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Workday: OK, you've had your day, now get back to work

Sound the trumpets, roll out the carpets, let the coronation begin!

Workday Yes, the long-awaited, much anticipated launch of Dave Duffield and Aneel Bhusri's new venture, Workday, has finally come to pass.  Yesterday I, along with presumably a trillion other analysts and media types, attended the Workday launch briefing. The one-hour webcast gave us plenty of tidbits to chew on but left me with far more questions than answers. I'm looking forward to the chance to sit down with some of my fellow Enterprise Irregulars for a more pointed briefing in the coming weeks now that Workday is officially out of stealth mode.

What we learned yesterday...

The Basics -- Workday is being funded primarily by Duffield himself along with an investment from venerable Greylock (where co-founder Bhusri has hung his hat as General Partner since leaving Peoplesoft).  The company is located in Walnut Creek and currently has 65 employees. The management team, unsurprisingly, is a who's who of key players from Peoplesoft's early days:

  • Dave Duffield, CEO and Chief Customer Advocate
  • Aneel Bhusri, Co-Founder
  • Stan Swete, VP Products & Technology
  • Mike Duffield, VP Sales
  • Ken Morris, VP Chief Technology Strategist

The Offering -- When asked if Workday was the "reincarnation of Peoplesoft", Duffield said "Yes and No."  In many ways, Workday is Peoplesoft Redux; or what Peoplesoft would have looked like if it was started in today's age of SaaS, web services and Web 2.0 UI technologies.  Duffield has embraced the SaaS meme wholeheartedly and is quick to point out that Workday isn't selling software, it's selling Enterprise Business Services:

  • Hosted, on-demand
  • Single instance, multi-tenant
  • Subscription-pricing
  • Browser-based
  • Metadata driven

The Target Market -- Workday may look like Peoplesoft Redux in many ways, but it's initial customer focus looks more like J.D. Edwards Redux.  Workday plans to target 1,000-5,000 employee organizations with $200mm-$1B in revenues (it's calling it the upper middle market).  It was clear that Workday intends to steer clear of SAP and Oracle for as long as it can; even suggesting at one point that by the time Workday is ready to go head-to-head, SaaS pioneers like salesforce.com and RightNow might have paved the way for deploying SaaS across a large enterprise.

Functional Areas -- Right now, Workday has only one silo of functionality available, Human Capital Management, but has targeted four core areas over the next year:

The Testimonials -- Workday announced five customers yesterday, and Biosite and Kana Software gave brief accounts of their early experiences.     

  • Mike Fields, the CEO of Kana (and former Oracle executive), is replacing a paper-based legacy system. The implementation started a few weeks ago and they're now live for self-service among Kana employees. Fields cited the lower TCO and the adaptability of the Workday architecture as critical selling points.
  • Suzanne Zoumaras, Chief HR Officer of Biosite, spoke about Workday replacing an "existing HR system that was an impediment to [their] business." Cited scalability, flexibility, the need for a global system, and the desire for a hosted system that could be managed internally as key issues. Biosite is already live on the service offering and processed its first payroll through the service this week. The most compelling part of Zourmaras' story was the ease of implementation.
    • Accordingly, Zoumaras said Biosite went live in four months using three FTEs from HR with "very little" input from the IS team. IS spent "no time" in the implementation.

The Demo -- The demo was, in some ways, underwhelming in my estimation. To be fair, we were seeing a just released 1.0 version so I don't want to pretend like what we saw is what Workday will look like in a year's time. However, I think the demo could have been much stronger in both its structure and focus. As I told Dan Farber:

I would've liked to see less focus on the buzz jargon that dominates the software industry today and more on how the Workday service offering will fundamentally reshape the way workers live their daily lives. Based on the demo, does it really look like something every individual employee is going to a) feel comfortable using and b) be allowed to use? It's cool that someone can go in and do a reorg of their organization, but why would any $500M-$1B company allow that beyond mid-management level? I would've liked to see more of the demo focus on what Joe Employee's processes are like and how Workday improves them, versus the demo we saw which was in the role of a COO reorganizing his workforce; something not unlike what he would be tasked with in current conventional HR ERP modalities. 

Other observations worth pondering...

