – Workday’s pricing tiers should reward larger FSE counts.
- Competitive Alternatives (Module-by-Module): Even if Workday is the only full-suite choice you’d consider, you can introduce competition for individual modules. For example, if negotiating Workday Learning or Workday Recruiting, mention that you are also evaluating Cornerstone or LinkedIn Talent Hub. For Workday Adaptive Planning, mention Anaplan or Oracle Hyperion. This signals to Workday that any add-on module is optional and must be priced keenly or you might go with a niche vendor. It doesn’t mean you will, but it costs nothing to remind them that Workday is not the only game in town for every piece of functionality. Leverage “best-of-breed” options to keep Workday’s add-on pricing honest.
- Bundling and Multi-Module Deals: Bundling can be a double-edged sword: it can hide costs, but you can also demand better overall discounts because you’re “buying more.” If you genuinely intend to adopt multiple Workday products, negotiate them together to maximize your bulk discount. Workday reps love to “bundle to hit hurdles,” meaning they might throw in a sweetener if adding one more module helps them reach a quota tier. Use this: “If we include Recruiting in this deal along with HCM and Payroll, I’ll need an aggressive bundle discount on the whole package.” Ensure the final net price per module is better than if bought standalone. Important: Only bundle what you need (remember the shelfware warning). You can also negotiate future bundle pricing – e.g., “We agree to evaluate Workday’s Help Desk module by Q2; if we choose to add it, it will be at 20% off list.” This keeps some forward-looking leverage.
- Contract Length vs. Flexibility: Workday might offer a bigger upfront discount for a longer term (e.g., a 5-year commitment instead of 3). This can be a lever – if you’re comfortable locking in, extract something meaningful in return, like extra discount, price locks, or additional services. Alternatively, you might leverage a willingness to sign a longer term to get concessions: “We could consider a 5-year term, but only if we get a cap of 2% on yearly increases and a 15% price cut.” However, be careful not to give away future flexibility without adequate compensation. Sometimes, sticking to a 3-year term is wiser unless the long-term deal is too good.
- Executive-Level Engagement: Workday’s leadership will get involved in very large deals. Don’t hesitate to escalate to CIO-to-CIO or CEO-level discussions if you’re a major account. Anecdotally, having your CEO or CIO call Workday’s executive sponsor to express how important the partnership is – but also how the current proposal is a bit off – can yield improved terms. Workday prides itself on customer satisfaction; a strategic customer making a reasonable ask at the executive level can push the sales team to be more flexible.
- Benchmarking and Outside Help: Use third-party advisors or tools to bolster your stance. Firms like UpperEdge, NPI, Info-Tech (and others) have Workday deal data. Bringing an outside benchmark or saying, “We’ve done a market analysis and find this price above fair market” puts pressure on Workday that you know your stuff. Even if you don’t disclose sources, quoting specific metrics (“We believe a competitive price for module X is around $YY per employee”) shows you are an informed buyer.
- Payment Terms & Cash Flow: While Workday won’t usually offer a discount for prepay, you might negotiate a payment structure. For instance, request annual payments (standard), but maybe you want net 60 payment terms instead of 30 – worth asking. In some cases for large projects, you could attempt a ramp-up payment plan (pay less in year 1 while not fully live, then more later). Workday expects you to pay from contract start even if you’re not live (this “shelfware” period irks many). Getting a ramp is tough but not impossible if your go-live is 12+ months out. Try for at least a partial concession, like 90 days free or reduced fees in the first year while implementation is underway. They may say no, but asking costs nothing – and some customers have gotten creative structures when it was a make-or-break issue.
- Reference and Marketing Leverage: If you’re a marquee brand, Workday may salivate at the chance to announce you as a customer. You can trade non-monetary leverage for terms, e.g., agree to do a joint press release, be a reference, or speak at Workday Rising – in exchange for a better price or extra services. Essentially, “We’re willing to be a public success story for Workday – what can you do for us on the pricing?” This should be approached carefully (your comms team must agree), but it can be surprisingly effective. It gives the sales rep something to justify a discount to their higher-ups (“We got them as a reference account, that’s worth X%”).
