Workday CEO Aneel Bhusri, who will speak on the earnings call May 28th
Workday CEO Aneel Bhusri, who will speak on the earnings call May 28th

Will Workday Whack Oracle and SAP Again on Earnings Call?

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As Workday continues to thrive against much-larger competitors, CEO Aneel Bhusri has been hammering home his belief that Oracle and SAP simply cannot match Workday’s ability to drive high levels of success for the world’s largest corporations.

Workday releases its fiscal Q1 earnings later today. And I think it’s highly likely that Bhusri will once again use the earnings call to make his case that when it comes to increasingly strategic HCM purchases by the Fortune 100, size simply doesn’t matter.

Workday’s current annualized cloud-revenue run rate is about $4 billion. SAP’s is about $8.5 billion, and Oracle’s is probably around $7.5 billion. But in spite of both competitors being twice as large as Workday in the cloud—and SAP being 7x bigger overall and Oracle 10x overall—Workday is locking up many of the world’s largest HCM accounts.

Here’s an excerpt from my analysis 3 months ago, called Workday CEO Hammers Oracle and SAP over Shortcomings in Fortune 500

In the Q&A portion of the Feb. 27 earnings call, Credit Suisse analyst Brad Zelnick asked Bhusri this question: “While we’re all very familiar with your success replacing legacy HR systems, we recently picked up a couple of significant Oracle HCM cloud displacements that stood out to us just because this is their current-generation product. Can you give us a sense of how prevalent these conversions are, and what might be in common when you come across them?”

Bhusri’s answer reflected other comments he’s made about the inability of Oracle and SAP to deliver fully satisfactory go-lives for customers. And the math is very clear: if Workday has 45% or almost half of the Fortune 500 for HCM, then its share is almost twice that of either of its primary and much-larger competitors.

“I’m not going to comment on how prevalent they are—I’d just say that as it relates to all of our legacy competitors, they were slow to move to the cloud,” Bhusri said.

“They have not had the success on the deployment side. They might have done a good job on some of the sales opportunities but the deployment side hasn’t worked out and so those accounts come back to market.”

If that is in fact what’s been happening, then this represents a massive victory for Workday and its ability to significantly differentiate itself from competitors in ways that customers value most highly. That’s a point Bhusri made at the very top of his opening remarks on the call when he said Workday’s success is the result of the outstanding work of its employees and also “our forward-thinking customers who expect more from their enterprise applications and who continue to choose Workday as their partner for their finance and HR cloud transformations.”

Bhusri was equally blunt in September of last year when he used his fiscal Q2  earnings call to outline what he sees as Workday’s superior capabilities and competitive differentiation. Here’s an excerpt from my analysis of that call, headlined Workday CEO: Oracle and SAP Can’t Match Us in Fortune 100:

During Workday’s fiscal Q2 earnings call last week, Bhusri was asked if Workday’s gaining ground among large customers that had bought early versions of cloud HCM products from Oracle and SAP and have since decided to replace them.

“If you look at the Fortune 500, candidly neither of our large competitors have real proof-points over 100,000 employees or even over 50,000 employees that are in production,” Bhusri said.

“But a huge part of our success has been not just winning the customer, but more importantly getting them into production and having them be happy.”

Bhusri said that about 50% of the Fortune 100 have subscribed to Workday’s cloud HCM services. And that of those 50, 35 are already live.

“So that’s a huge advantage,” said Bhusri.

“And when people have a failed project, they wanted to get the sure thing and make sure that it works. And that’s where we hopefully come into play.”

Of course, SAP and Oracle would beg to differ. However, neither of those proud companies has been able to refute Bhusri’s figures about Workday’s domination among the Fortune 100 and Fortune 500. Nor have they been able to produce their own showcase list of multiple HCM wins among the world’s biggest companies.

Oracle’s Larry Ellison is hoping that his company’s fast-growing Cloud ERP business will pull along some Cloud HCM wins, a dynamic that Ellison recently said is gaining favor among big companies.

Here’s how I described Ellison’s perspectives in a recent piece called Larry Ellison’s View: Oracle Whipping Workday, Kicking AWS, Sacking SAP:

More compelling were Ellison’s comments in his opening remarks regarding his company’s progress and competitive positioning versus Workday’s flagship HCM product line. If, as Ellison claims, business customers are beginning to bundle the purchases of ERP and HCM from a single vendor, that could have huge implications across the SaaS business.

“Workday’s lack of success in Cloud ERP is also creating opportunities for Oracle in Cloud HCM,” Ellison said.

“HCM increasingly is being purchased as a part of an ERP cloud application suite. As a result, Oracle now has more HCM customers than Workday, and Fusion HCM revenue is growing faster than Workday.”

While I don’t have the latest 1:1 comparative figures that Ellison alluded to but did not supply, some details indicate that for at least the short term, Ellison is completely correct in saying that Oracle’s Fusion HCM business is growing more rapidly than Workday’s HCM business. For Oracle’s quarter ended Feb. 29, it said its Fusion HCM revenue grew 27%. That’s significantly higher than the “high teens” guidance for Workday HCM Bhusri offered for Workday’s fiscal 2021, which will end Jan. 31, 2021.

Each of the cloud leaders offers very a different perspective on what’s actually going on in the enterprise-software world. But one indisputable objective truth is that business customers have never had it so good—the ferocious competition means they’re seeing stellar products at attractive prices.

So in this afternoon’s Workday earnings call, I’m betting Aneel Bhusri will make some very pointed comments about Workday’s ability to “not just win the customer, but more importantly get them into production and have them be happy.”

Disclosure: at the time of this writing, Workday, Oracle and SAP were each among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.

 

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