  • What might have been...Has anyone thought about what might have been had Duffield not lost the battle for Peoplesoft two years ago?  Would he have found the SaaS religion we heard so convincingly yesterday if he still had a massive Peoplesoft and J.D. Edwards legacy installed base to support?
  • Cape Clear's ESB is a critical component to the offering...Workday has embedded Enterprise Service Bus (ESB) technology from Cape Clear. The enterprise services bus is critical for integration and re-use of the web services that drive the Workday solution set. According to the company's website, customers will have the option of managing the ESB internally or having Workday host. 
  • While Cape Clear is a best-in-class ESB, don't think for a second that Workday looked seriously at an alternative ESB...Make no mistake, Cape Clear has the reputation for being as good, if not better than, any other stand alone ESB product on the market. So while it's perfectly rational for Workday to chose Cape Clear in a bake off, I must admit that I find some of the posturing disingenuous. Take a look at this quote from the press release on Cape Clear's website:

“We chose Cape Clear’s ESB Platform for two reasons: they are the recognized market leader, and they are considered the industry's visionary experts,” said Stan Swete, vice president of products and technology for Workday. “With the help of Cape Clear, we’ve been able to deliver an innovative integration layer that supports flexibility and usability – both for us and for our customers – better than any other enterprise system today.”

Hmmm...so the fact that Cape Clear is another of Bhusri's Greylock portfolio companies (where he currently serves as Chairman) didn't play a role in the decision?

  • Aneel's Rolodex having profound influence in the early going...for all the obsession with Dave's return to the market (re-read Vinnie's post if you need a refresher on the cult of Dave), yesterday's press conference had Aneel's fingerprints all over it.
  • CIO mandate can, and will, be an issue...Duffield was asked whether CIOs would be an impediment to Workday's success and he candidly answered that some, in fact, will be while others will be more forward thinking and accept the eventuality that SaaS is the software delivery model of the future. Aneel added that CIO mandate will probably be a larger issue in a year or two when Workday is targeting Fortune 500 accounts. We know that sales executives can mandate the use of salesforce.com, but can an HR executive do the same? Do they have the juice? Will any major company consider ripping out and replacing its battle-tested financial apps for an on-demand alternative?
  • Accenture has already committed to building a dedicated team around Workday...if you needed further evidence that Workday isn't just another SaaS startup, look no further than the fact Accenture is already training a team on the Workday solution.  Getting the big SIs to build a practice around a software offering is something that typically takes years and massive traction within the enterprise; a great many SaaS companies would kill to have Accenture's attention in the way Workday already appears to. This lends credence to Phil Wainewright's position that Accenture is taking serious notice of SaaS opportunities.
  • More flesh on the bone of "definitional services"...Bruce Richardson of AMR has an interview with Workday's two chief software architects that speaks to the revolutionary nature of what they're trying to accomplish. It's a shame that much of the detail found in Bruce's interview wasn't more of a focus in yesterday's launch. 
  • Who is Workday really competing against?...I generally find Q&A sessions on webcasts to be frustrating, because the questions are generally too predictable and lacking in any meaningful depth. Predictably, Workday was asked about competing against SAP and Oracle yesterday but wasn't pressed on the REAL competitive landscape.  While Workday has aspirations of replacing SAP and Oracle in big accounts down the road, they are years away. Let's not forget that Benioff and salesforce.com are still trying to make hay in large enterprises after seven years of trying. Workday is much more battling vendors like NetSuite, SuccessFactors and ADP (which curiously is also a partner). I'm looking forward to Jason Corsello's take on what the other HR-focused SaaS vendors are offering in comparison to what we saw of Workday's HCM solution yesterday. 

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Note: At the time of this writing I, and/or funds I maintain discretionary control over, maintained long equity positions in CRM, MSFT and SAP but did not maintain a position (long or short) in ORCL, RNOW, BSTE, KANA or Accenture. We also may, at times, carry derivative options on underlying positions as a hedge. Also, by way of full disclosure, we have a passive investment interest in Granite Global Ventures (we are an LP), which is an investor in SuccessFactors.

November 07, 2006 in Enterprise2.0, Investing, Irregulars, Oracle, Private Company Spotlight, SaaS, SAP, Software |

Comments

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James

How come the irregulars don't have a member who works for a large enterprise whose primary business isn't technology...

Posted by: James | November 09, 2006 at 08:53 PM

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