Using these levers in combination is most powerful. For example, time your competitive RFP to conclude in Workday’s Q4, leverage your large employee count and willingness to bundle multiple modules, and hint that your CEO is following the negotiation closely.
The goal is to maximize Workday’s fear of losing and desire to win – so you get the best deal with the least compromise.
Data Access, Exit, and Transition Terms
Enterprise SaaS negotiations aren’t just about price – data rights and exit terms are critical for a CIO to consider, especially for a system as mission-critical as Workday:
- Data Ownership: Ensure the contract explicitly states that your company owns the Workday data. Workday’s standard terms usually affirm this, but double-check. You want the right to access and export your data anytime in a usable format. Do not accept any clause that limits data access to only during the subscription term without providing a post-termination access window.
- Data Export and Format: Negotiate the means of data retrieval. Workday’s system allows exporting reports via APIs. Confirm you can export all your core HR, finance, etc., data before the contract ends. Ideally, get language that Workday will assist with data export upon termination (even if for an hourly fee). They may not always include that proactively. Ensure you’ll have system access to pull data shortly after termination. For example, you might negotiate a clause: “Upon non-renewal, Customer may access the Workday environment for 60 days in read-only mode to retrieve data.” This prevents a scenario where your contract ends and your data is inaccessible the next day.
- Transition Assistance: If you ever decide to leave Workday (or even just switch a module out), having contractual transition assistance can save you. This could mean professional services hours from Workday to help migrate data to a new system or a commitment to cooperate with a successor vendor. It’s rare for SaaS vendors to offer much here, but you might get a token amount for a large enterprise. If nothing else, set expectations that if you leave, Workday will provide data in a standard format (CSV, XML, etc.) and not charge an exorbitant fee.
- Retention and Purging: Ask how long Workday retains your data after the contract ends. The standard is immediate deletion after a grace period. If you require longer retention (due to regulatory reasons, for example), negotiate that (you might have to pay for extended data storage). Also, consider backups—if you want an end-of-service data dump or backup image, specify that now.
- Access During the Term: On a related note, ensure adequate access during the contract: API access, integration access, and the ability to extract data into your own data lake or analytics systems. Workday Prism Analytics (discussed later) is one way to do cross-system analysis, but even without it, you should be able to pull your data regularly. Ensure no contract language restricts that (it normally doesn’t, but always verify).
- Exit Costs: Check if there are any penalties for not renewing or for reducing scope at renewal—ideally, there should be none (aside from losing the volume discount if you shrink dramatically). Clarify that if you choose not to renew, you simply stop paying, and there’s no additional fee (some vendors sneak in termination charges or notice fees—unlikely with Workday, but always good to confirm).
- Surviving Clauses: Look at what clauses survive contract termination (typically confidentiality, liability, etc.). Ensure data protection obligations survive until data is deleted or returned. You don’t want Workday off the hook for protecting your data the moment the contract ends if they still hold some of it.
In essence, plan your divorce before you get married. While you may never leave Workday, having the contractual ability to do so cleanly gives you power. It means if Workday’s pricing becomes untenable or the product no longer meets your needs, you have a clear path to exit with your data intact. That safety net also indirectly gives you negotiating leverage at renewal – Workday knows you’ve kept the door open to leave, which keeps them more honest on pricing.
Support, SLAs, and Service Levels
Workday will be a mission-critical system, so the terms of the support and service level agreement (SLA) are vital.
Here’s how to approach them:
- Standard Support Inclusions: Workday’s standard subscription includes 24x7x365 support for critical issues. They don’t usually charge extra for basic support (unlike some vendors). The SLA typically promises 99.7% uptime per calendar monthfor the service and defines maintenance windows (e.g., they get a few hours on Saturdays for maintenance). It also includes performance metrics (like 50% of transactions under 1 second and 90% under 2.5 seconds) and a disaster recovery RTO of 12 hours. As CIO, ensure these standards meet your business requirements. For most, 99.7% uptime (approx <2.2 hours downtime monthly) is acceptable, but if you have truly zero downtime tolerance, you might need to discuss that (rare, since even banks tolerate 99.7%).
