Workday looks to park its tank on giants' lawns

From its base as a HR company, Workday is set to shake up more established players

Some stunning numbers from Workday this week validate again the cloud firm’s strategy of leading on its flagship HCM offering before widening out into add-ons such as recruiting and then cross-selling into Financials - and most importantly, moving at its own pace.

OK, there are still no profits or indeed any sign of profits - which puts it on a par with the likes of Salesforce.com - but the revenue growth is terrific; up 74 per cent year-on-year to $159.7 million, with second quarter expectations of 65 per cent year-on-year growth to hit $178 million.

Now those numbers still leave it trailing behind Salesforce.com, which is looking at a $5 billion a year run rate “any time now”, but they’re indicative that Workday’s more understated approach to growth is paying off as well as causing pain points for the likes of Oracle and SAP.

And it is understated. Not for Workday, the grandiose gesture of re-naming tower blocks after yourself, as Salesforce.com has just done with the Heron Tower in London and the Trans Bay building in San Francisco. Nor do we see the ‘bread and circuses’ style keynote presentations of its CRM counterpart. What we can track is a solid growth strategy - carefully planned, mapped out and (to date) successfully executed upon.

The firm clearly benefits from two of the steadiest hands on the tiller that a sector-disruptive firm like Workday could hope for, in the shape of co-founders Aneel Bhusri and Dave Duffield. The latter, best known still as the CEO of the original HCM giant PeopleSoft, has recently stepped back from his role as co-CEO of the firm, leaving Bhsuri in sole command.

This has been widely seen as a good move, positioning Bhusri more as the public face of the firm. He’s recently stepped back from a number of external responsibilities in order to focus on Workday as it reaches ‘that difficult age’ that all fast-growing, enterprise providers pass through as they mature. 

When Oracle and Salesforce.com signed their (in)famous detente last year, the initial assumption was that Workday would be the loser. Certainly that’s what the internal Oracle corporate messaging document told any staffers to say who might be questioned on the subject.

And those enterprise customers are coming in. Hewlett-Packard just went live on Workday HCM for 300,000 employees across 100 countries, while Philips went live on the same for 100,000 staff across 70 countries. “HP is now our largest customer in production globally and Philips is our largest live customer based in Europe,” confirms Bhusri.

Both of those firms are also flagship Salesforce.com customers, of course, and the fortunes of the two firms are mirroring one another more and more. The non-aggression pact between the two is proving valuable. When Oracle and Salesforce.com signed their (in)famous detente last year, the initial assumption was that Workday would be the loser. Certainly that’s what the internal Oracle corporate messaging document told any staffers to say who might be questioned on the subject.

But of course Salesforce.com and Workday then proceeded to do their own deal, each standardising on the other, leaving onlookers to wonder what had happened to that seeming commitment by the former to standardise on Oracle HCM. (The story of what really happened behind the scenes there is something that’s yet to be aired in the public domain…)

Both firms are quick to emphasise their reluctance to tread on one another’s toes. “We’re not an HR software company. We’re really a customer relationship management software company and all of our focus is customer facing applications, sales, service, marketing, engagement,” said Benioff recently. “We’re not really interested in the HR software market. We will let others worry about that one.”

Bhusri makes similar noises about front office applications such as CRM, but that’s not to say that the Workday strategy is to stick only to its tried and tested knitting. Siebel and its fate stand as a warning of what happens to companies that have one, really good idea and then fail to expand that footprint. It’s a mistake Salesforce.com hasn’t made and neither is Workday.

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