Workday Doubles Down on Planning, Analytics and ML to Rip and Replace Legacy IT

Aneel Bhusri
Aneel Bhusri

Workday Doubles Down on Planning, Analytics and ML to Rip and Replace Legacy IT

CLOUD WARS RANKING

#8

CO-CEO

Aneel Bhusri & Chano Fernandez

QUARTERLY CLOUD REVENUE
AS OF NOV. 30, 2020

$969 million

Walmart recently went live on a core HCM system that connects all of its 1.7 million employees around the world in what is very likely the largest cloud HCM deployment ever. Walmart had an impressive list of HCM suppliers from which to choose, including enterprise-software giants SAP and Oracle.

But Walmart chose Workday, and the two companies recently celebrated a successful go-live event.

That superb achievement stands out because it’s surprising and yet it’s not surprising. After all, SAP’s about 8X larger than Workday, and Oracle’s about 10X larger than Workday—so wouldn’t they have had inside tracks to grab the business of the world’s largest retailer? Surely Walmart’s familiar with SAP and Oracle from using some of their applications or databases—so wouldn’t that familiarity help seal the decision?

Conversely, relative sizes aside, Workday has made the Fortune 100 its favorite hunting ground with about half of the world’s largest corporations using its HCM products, with a few using its Financials products. You can read all about that in Workday’s Beating Oracle and SAP in Fortune 100—Can It Continue?.

For 15 years, Workday has competed, won, and excelled against its much-larger rivals while simultaneously winning scores of awards for being a fabulous company to work for, a top company for women, and a relentlessly innovative company.

It has been a classic story of a company doing well while also doing good.

And as we round the corner into 2021, Workday is in better shape than it’s ever been:

 

  • for its fiscal Q3 ended Oct. 31, total revenue was $1.1 billion and subscription revenue was $960 million, up 21%;
  • to allow co-founder Aneel Bhusri to focus on more on what he loves most—products and strategy—Workday has brought back the co-CEO model with Bhusri transitioning from being the sole CEO to now being co-CEO with Chano Fernandez, who’s led Workday’s field operations for the past few years;
  • it has created a unique position for itself—plan, execute, and analyze—among its bigger competitors and has built out an impressive portfolio of products that enable that ongoing closed-loop function;
  • it has rebranded some recent acquisitions under the Workday master brand to reflect the company’s expanding set of capabilities aligned specifically to customer needs; and
  • it is confidently moving into a future where nothing that Workday achieves—no matter how unexpected or apparently outlandish—should be a surprise to anyone who understands the world of business technology.

Workday’s Opportunities

workday

While the Walmart go-live has been accomplished, the opportunity it kicks open reflects the model that Bhusri has pursued since he and Dave Duffield founded the company 15 years ago: get a foot in the door, show your unique capabilities, put the customer at the center of everything, meet all your deadlines, and ensure every step of the way that the customer is getting what the customer wanted.

When those type of go-lives happen and customers are happy, word gets around. And any big company on Earth that’s been scouting out the HCM landscape is going to hear about the Walmart go-live and, accordingly, give Workday a shot at showing what it can do.

Plus, it’s a clear indication of the scale of achievement that Workday has reached that another massive win for the company—the go-live with Accenture and its 500,000 employees—is totally dwarfed by the Walmart event. At any other time, the Accenture shift into full production for 500,000 people would be the highlight of the year. But right here and right now for Workday, both of those massive wins are becoming if not commonplace then certainly not so surprising.

Because Workday shows—again and again—that it can compete and win any business against any competitor in the world.

And while the company’s HCM suite is clearly its franchise, Workday Financials is also reaching breakaway velocity where no one views it as convenient cross-sell from HCM.

From Workday’s Nov. 19 earnings call, here’s Bhusri on the company’s Financials progress.

