Workday labours for growth with nice-guys approach

Cloud human resources leader Workday is taking a different route to success

Haven’t they grown? It seems five minutes ago that Workday was in beta testing and was being mooted as potentially doing for human resources what had done for CRM – a cloud service, mobile-friendly, a platform play, a unified data model, a continuous user feedback loop, and a strong, consumer-like user experience, all leading to an evangelical customer base and the adoration of Wall Street. The Californian company is in fact 11 years old now and it has lived up to the pre-launch hype by delivering the biggest hit in cloud-based human capital management (HCM), employee performance management (EPM), or whichever three-letter acronym/abbreviation you prefer, for the current generation of software services. And with Oracle recently devouring NetSuite, (founded in 1999) and Workday stand virtually alone as dedicated business cloud applications firms to have stayed solo.

Proof of success comes in many forms: a booming stock price that values the company at over $16bn; annual revenue heading for over $1.5bn; headcount of 6,000-plus; a 1,350-strong customer roster that includes Unilever, Twitter, Visa, EasyJet, Rolls-Royce, AstraZeneca, Coca-Cola, Primark, Centrica, Warner Bros. and AON; and partners like IBM, Accenture and Deloitte. Or look at a mega-conference like Europe’s Workday Rising here in Barcelona with over 1,200 attendees.


Déjà vu all over again

In some ways, you might argue, Workday is version 2.0 of another company, PeopleSoft. It was co-founded by David Duffield, the former PeopleSoft CEO who left the company after Oracle’s hostile takeover of 2004, together with his colleague Aneel Bhusri who now serves as Workday CEO. That DNA is evident in several things, most notably the twin-track focus on HCM and payroll/financial management applications.

But it’s also present in a commitment to looking after employees and strong customer service ethos. In Workday, just as with PeopleSoft once upon a time, you can still see glimpses of the old Silicon Valley, a questing spirit of innovation that’s spliced with respect and an ‘all for one, one for all’ bond with staff, customers and partners. Workday maintains a model of inclusivity akin to what in the old Hewlett-Packard days was known as the ‘HP way’. The absence of arrogance is notable and welcome; asking pretty much anyone on the breezy coast where Workday followers had gathered led to tales of courtly behaviour and old-fashioned service. Perhaps the cloud era’s quietest contribution to the way the tech business works it is to have begun the end-of-life process for client/server software shakedowns, veiled threats and money with menaces.

That companionable spirit comes all the way from the top of the company and permeates far and wide. On the Trump election, Bhusri said:

“The simple way to describe what happened was that it was like Brexit: it was a protest vote. There’s a group of people who got left behind and shame on us. We just have to figure out how to give those people hope and skills.”


Another way to parlay M&A

Two of Workday’s biggest peers, Taleo and SuccessFactors, became basket items in the respective epic cloud M&A shopping sprees of Oracle and SAP in 2012 and Bhusri took the chance to take (characteristically mild) sideswipes at both, calling them “Frankensaurus” beasts, thus conflating Victor Frankenstein’s monster and dinosaurs. “They tried to buy their way in,” Bhusri added. “If you’ve bought five different companies it’s unlikely they’re all built on the same platform – they will have different data models, application environments, user interfaces…”

While acquisitions can often lead to a lot of mess, multiple tools and user interfaces, and sticking-plaster kludges to bind systems, Workday has taken another route. Rather than bastardise its data model, application environment and user experience, it has acquired small companies where necessary, but then got engineers at those companies to rewrite for the Workday cloud.

An example.

Workday last year bought GridCraft, a small maker of collaborative spreadsheets but the latter’s people then wrote a version of its product to become the engine for Workday’s Planning system for joined-up business budgeting and forecasting. (Similarly, Workday earlier this year bought a company called Platfora and is doing the same thing in analytics.)   

“Our customer counsel really wanted us to build Planning,” said Bhusri. “There are many startups we could have acquired but we wanted to build it on Workday to keep the same data model and user interface. We find these small technology companies and build that [new capability] into the platform so you can’t tell the difference.”

Workday is also expanding in other ways, for example with a Learning content platform for collateral such as training videos that Bhusri calls a “YouTube for corporations”.  


Financial considerations

Workday is clearly doing well but it’s much bigger in HCM than it is in its other major field of financial management. PeopleSoft never quite managed to lose its tag of being an HR software outfit with financials etc. on the side, but Bhusri said that, unlike the case with PeopleSoft, Workday had set about making financials an equal partner at the very least to HCM from the off.

“[At PeopleSoft] we just became known early on as an HR vendor,” he recalled. “The one takeaway [lesson] was we started financials from day one. With PeopleSoft we had HR and three years later [David Duffield] said ‘hey, we can do financials too’ and they were two different data models. The financials market, frankly, is bigger and we’re spending more on financials.”

It’s probably fair to say that Workday is also advancing on a broader front in its current march. That Planning system referred to earlier effectively takes Workday into competition with the likes of Tidemark, Host Analytics, Adaptive Insights and Anaplan. Both Anaplan, a UK-founded company, and Tidemark have been Workday partners but Bhusri was frank in his view of the former:

“Candidly, they’ve never been a great partner and we ended up getting into this space because couldn’t make that work. We’re not really partners anymore. I don’t think customers want separate planning and transactional environments.”

Another opportunity comes from the fact that many CFOs are keen to swap out legacy systems that restrict their chance to be business partners rather than just focusing on transactions, controls and governance. And here, as Workday Financials VP Betsy Bland said: “The process today is broken.”

By offering a route out of ‘versioning hell’, and through its modern core financials offering, Workday has a shot at doing what PeopleSoft never did: becoming as known for financials as for HCM.

But it’s about more than building a better mousetrap.

Gartner analyst Nigel Rayner, himself a former PeopleSoft employee, told me that in financial suites issues such as having the right channels to market are more important than software quality. “Your product’s irrelevant – the best product doesn’t win,” he said.

Rayner also saw some potential upside in Oracle’s recent deal to buy NetSuite but took a balanced view. “It could either reduce the competitive threat from NetSuite, or Oracle could bring NetSuite a huge global presence and make them a stronger competitor.”



Apart from continuing growth and bagging more market share in financial management, what’s left to do? Plenty, in geographic terms. Workday in Europe is growing with 170 local customers, 1,000 staff and 825 certified consultants and support for Privacy Shield recently added, but it’s still dwarfed by the US.

And, as for any cloud company accruing customers, the ‘P’ word will eventually pop up.

“Profitability matters because it’s a test of longevity,” Bhusri said. “In the long run we have to be a profitable company. We’re not doing it by counting pennies or cost cutting.”

Nor by the standard financial arbitrage tactics that dominate enterprise software.

“We relish diversity… despite the recent election… we’re different in California,” Bhusri said. “People that are nice people… we believe that nice people can also win. We tell our people if they don’t want to have fun they should go work at Oracle.”


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