- Premium Support Options: Workday offers Success Plans (often subscription-based support enhancements) and possibly premium support tiers. For example, they have offerings where you get a designated support manager or faster response times. If your enterprise needs white-glove support, consider negotiating a Premier Support package. You could ask for free premium support (the first 6 months post-go-live) as part of the deal. If they won’t budge on price, sometimes you can get this kind of extras. Always quantify: e.g. “We want a named technical account manager and quarterly on-site check-ins at no extra cost.”
- Service Level Credits: The SLA should have remedies if Workday fails to meet it. Workday’s standard SLA includes service credits that kick in after repeated failures. Typically, after the first major SLA miss, they’ll meet with you (no credit yet, just a meeting); the second failure in six months = 10% credit, third = 20%, fourth = 30% credit of that month’s fee. These credits are nice, but they’re capped and only apply to the subscription fee for the affected service (so if only one module was down, maybe credit just on that portion). Negotiate credits if you need higher protection. Workday is often more willing to enhance service credits than to alter the 99.7% uptime figure. For instance, you might argue that even a critical outage over X hours yields a credit (not waiting for a second failure). Ensure the SLA language covers performance and availability in meaningful terms for you.
- No Price Increase for Better SLA: Workday has been known to improve SLA terms without extra cost if you negotiate firmly. Don’t let them charge you more just for what should be table stakes reliability. You can ask if you need a tighter SLA (e.g., 99.9% uptime), but Workday might resist changing the number. They may instead offer other assurances (like more robust credits, as above). Gauge how critical that extra 0.2% is for your org – it equates to about 15-20 minutes less downtime a month, which might not be worth dying on a hill for.
- Support Response Time Guarantees: Beyond uptime, consider support responsiveness. Workday likely defines severity levels (P1, P2, etc.) and might not commit to response times in the contract. If premium support is in play, get those response SLAs defined (e.g., P1 responded to in 1 hour, resolution or workaround in 4 hours, etc.). At least have it documented in a support policy.
- Escalation Path: As a large customer, you should have a named customer success manager or account manager. Ensure that role is mentioned in the contract or at least in an exhibit – someone at Workday is accountable for your success. It might also be worth getting an executive sponsor named (sometimes vendors assign a VP or exec to your account for escalation). While this might not be in the contract, during negotiations, ask, “What executive sponsor will you provide for our account?” The answer and commitment can tell you how important your account is to them.
- Scheduled Maintenance Impact: Workday’s maintenance windows (the few hours on Saturdays) are usually standard and not counted against SLA. Verify that those times don’t critically hurt your operations (for a global company, there’s no perfect window, but ensure your payroll processing or critical timelines aren’t always in that window). If they are, discuss if anything can be done (maybe not, but discuss).
- Security and Compliance: Workday’s security, privacy, and compliance commitments will be in the agreement or a trust appendix. Ensure they meet your standards (GDPR, SOC audits, etc.). While you might not “negotiate” these (they are standard), you should know them. As CIO, also clarify if you need enhanced support for security incidents – e.g., if a breach occurs, how quickly will they inform you and support investigations? These might be in their security exhibit; if not, consider adding language.
Key tip: If Workday balks at custom SLA terms, focus on those service credits. Those have monetary value and can be improved without engineering changes. UpperEdge notes that Workday has shown a willingness to give better credits (e.g., maybe a higher percentage or credits for the first failure) if a customer pushes.
That can protect you financially if things go wrong, and it motivates Workday to prioritize your issues. Always remember, the SLA is your safety net – hopefully never needed, but crucial when things go awry.
New Workday Products: Extend, Prism Analytics, Skills Cloud, and more)
Workday is continually expanding its platform with new offerings, and they love to position these “shiny new” products during negotiations. As of 2025, some prominent newer products include Workday Extend, Workday Prism Analytics, Skills Cloud, and modules like Journeys and Help.