“We once again saw a solid demand for our expanding suite of products that support the Office of the CFO and Chief Procurement Officer, including Workday Adaptive Planning, Prism Analytics and Spend Management. I’m also happy to share that we now have fully integrated Scout RFP into the Workday organization and have rebranded as Workday Strategic Sourcing, which is part of our spend management pillar that is being led by Scout Co-Founder and CEO Alex Yakubovich. The team had a record quarter with several big wins at Fortune 500 accounts that included a biopharmaceutical company, a food distributor and a large grocery store chain with over 100,000 employees.”

So that comment from Bhusri reflects a few opportunities that he sees for Workday in 2021 and beyond:

 

  • “which is part of our Spend Management pillar”—very interesting: so while Workday has assiduously avoided getting into the ERP business that is the heart of the SaaS strategy of both SAP and Oracle, Bhusri indicates very clearly here that his company’s getting into the spend-management segment on which SAP has been focused for some time;
  • Workday has raised the strategic positioning of its Scout RFP to Workday Strategic Sourcing to reflect not just an ability to do RFPs more efficiently but to make strategic sourcing a value driver within the corporation; and
  • “the team had a record quarter with several big wins at Fortune 500 accounts” –the affiliation with big-time enterprise player Workday and its “expanding suite of products that support the Office of the CFO and Chief Procurement Officer” is triggering new growth in new markets among major customers.

 

Within Workday’s Financials, I think one of its biggest opportunities—and perhaps the one that has become the most prominent differentiator—is Workday Adaptive Planning. We’ll touch on that more later in this strategic overview in the Differentiation section.

A final thought on opportunities from Bhusri: during the Nov. 19 earnings call, he flagged the huge challenges some companies are having in trying to reimagine themselves and their operations during the pandemic because their legacy financial systems simply can’t handle those types of assignments or workloads.

While noting that among the Fortune 500 there is still some hesitancy during the pandemic about committing to big Financials deasl, Bhusri said, “I think when people come out of the pandemic they’ll say, ‘I want to get rid of every legacy piece of technology I’ve got. And I’ve got to move into this world of agile, flexible systems that support all different kinds of work environments.’ ”

No doubt, Oracle and SAP see those same opportunities looming. We shall see which of the 3 can be most opportunistic.

Workday’s Challenges

workday

In software as in poker, you’ve gotta play the cards you have. Bhusri knows he doesn’t have any ERP cards in his hand, so he steers his play in a different direction and looks to outflank those holding ERP cards with some unexpected combinations like Workday Strategic Sourcing. And without having any ERP cards—and seemingly without having any desire to have any ERP cards—Bhusri will play and bet as if there is no question that steering clear of ERP is the only way for Workday to go.

But we can all be sure that SAP and Oracle will take a totally different approach, and claim that (a) having modern cloud-based ERP applications is essential in today’s end-to-end digital world and (b) the absence of cloud ERP apps is the sure sign of a second-tier player.

In June, Oracle founder Larry Ellison did exactly that, citing a tendency among customers to tie their HCM decisions to their ERP decisions. Here’s an excerpt from a June 18 article called Oracle Calls Out Workday on HCM Growth, Customer-Sat Scores, Loss of Goldman Sachs:

Citing another trend as Oracle’s friend, Ellison said that more and more customers who are buying cloud ERP are bundling in cloud HCM as well. And since Oracle has a huge and fast-growing cloud ERP business, that pull-along effect will push Oracle into the #1 spot, the Oracle founder believes.

“More and more customers these days are purchasing HCM as a part of an overall ERP decision,” Ellison said in Oracle’s fiscal-Q4 earnings call this week.

As a result of that dynamic, Ellison said, “We’ve seen our HCM Fusion growth rates surpass Workday’s HCM growth rates. We are already by far the biggest cloud ERP player and it looks like we’re going to be able to leverage our advantage in ERP and our scale in ERP to also become the biggest cloud HCM player.”

