Workday 14: Amazing Enterprise Software for HR

Today Workday introduced release 14, the latest upgrade of the company’s SaaS HR and Financials application.  I rarely gush at enterprise software, but in this case I have to admit I was “wowed” by the progress the company has made.

Workday’s product now spans the range of ERP applications from financials to human resources, workforce planning, and talent management.  Built from an object-oriented architecture, the system has a unique “user-centric” design which lets people use the system for just what they want, with context-sensitive menus and embedded analytics to help managers make decisions on the spot.

The new release, which apparently has 140 new features, now includes industry-leading embedded analytics:  a user can pop open a window at any time and view “related information” about a transaction in a variety of forms to help make a good decision.  When changing an individual’s base compensation, for example, the system pops open a dynamic report of the team’s compensation and shows where this person fits (with compa ratios and other metrics), their relative performance ratings, and virtually any other information you need to make that decision.  The concept of embedded analytics has been around for a long time – in this release Workday really delivers.

Fig1 :  Embedded Analytics available during a Transaction

The system also has a “Compare Workers” feature which lets a user compare people against peers against a wide variety of metrics (based on the user’s authority of course).  For example, you can bring up a 9 box grid and compare people based on a particular project, not only their annual reviews.  The “Compare Workers” is like a dynamic “shopping comparison” tool you would find on a shopping website – you compare people by a variety of factors and you can quickly see what variances warrant a chnage.

In the area of talent management, the product now has much of the basic features of any performance and succession management system – including full support for contingent workers (we estimate that up to 35% of many companys’ employees are part-time or contingent).  You can evaluate a temporary worker on their project work, for example, using a tool which matches the temp against employees who have traditional performance appraisals.  Workday does not have a recruiting or learning module yet, and will not likely have one for a year or longer, so the company has integration partnerships with other vendors in those areas.

Workday’s user interface has evolved and now gives the user the ability to view a subset of the analytics within selection menus.  For example, when a manager wants to change an employee’s base comp, the menu itself shows a small slider bar to help view where this employee is relative to his or her peers.

Fig 2:  Navigation and Analytics Embedded

Workday also introduced the company’s iPad version, which replicates the circular menu-style interface on the web with much of the same functionality.  Workday understands (as does Peoplefluent and others who have introduced iPad specific versions) that ultimately most or all managers and employees will want to use their ERP systems from a mobile device.  Workday’s expense management module for the iPhone, for example, enables an employee to scan a receipt and add it to their expense reports.

Workday’s Momentum in the Market

Most impressive of all, the company has now started to gain major momentum.  After many years of R&D and evangelism, now Workday expects its 2012 revenues to be around $300 Million (2011 around $150m) and the company is growing at nearly 100% per year.  The employee count is now at 800 and growing very rapidly.  In fact, to attract engineers, the company has now opened a satellite office in San Francisco, and lets any employee who wants to join the company select San Francisco as their home office.  Pleasanton, while nice for family types, is not the most attractive location for young, hot-shot engineers and marketeers.

The company now has around 2 million workers under contract and around 210 signed customers (142 of which are live).  These are big companies (average size 8,000 employees) and today the company announced a big one:  a 55,000-user deal with Thomson Reuters which includes payroll.  These are very big deals (multi millions in annual contract revenue).

Workday is still well known as an HRMS or HCM software company – and these are the roots of the founders.  But the company’s clearly stated strategy is to go public in 2012 as an ERP company – so the company continues to focus on winning financial application customers as well.  Today there are around 23 customers using Workday Financials, and the company wants that number to grow to establish its clear parity with Oracle and SAP.  The company now also has five major universities using the system, and has built a higher-education feature set which will help it grow in that important, but slow moving market.

I have talked with several Workday clients, and while the decision to “rip and replace” a company’s existing HRMS is hard, these companies are very happy.  The return on investment of replacing a piece of infrastructure like an HRMS can actually be very high:  not only are system operating costs lower, but for the first time a global company can get a single view of its workforce, understand workforce spending and labor allocation to various products, and dynamically manage talent with a single source of truth.  The companies I have talked with were initially enamored by Workday for various reasons, but then later found that the ROI of moving to a new, integrated platform was high.

This an exciting, disruptive company with an amazingly integrated product.  While Workday does not yet play in end-to-end talent management, nor has the company developed a totally complete solution for financials, this company will change the HR software market in a big way.  Today any large company which considers Oracle or SAP upgrades (Fusion is here) will likely consider Workday – and this is a multi-billion dollar market. Large companies looking at SuccessFactors, Taleo, or other talent management products will still find Workday missing core elements (like Learning, Recruitment, Social learning, etc.) but may decide to use Workday’s core talent management and use the smaller vendors for these modules.

The ultimate challenge Workday faces (which the company understands well) is that most companies already have a financials and HRMS system in place.  These systems are usually old, unintegrated, and very complex to manage – but as my old boss at IBM used to say, “legacy software is software that works.”  When a system already works, there must be a compelling reason to change. Workday can clearly communicate what that business case looks like, and we do expect the company’s momentum to continue to build in the coming year.