Here’s how Workday positions them and how to handle it:
- Workday Extend: Extend is Workday’s low-code platform to build custom applications and extensions on top of Workday. Workday is highly motivated to drive Extend adoption – it’s strategic for them to have customers building on their platform. In negotiations, they might pitch Extend to solve unique requirements, possibly bundling it at a “discount”. Reality check: Extend is indeed powerful, but it’s not free – there are licensing and hosting costs for it, and you’ll likely need a partner to build anything meaningful initially. If you have a clear use case (e.g., a custom app HR needs that Workday can’t do out-of-box), then by all means, discuss Extend. However, approach it like any module: get pricing for the Extend platform and consider the development cost. You might negotiate free Extend licensing for a year or include a pilot app if they’re eager to land a case study. Workday might agree to an extended trial or reduced price if you commit to be a reference for it – that’s your leverage. If you don’t have a concrete Extend use case, be blunt: “No, thanks – not at this time.” Don’t get talked into a tool without a plan, or you’ll pay for shelfware.
- Workday Prism Analytics: Prism is an analytics module that allows you to bring external data into Workday and do advanced reporting/dashboarding beyond standard Workday reports. It’s often pitched to finance and HR analytics teams as a way to avoid separate BI tools. If Workday sees that analytics is important to you (or that competitors offer integrated analytics), it’ll tout Prism. Negotiation angle: Prism is an extra cost add-on; gauge if it replaces anything for you (maybe it could replace a separate BI license). If yes, that’s value – negotiate Prism in a bundle with an appropriate discount. If not, you can defer. Sometimes, Workday may bundle Prism for free or very cheap if you’re buying a lot of core stuff to get you hooked. That would be good if you used it. Ensure you understand Prism’s capacity pricing (if any). Is it priced based on data volume or just a flat fee? Get that clarity. If you take it, secure a price lock for future years (so it doesn’t double after a year). If you don’t want it, exclude it and any associated costs.
- Skills Cloud: Workday Skills Cloud is a machine-learning-powered skills ontology that helps identify and manage employee skills. The good news: Skills Cloud is generally included as part of a Workday HCM subscription, not a separately priced item (Workday touts it as a value-add). So there’s not much direct negotiation on cost, but more on value realization. Workday will position Skills Cloud as a differentiator (especially since Oracle and others are hyping skills platforms, too). As a CIO, ensure your HR team is aware of it and plans to use it (it can enhance talent management value). Since it’s included, your leverage is to ask for enablement: e.g., have Workday provide workshops or services to help set up your Skills Cloud taxonomy. If Workday pushes you to be a “skills-based organization” success story, they might throw in some advisory hours. Take advantage of Skills Cloud (since you’re paying for it in HCM), but don’t let it distract from other negotiation items – it’s likely already in your package.
- Workday Journeys and Help: These are newer modules aimed at employee experience (Journeys provides configurable employee journey workflows, and Help is an HR helpdesk/case management tool). Workday is pushing these to compete with ServiceNow and others in the employee experience space. If you’re an HCM customer, expect your rep to mention them. They might offer a deal if you add them. Approach it like any expansion: if you have a need (e.g., you’re considering ServiceNow HR Service Delivery, etc.), then leverage Workday vs the competitor. If you don’t have a defined need, be wary of adding on. Workday will likely bundle Journeys/Help at renewal time to “expand footprint”. This could be fine if the price is right and it brings value. If not, you’re free to say not now. There’s no penalty for declining – just be ready for the sales persistence.
- Other New Stuff (Planning, Sourcing, etc.): Workday Adaptive Planning (from Adaptive Insights acquisition) and Workday Strategic Sourcing (from Scout RFP) are somewhat more established, but if you don’t have them, Workday will try to upsell these too. The key is similar: Tie any purchase to business needs and competitive context. If you’re adding Adaptive Planning, mention that Anaplan or Oracle are alternatives – get the price where it needs to be. If Workday knows you’re likely to go with them anyway (because integration is easier), they might hold the price – so keep some healthy competitive tension.
Overall strategy with new products: Workday often introduces new SKUs with incentive pricing to drive adoption (they want reference customers). This can be a boon – you might get a new module for 50% off or free for a year.
But remember the flip side: after the special deal period, you could be on the hook at full price, and if you didn’t utilize the product, that spend becomes “toxic” waste. As NPI aptly noted, “what may seem like a good deal now could lead to underutilized shelf-ware and toxic spend down the road.”So evaluate critically.