Of course, the fact that Ellison’s saying customers are tying HCM decisions to their ERP decisions does not make it gospel—but at the same time it definitely raises a question that cannot be ignored. It is true that Oracle is reporting higher growth rates for its Fusion HCM suite (22%) than Workday is reporting for its overall subscription business (21%).

And it is also true that in a recent IDC report on leading HCM vendors, survey results revealed that in some areas, customers rated Oracle HCM as superior to Workday HCM, while in others Workday HCM came out on top. For full details, please see Oracle-Workday Showdown: Larry Ellison Says Analysts Prefer Fusion HCM—Do They?

Cloud Wars Top 10: World’s Most-Influential and
Largest Cloud Vendors

Vendor

2021 Snapshot

2. Amazon AWS

time for Bezos to cut it loose?

3. Salesforce

Benioff pushes boundaries of CRM

4. Google Cloud

rising star under Thomas Kurian

5. SAP

Klein eyes return to higher growth

6. Oracle

Ellison: huge momentum in IaaS, SaaS

7. IBM

Krishna drives huge overhaul around cloud

8. Workday

Now co-CEO, Bhusri can refocus on cloud

9. ServiceNow

McDermott has ignited workflow rocket

10. Adobe

Narayen remains bullish on CX potential


workday

Workday’s Opportunities

While the Walmart go-live has been accomplished, the opportunity it kicks open reflects the model that Bhusri has pursued since he and Dave Duffield founded the company 15 years ago: get a foot in the door, show your unique capabilities, put the customer at the center of everything, meet all your deadlines, and ensure every step of the way that the customer is getting what the customer wanted.

When those type of go-lives happen and customers are happy, word gets around. And any big company on Earth that’s been scouting out the HCM landscape is going to hear about the Walmart go-live and, accordingly, give Workday a shot at showing what it can do.

Plus, it’s a clear indication of the scale of achievement that Workday has reached that another massive win for the company—the go-live with Accenture and its 500,000 employees—is totally dwarfed by the Walmart event. At any other time, the Accenture shift into full production for 500,000 people would be the highlight of the year. But right here and right now for Workday, both of those massive wins are becoming if not commonplace then certainly not so surprising.

Workday’s Challenges

In software as in poker, you’ve gotta play the cards you have. Bhusri knows he doesn’t have any ERP cards in his hand, so he steers his play in a different direction and looks to outflank those holding ERP cards with some unexpected combinations like Workday Strategic Sourcing. And without having any ERP cards—and seemingly without having any desire to have any ERP cards—Bhusri will play and bet as if there is no question that steering clear of ERP is the only way for Workday to go.

But we can all be sure that SAP and Oracle will take a totally different approach, and claim that (a) having modern cloud-based ERP applications is essential in today’s end-to-end digital world and (b) the absence of cloud ERP apps is the sure sign of a second-tier player.

In June, Oracle founder Larry Ellison did exactly that, citing a tendency among customers to tie their HCM decisions to their ERP decisions. Here’s an excerpt from a June 18 article called Oracle Calls Out Workday on HCM Growth, Customer-Sat Scores, Loss of Goldman Sachs:

Citing another trend as Oracle’s friend, Ellison said that more and more customers who are buying cloud ERP are bundling in cloud HCM as well. And since Oracle has a huge and fast-growing cloud ERP business, that pull-along effect will push Oracle into the #1 spot, the Oracle founder believes.

Cloud Wars Top 10: World’s Most-Influential and
Largest Cloud Vendors

Vendor

2021 Snapshot

2. Amazon AWS

time for Bezos to cut it loose?

3. Salesforce

Benioff pushes boundaries of CRM

4. Google Cloud

rising star under Thomas Kurian

5. SAP

Klein eyes return to higher growth

6. Oracle

Ellison: huge momentum in IaaS, SaaS

7. IBM

Krishna drives huge overhaul around cloud

8. Workday

Now co-CEO, Bhusri can refocus on cloud

9. ServiceNow

McDermott has ignited workflow rocket

10. Adobe

Narayen remains bullish on CX potential

Unique Differentiation

In 2021, the two primary differentiators for Workday will be Workday Adaptive Planning and the company’s long-standing commitment to a unified data model for all of its applications and related solutions.

