I started the year with voices of customers still ringing in my ear from interviews for SAP Nation. They were fretting that there were few operational, industry-specific applications in the cloud. Workday and other cloud vendors were missing out on a window of opportunity around SAP and other on-premise vendors as they keep enriching back office functionality and targeting narrow markets like higher education.
Having spent the last few days with Workday executives and analysts who follow it at the annual Tech Summit and participating in the Predict and Prepare videocast I left feeling that that window of opportunity is still mostly open, and that in the back office, the Workday positioning has actually strengthened.
At the Tech Summit (a Twitter based transcript of which is nicely captured by Holger Mueller in Storify), we saw a confident Workday. The global footprint of functional and data center coverage is growing nicely – there was even a lucid discussion on the sticky Safe Harbor issues that multinationals face in Europe. The scale of customers being serviced is growing exponentially. Workday is investing heavily in lifecycle management tools, and keeping implementation costs in check, even as the ecosystem around it grows. The CIO of the large real estate services company, Cushman and Wakefield joined us all day and provided a customer pov to many of the analyst questions. Quite a symbol of confidence to have him participate and provide unvarnished input to analysts.
Predict and Prepare, the annual videocast that Bill Kutik hosts with a few analysts like me had its largest attendance ever this year. (Workday will have the replay up shortly). And in a sign of Workday’s growing product portfolio and opportunities to cross-sell and up-sell, the majority of the attendees were incumbent customers, not prospects. The topics were far more strategic and focused on issues executives want to hear about including growth and automation impact on workforces. In other moves, Workday is marketing higher via golf and other sports to executive audiences and its executives are becoming more visible at Davos and other high level events.
In the meantime, SAP appears to have become even more exposed. S/4HANA, introduced earlier this year, is looking more like a Trojan Horse to sell HANA, not provide its application customers a a long overdue refresh. The initial implementations of the Finance applications (the only ones initially delivered) are almost entirely on-premise (more cynically “private cloud”). There is little visibility on when industry functionality will be available, and there is little integration between its finance functionality, that of HCM in SuccessFactors, or other procurement, T&E, contractor management functionality in other acquired features via Ariba, Concur and Fieldgass. Workday’s cloud architecture and mostly homegrown features and integration across all these areas is so much more attractive.
Oracle has a more viable cloud back office story as Fusion continues to mature. But for all the valiant efforts of its cloud executives, the company continues to send mixed signals as it clings to its on-premise revenue and margins and annoys its customers with audits and its overreaction to support alternatives like Rimini Street. Similar to SAP, Oracle has not moved much of its industry, operational functionality to the cloud.
Infor in fashion, hospitality and a few other verticals, Unit4 in municipal and higher ed have some traction in those markets. Microsoft, Plex, Netsuite have their own vertical strengths in retail and manufacturing but aim at a much smaller customer than Workday targets. So, the wider cloud industry opportunity has not shrunk in the last year. The window is still open, but will not stay so for ever, and I expect Workday to start to make moves in 2016 – cautious ones so as not to over stretch itself.
But if I was still at Gartner where I analyzed what it called “administrative applications” – for the back office of larger customers, I would put Workday in the top-right, leader quadrant. More emphatically, I would make it stand out in that quadrant, way to the Northeast corner.
2015 has been a very good year for Workday.
(Cross-posted @ Deal Architect)