It’s perfectly acceptable to tell Workday: “We’ll pilot Extend (or Prism) now, but we will decide at the next renewal whether to keep it, and if we do, it must be at this discounted rate long-term.” Make them commit to future pricing on any pilot they push.
One more tip: If Workday wants you to adopt a new module, consider asking for a free trial or a POC in writing, separate from your main contract. For instance, a 6-month free use of Prism or Extend with the option to license afterward. This keeps it out of your core financial commitment until you know its value.
Real-World Examples and Trends
It helps to learn from other enterprises’ experiences. Here are some real-world anecdotes and trends in Workday negotiations that CIOs should heed:
- Massive Savings with the Right Tactics: One company avoided overpaying by rigorously negotiating and achieved $11M+ in savings over 5 years (and $21M over 10) compared to Workday’s initial offer. They did this by getting FSE counts right, removing unneeded SKUs, and securing price protections on renewals—validating that these tactics can yield huge ROI. The lesson: Workday’s first proposal is not its best—it can be dramatically improved with the right strategy.
- First Deal Sets the Tone: As discussed, companies that negotiate a low initial rate enjoy much lower costs over time. UpperEdge likens it to a starting salary: if you start high, all raises compound on that. Conversely, if you win a great initial discount, even if the percentage increases later, stay on a low base. Organizations that secured, say, 50% discounts upfront end up paying millions less over a decade than peers who initially accepted a smaller 20% discount. Never leave money on the table in the initial deal – it haunts you in every renewal.
- Typical Discounts: Workday doesn’t publicly share “list vs. street” discount ranges, which vary. However, enterprise deals commonly see significant discounting (30-50% off list for big suites is not unusual if competitively bid). Conversely, some customers with less leverage or who didn’t benchmark paid near list price. The disparity can be stark – recall the example of $100/FSE vs $45/FSE per year for similar companies. That suggests one had a ~55% better effective rate than the other. The trend is that Workday pricing is highly situation-dependent, which is why benchmarking and negotiation are so critical.
- Renewal Sticker Shock: Companies are sometimes taken aback by renewal quotes. A trend reported is double-digit renewal increases, and in some cases, Workday is trying to lock customers into longer renewals with those increases. Enterprises anticipating this and negotiating caps or fixed renewal pricing in the initial term fared much better. Those that didn’t often had to scramble, and some ended up signing perhaps a 3-year renewal at +10% year-over-year because they felt stuck. The takeaway: plan for renewal early, don’t wait for Workday’s quote – model it yourself and push back preemptively.
- Benchmarking Becoming Norm: More enterprises are engaging specialist firms or using communities to benchmark their SaaS deals. Workday, noticing this, sometimes asks customers how they came up with their counter-offer numbers. It’s fine to say you have industry benchmarks – it signals you won’t accept an above-market deal. Vendors play fairer when they know you’re informed.
- Bundling & Product Stickiness: Workday knows you are deeply entrenched once you adopt multiple modules (HCM + Payroll + Financials + more). Some enterprises report that Workday’s flexibility on price correlates with how much of their product suite you use. If you only use one module, they fear losing you to a point solution and might be more flexible. If you use everything, they know ripping it out is a nightmare, and they might be more rigid. So, one trend is always retaining some element of competition – e.g., some companies deliberately don’t use Workday for one area (say, they keep a separate ATS or LMS) as a strategic move. That gives them a credible “edge” to negotiate – i.e., “We could also consider migrating HR off Workday like we never moved recruiting on,” etc. It might be extreme, but it’s a tactic we’ve seen. For most, it’s not feasible to hold back core modules just to have leverage, but at least maintain the mindset that “We could leave if we had to”.
- Emerging Alternatives: Workday still leads in functionality for many, but competitors (SAP, Oracle, etc.) have improved. In some recent negotiations, enterprises have successfully used Oracle’s aggressive bundling (Oracle sometimes offers ERP+HCM together at a steep discount for Workday customers) to get Workday to match or beat certain terms. Another trend is mid-market vendors moving upmarket (e.g., Ceridian or UKG trying to court larger clients). They may not beat Workday on all features, but they might on price. Workday recognizes a more fragmented market and, in 2023, even saw slower growth partly due to economic headwinds. This environment may make Workday more willing to negotiate than in the high-flying years. Use that trend: They can’t afford the negative PR of big customers switching, so they’ll likely find a compromise to keep you.