Since acquiring Adaptive Insights and its cloud-based enterprise-planning solutions in June 2018, Bhusri has consistently stated in almost every earnings call the powerful impact those solutions have had on Workday’s entire business.

In some cases, a CFO is not ready or willing to move core Financials to the cloud but is eagers—perhaps even desperate—to roll out a comprehensive and consistent planning solution. Bhusri has stated that in many such cases, Workday has not only landed a significant deal for planning, but also got that much-needed foot in the door for follow-on Financials business down the road.

In the other direction, Workday Adaptive Planning (the new name for what had been Adaptive Insights) was initially sold primarily in the mid-market, but the acquisiton by Workday opened up an entirely new market among the Fortune 500. And while Workday does not break out specific revenue or growth rates for Planning, Bhusri continues to cite the very significant impact it’s having on Workday’s growth, customer engagements, and reputation.

Some customers during this crazy year of 2021, Workday has said, have increased the volume of plans they’ve created by 30X—not 30%, but 30X.

In the Nov. 19 earnings call, Bhusri said, “The one area that continues to be very strong on the finance side is planning because people are under a lot of pressure to come up with new plans on a regular basis. I don’t know how many times we’ve gone through a new planning cycle just since the pandemic started. But it’s such a fluid and challenging environment that it’s putting a lot of pressure on planning. And I think that is driving that need for Financials.”

In addition to the impact the planning unit is clearly having on Financials, Workday also offers Workforce Planning, which is driven by the capabilities acquired in the Adaptive Planning acquisition and reveals the extent to which that deal has impacted the entire company and a vast and growing number of customers.

The second big differentiator is Workday’s strict adherence to getting all of its applications—organic or acquired—rapidly and completely onto the company’s single data model. “Workday One” is the term used to highlight this capability and the premise is both simple and hugely valuable: “Our finance and HR applications were built in the cloud, on a single codeline, so you get one system to drive your business.”

In 2021 and beyond, as the pace of change continues to accelerate and businesses need 24/7 access to all their data, the fragmented applications and data silos of the past become insurmountable obstacles. Both Oracle and SAP have been battling this challenge as both companies try to resolve the impact of multiple acquisitions and of different home-grown generations of technology and applications that require customers to become full-time integrators.

Workday has clearly been exploiting this advantage and will need to do so even more aggressively in 2021 because Oracle and SAP are catching up to the ideal of the single data model. Oracle’s Fusion applications are now optimized to run on the Oracle Autonomous Database and all other services within Oracle Cloud Infrastructure, and SAP has made it an absolute top priority to have all of its acquired applications fully integrated in the cloud by sometime in 2021.

Unique Differentiation

In 2021, the two primary differentiators for Workday will be Workday Adaptive Planning and the company’s long-standing commitment to a unified data model for all of its applications and related solutions.

Since acquiring Adaptive Insights and its cloud-based enterprise-planning solutions in June 2018, Bhusri has consistently stated in almost every earnings call the powerful impact those solutions have had on Workday’s entire business.

In some cases, a CFO is not ready or willing to move core Financials to the cloud but is eagers—perhaps even desperate—to roll out a comprehensive and consistent planning solution. Bhusri has stated that in many such cases, Workday has not only landed a significant deal for planning, but also got that much-needed foot in the door for follow-on Financials business down the road.

In the other direction, Workday Adaptive Planning (the new name for what had been Adaptive Insights) was initially sold primarily in the mid-market, but the acquisiton by Workday opened up an entirely new market among the Fortune 500.

