I just finished a day with the Workday executive team at their analyst Innovation Summit (titled “The Power To Adaptation”). Let me share my thoughts.
Labor Day Growth will continue
Despite the pandemic and many changes in the tech landscape, the company is working very well. With a 22% subscription growth rate and nearly $ 5 Billion in annual revenue, Aneel Bhusri believes Labor Day will reach $ 10 Billion in revenue over the next four years. Why the constant optimism? The company sees strong win rates and believes there is not much competition. Today, more than half of the Fortune 500 use Workday for HCM and the company is aggressively growing its international business and financial applications (over 1,300 customers). So yes, life is good on Labor Day.
(Note: IDC now rates Labor Day as HCM’s #1 provider with approximately 13% market share, 30% higher than SAP’s #2.)
Here are the numbers (since January 2022).
- All Business Day customers: 9,500+
- Working Day Financial Management: 1,300+
- Working Day Human Capital Management: 4,050+
- Workday Adaptive Planning: 5,900+
- Workday Study: 1,975+
- Workday Payroll: 2,625+
- Workday People Analytics: 500+
- Workday Prism Analytics: 925+
- Working Day Recruitment: 1,100+
- Labor Day Recruitment: 3,100+
- Workday Strategic Sourcing: 400
- Workday Hour Tracking: 2,775+.
Why does Labor Day continue to grow? In addition to its strong management team and focus on sales and marketing, the architecture and product line are constantly evolving.
Workday Architecture Development
The big innovation that Workday has brought to ERP is its cloud-ready architecture. The workday is famous for having its own object-data model built on a graph database structure, enterprise business process framework, and novel user experience. This architecture allows Workday to successfully compete against Oracle, SAP, Infor and many other HCM and ERP vendors and eventually win the hearts and minds of HR and IT executives around the world.
Since then, however, the world of IT has changed. Companies use multiple public clouds (Azure, Google Cloud Platform, AWS), they buy many specialized cloud applications, and they now use tools like OKTA, Microsoft Teams, and ServiceNow for identity management, identity productivity, and employee experience. So Workday, designed to be the “Power of 1,” can no longer define itself as an end-to-end experience. In fact many large companies “hid” the Labor Day behind these other systems, assigning it the role of “core system of record” and core ERP system for many applications.
The Labor Day platform has evolved. As a team of senior technology architects, Workday product executives FWorkde expanded the architecture into a new domain. Pete Schlamp, the CTO, described it as an “enterprise management cloud,” a set of integrated applications, running under a single business process and security framework, delivering the best-of-breed applications and partner with HR, finance, planning, and business leaders.
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I know that sounds like marketing, but there is really something here. Over the past few years, Workday has opened up its proprietary architecture and now offers a platform called Workday Extend (APIs and development tools) and Workday Orchestrate (an open toolset for design). of workflow) to let customers extend the Workday and develop new applications.
The result is what Pete Schlampp calls a “mesh” business. In other words, customers can purchase new modules or applications on Labor Day and they all use the same security, business rules, user interface, and identity management as the primary system.
As far as Employee Experience is concerned (Oracle just announced Oracle ME, a full product designed to compete with ServiceNow), the company is working together. Not only is the Workday Employee Experience now becoming very personalized and easy to use, Workday is focused on chatting and transactional integration with Microsoft Teams, Viva Connections, Slack, and other systems. So the original Workday UI is quickly updated.
In fact, as the team discusses its app partners, they seem to be more excited about it than themselves. (Of course not yet, but it’s a big deal.) Like Apple and Microsoft with “app stores” that create business models for thousands of creators to come up with solutions, Workday is doing the both. And it goes on the subject of Labor Day acquisitions.
Workday Recruitment Strategy
In the early days, Workday boasted its “integrated and single vendor” solution, pointing out that competitors like SAP or Oracle were “Frankenstein” architectures (bolted together with fragile and poorly integrated interface). Since then, however, Workday has learned that it also needs to take good technology to grow.
The first few acquisitions (Cape Clear, Identified, Mediacore, etc.) were technology deals, designed to help Workday build its core platform. Later Workday acquired Platfora (where Pete Schlampp came from) to greatly extend its data services and then application companies such as Adaptive Insights, Peakon, VNDLY, and Zimit. These next acquisitions are real applications that have a lot of customers, so Labor Day needs to find a way to integrate them.
As Sayan Chakraborty, head of technology, discussed, this means Workday needs a new model. Realizing that these apps have their own data structures, application logic, user experiences, and security schemes, Workday now “integrates” these apps into the Workday object model and framework of the business process, giving customers access to the new application without losing any of the security, identity management, and system records profiles they already have. It’s an architectural and “tightly integrated” integration, so these new systems (and development teams) can grow and thrive as “workday assets.” (Sayan says.)
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Due to the fact that most of these vendors are already cloud-enabled, Workday then gives them access to Workday AI and ML teams, Workday Kubernetes tools, and Workday API cloud platforms. So these add-on acquisitions can thrive and grow while focusing on their unique value-add.
Industry Focus
The new architecture has many other implications. The workday understands that its product needs to become more upright over time. While most ERP companies want to sell one package per company, industries such as healthcare, retail, and manufacturing are very different from people-centered businesses such as banking, finance, and professional services (where Labor Day is very successful).
To address this, Workday is expanding its focus on the industry. By using partner apps, the company plans to extend its HR, Finance, and Planning apps to other of these industries. And consulting firms like Accenture, Deloitte, and others can help. For example, there are now partner apps that help manage the cost of contingent nursing labor, create back to work programs for retailers, and other “vertical” industry solutions.
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A Deep And Well -Organized Management Team
What does all this mean? For me it shows that the $ 10 Billion Labor Day revenue target is very achievable. Let me add a few other points.
First, we know that the selection and implementation of HCM is a very complex process, and Labor Day is not suitable for everyone. Some mid-sized companies in certain industries (healthcare, energy, manufacturing, retail) are often better served by specialized vendors and sometimes Labor Day is too expensive for a client. Now, however, as the architecture becomes more open, the company can win more in this business.
Second, the company is laser-focused on the employee experience. While not every part on Workday may be best-of-breed, so far the EX platform is getting a lot of attention. The company is proud of its acquisition of Peakon (Peakon is a best-of-breed solution to employee listening and performance enabling) and it is expanding its toolset to make the platform useful in the workflow. You can use Labor Day from Microsoft Teams, Slack, Viva Connections, and Google Chrome. Many features (chat interface, cards, messaging) make the platform more open, making the system an “action platform”.
Third, by clearly outlining its strategy to attract developers and open the architecture to new applications, Workday no longer looks like an elegant walled garden. It becomes a welcoming garden with many small “properties” to visit.
Finally, I always admire the alignment and level of coordination among Workday executives. The product, technology, and leadership team remains focused on the company culture, ESG footprint, and the need to remain open and vigilant in the world of rapidly changing technology.
Overall, it was a very inspiring meeting, and I see nothing but goodness for Labor Day in the future.
Additional Resources
Disrupted the HR Technology Market: The Employee Experience The New Core
The Workday Goes Anywhere: In the Workflow And Beyond
Workday Learning: Fast-paced