- Locking Down Modules in New MSA: A noteworthy trend (as NPI highlighted) is Workday’s newer contracts, making it tougher to drop modules at renewal. They want to prevent customers from picking and choosing later. While this is good for their revenue predictability, it’s not great for customers. If you have an older, more flexible agreement, and you’re asked to sign a new one, scrutinize this. You might fight to grandfather some flexibility. This trend means less wiggle room later, reinforcing the need to sign up only for what you need and negotiate any potential future removals now.
- Economic Conditions & Negotiation Climate: With SaaS costs rising ~8-9% on average (even higher than CPI), CIOs are under pressure to rein in costs. Many organizations are pushing back on vendors’ price increases. Workday in 2023–2024 faced more cost-conscious customers (and even did a workforce reduction itself). The climate is more buyer-friendly than when every SaaS vendor had endless growth. Leverage the economic climate – It’s reasonable to say, “We cannot accept an X% increase; we need to contain costs.” Workday won’t do charity, but they understand long-term partnership and can structure deals to help (e.g., lower increase now, maybe slightly more later). One enterprise negotiation in late 2024 resulted in Workday agreeing to delay a one-year price increase due to the customer’s budget constraints, which might not have happened a few years ago.
- Enterprise Negotiation Teams: We see more CIOs involved in procurement and even external negotiators specializing in SaaS. Workday sales teams are experienced, so bring your A-team, too. A trend is treating SaaS deals with the same rigor as on-prem licenses used to be – multi-disciplinary negotiation teams (IT, procurement, finance, legal) to cover all angles (pricing, terms, compliance). Those who do this tend to secure more comprehensive deals (both good price and favorable terms in all areas discussed above).
In summary, Workday negotiations are winnable – enterprises secure better deals by being informed, being assertive, and leveraging timing and alternatives. By learning from others and following the strategies in this playbook, you can join the ranks of CIOs who turned a vendor contract into a truly favorable, flexible partnership.
Conclusion
Negotiating a Workday contract is not a one-time event – it’s an ongoing discipline across initial deals, expansions, and renewals. As CIO, you must approach it strategically and unemotionally: know your requirements, know the vendor’s playbook, and hold firm on what matters.
To recap our blunt advice:
- Do your homework on pricing – know the benchmarks and insist on clarity. Workday’s cost model can be opaque by design; shine a light on it.
- Secure a solid contract structure – right-size your employee counts, co-term your modules, and bake in protections (caps, options, flexibility) that will pay dividends later.
- Avoid common pitfalls – budget for implementation, don’t buy “too much too soon,” and never sleep on a renewal notice, or you’ll pay for it (literally).
- Leverage your strengths—whether volume, timing, or competitive bids—to extract concessions. Workday will earn your business and your loyalty every step of the way.
- Protect your exit—hopefully, it will never be needed, but knowing you can leave ensures you won’t be taken for granted on renewals.
- Hold them accountable – SLAs and support commitments matter; get what you need to keep Workday running in your environment with minimal disruption.
- Be savvy with new toys. Critically evaluate new modules like Extend or Prism. If they add value, great—negotiate them in. If not, you’re empowered to say no, not now.
- Learn from others. Numerous enterprises have walked this path; use their lessons (and mistakes) to inform your strategy.
Above all, maintain a partnership mindset but with hard-nosed execution. Workday is a fantastic platform that can deliver immense value, but only if the contract aligns with your interests and you don’t overspend or overcommit. By using this playbook, you’ll ensure that when you sign on the dotted line, you’ve achieved a fair, future-proof deal and set your organization up for success.
Remember: The goal isn’t to “win” a negotiation in a vacuum; it’s to establish a long-term relationship with Workday that supports your business objectives on your terms. Negotiate fiercely and manage proactively, and you’ll turn Workday from a costly investment into a strategic asset with controlled costs and flexibility. That is the outcome every CIO should aim for when dealing with Workday (or any major SaaS provider). Good luck – and get that deal.