Leadership

For all of his extensive success, Aneel Bhusri is one CEO (sorry, co-CEO) who does not seek the limelight. More at home in development labs than on stage, Bhusri will now be able to dive more deeply into the company’s future development efforts and long-term strategy while co-CEO Fernandez continues to drive sales, customer success and marketing.

A less confident executive might have blanched at the prospect of sharing the top spot, but I suspect Bhusri was not only okay with it but in fact was the driving force behind that move. He remains a quiet leader whose interests and worldview have been sharply changed by the pandemic and the upheaval it has caused.

Quiet, but still a forceful and dynamic leader. I’ve known Bhusri fairly well since he and Dave Duffield launched Workday in 2005, and was intrigued and impressed when he opened his remarks on the Nov. 19 earnings call with some comments about the need for a new type of leadership to meet the challenges of our time.

So let me share in his own words the new sort of leader Aneel Bhusri wants to become and how he’s working with other leaders to amplify that type of change.

workday
Chano Fernandez

“Business leaders are facing a myriad of different challenges right now. Indeed we are experiencing a health, economic and social crisis simultaneously. There’s a lot of uncertainty in the world that requires conversation and collaboration. That’s why in October we gathered global changemakers together with our customer community for a virtual event we called ‘Conversations for a Changing World’….  I was personally excited to have my friends and fellow CEOs, including Adena Friedman of Nasdaq, Chuck Robbins of Cisco, and Satya Nadella of Microsoft joining our event to share their thoughts on leadership and how they are dealing with the challenges of today. We received excellent feedback on the event from our customers and prospects, many of whom mentioned some important takeaways.

First, we heard the call that business leaders simply cannot opt out of this moment. Companies have to lean in and be part of the solutions that address the most pressing issues that our society is facing today. Many of the conversations also touched on diversity and inclusion and a growing commitment to rescaling the global workforce. At Workday, we need to continue to be a driving force for the creation of opportunities in this digital economy for everyone, not just a few.”

With the highly capable and proven Fernandez now leading not just customer operations but also a lot of the overall operations of a fast-growing $4-billion global business, Bhusri will be freed up to help ensure Workday remains the sort of company that lives up to his vision of not just creating great products and crafting a successful strategy, but engaging more passionately with the outside world: “Business leaders simply cannot opt out of this moment. Companies have to lean in and be part of the solutions that address the most pressing issues that our society is facing today.”

Leadership

workday
Chano Fernandez

For all of his extensive success, Aneel Bhusri is one CEO (sorry, co-CEO) who does not seek the limelight. More at home in development labs than on stage, Bhusri will now be able to dive more deeply into the company’s future development efforts and long-term strategy while co-CEO Fernandez continues to drive sales, customer success and marketing.

A less confident executive might have blanched at the prospect of sharing the top spot, but I suspect Bhusri was not only okay with it but in fact was the driving force behind that move. He remains a quiet leader whose interests and worldview have been sharply changed by the pandemic and the upheaval it has caused.

Quiet, but still a forceful and dynamic leader. I’ve known Bhusri fairly well since he and Dave Duffield launched Workday in 2005, and was intrigued and impressed when he opened his remarks on the Nov. 19 earnings call with some comments about the need for a new type of leadership to meet the challenges of our time.

So let me share in his own words the new sort of leader Aneel Bhusri wants to become and how he’s working with other leaders to amplify that type of change.

“Business leaders are facing a myriad of different challenges right now. Indeed we are experiencing a health, economic and social crisis simultaneously. There’s a lot of uncertainty in the world that requires conversation and collaboration. That’s why in October we gathered global changemakers together with our customer community for a virtual event we called ‘Conversations for a Changing World’….  I was personally excited to have my friends and fellow CEOs, including Adena Friedman of Nasdaq, Chuck Robbins of Cisco, and Satya Nadella of Microsoft joining our event to share their thoughts on leadership and how they are dealing with the challenges of today. We received excellent feedback on the event from our customers and prospects, many of whom mentioned some important takeaways.

First, we heard the call that business leaders simply cannot opt out of this moment. Companies have to lean in and be part of the solutions that address the most pressing issues that our society is facing today. Many of the conversations also touched on diversity and inclusion and a growing commitment to rescaling the global workforce. At Workday, we need to continue to be a driving force for the creation of opportunities in this digital economy for everyone, not just a few.”

With the highly capable and proven Fernandez now leading not just customer operations but also a lot of the overall operations of a fast-growing $4-billion global business, Bhusri will be freed up to help ensure Workday remains the sort of company that lives up to his vision of not just creating great products and crafting a successful strategy, but engaging more passionately with the outside world: “Business leaders simply cannot opt out of this moment. Companies have to lean in and be part of the solutions that address the most pressing issues that our society is facing today.”


The Big Questions for Workday

  • Not Having ERP: Bug or Feature? For 15 years, Bhusri has led Workday brilliantly while surrounded by much larger competitors that could not match Workday’s agility, its early focus on the cloud, and its customer-centric culture. As those competitors have changed dramatically and as they’re now looking to tie cloud ERP more closely with HCM and other apps into an end-to-end digital framework for customers, can Bhusri navigate the new competitive landscape as effectively for the next 5 years?

  • Addressing the challenges highlighted in IDC report. I was rather shocked when Larry Ellison, as noted above, said IDC had rated Oracle Fusion HCM more highly than Workday HCM. Can Workday regain the leadership status in the category that drove it to global prominence?

  • Can Workday hold its edge in advanced technology? This is probably one of the reasons Bhusri opted to step back from the solo-CEO role: to work more closely with executive VP of product development Pete Schlampp to ensure that Workday continues to use ML, AI, and other front-edge technologies to differentiate the company’s products.

  • As Workday scales beyond $5 billion, can it maintain its unique culture? That culture has surely been a fundamental and highly essential part of Workday’s success since Duffield and Bhusri dreamed up the company on Lake Tahoe. That could be tough in the face of a number of challenges: the company’s size and growth rate, the pandemic-driven changes that every company’s facing, the newly instituted co-CEO dynamic, and the inescapable impact of a more intensely competitive marketplace. But I remain a big believer in Bhusri and Workday because, of all the things he could have talked about to open that November earnings call, look at what Bhusri focused on: “Business leaders simply cannot opt out of this moment. Companies have to lean in and be part of the solutions that address the most pressing issues that our society is facing today.”

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SPONSORED

Why You Need the Benefits of the Cloud Now

Increase your organization’s resiliency and agility.

Working with agility and driving innovation can be a challenge when you’re using inflexible legacy systems. Moving your IT core to the cloud has become imperative, especially during times of unprecedented change.

Learn more about the benefits of the cloud in this guide.

About The Author

I’ve analyzed the enterprise-tech business for more than 25 years as an editorial executive and more recently as Chief Communications Officer at Oracle. I’ve written thousands of articles and columns about business innovation, strategy, leadership, disruptive technology, digital transformation, cloud computing, AI and more. In late 2016, I resigned from Oracle to launch the Cloud Wars franchise. It began with the Cloud Wars Top 10 ranking and weekly articles, and has since expanded into daily articles, a weekly newsletter, a podcast with more than 200 episodes, and now this one-of-a-kind Special Report.

About The Author

About The Author

I’ve analyzed the enterprise-tech business for more than 25 years as an editorial executive and more recently as Chief Communications Officer at Oracle. I’ve written thousands of articles and columns about business innovation, strategy, leadership, disruptive technology, digital transformation, cloud computing, AI and more. In late 2016, I resigned from Oracle to launch the Cloud Wars franchise. It began with the Cloud Wars Top 10 ranking and weekly articles, and has since expanded into daily articles, a weekly newsletter, a podcast with more than 200 episodes, and now this one-of-a-kind Special Report.

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