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Stuart Lauchlan

Head of Editorial At Sift Media

Read more about Stuart Lauchlan

Analysis: Workday in a post-IPO world – The story so far


Workday was one of the most eagerly awaited Silicon Valley initial public offerings – and in the wake of the controversy following Facebook’s flotation, a lot of attention was paid to the fate of its stock on the first day of trading.

In the event, the Software-as-a-Service provider of human capital management applications saw the value of its stock soar, jumping 72% from an initial price of $28 per share.

The firm has come a long way since it was set up by former PeopleSoft chief executive, Dave Duffield, and now boasts major brand names as customers.
Prior to its IPO, our sister site, sat down with Workday’s chief technology officer, Stan Swete – one of the vendor’s first employees and himself a ten-year PeopleSoft veteran – to discuss its story to date.
“HR is still the main business,” Swete explains when asked about the company’s growing presence in the finance market. “The original plan was to build out through HCM into financials, but the speed at which HR took off means that we moved more quickly into selling payroll in the US and Canada.”

The aim is to “make a real go” of selling its financial applications to large public companies with about 10,000 users – and even as many as 40,000, he says.

Front and centre
“I definitely think that cloud has tipped for HCM, but not yet for financials. But financials will follow the same trajectory needed to become an acceptable, viable option,” Swete believes. “Our ability to delivery with the Chuck E. Cheeses [a major US customer] of the world is a definite step in that direction.”

Outside of the US and Canada, however, it is unclear when the supplier’s payroll offerings will appear, although apparently conversations are “on-going”. “Our attitude is that we will build our payroll into other locales when appropriate and we do integration into local payroll providers for now,” Swete says.

But HCM remains front and centre for the company and Workday continues to rattle incumbent providers SAP and Oracle.
“We’d like to claim to be the most brilliant company and predicting the wave, but really the timing just worked out,” says Swete about being on the front line of the conflict. “Attitudes have shifted and SaaS has become an acceptable option for HCM, to the extent that it’s now the leading option. You have to thanks the likes of for pioneering with SaaS and enabling us to point to the scale of SaaS implementations.”

Nonetheless, it’s worth noting that has made a number of incursions into Workday’s territory of late with its offering, although Swete attests that the two are coming at HR from different angles.

“Certainly it does directly overlap with some things that we do, but we view it really as complementary,” says Swete. “I think is very interested in adding value with social networking so they’re adding the capability to give feedback flexibly. But the main audience is still the sales rep working a deal.”
HR systems, on the other hand, collect feedback from all kinds of employees and in a range of different areas. So, he says: “It’s a natural thing to do. That’s the reason both of us should be doing it. So we co-operate with on events like Dreamforce and we’ve announced integration to”
Transformation plans
So what does Workday think has sparked interest in SaaS as a model for delivering HCM applications?
“There’s the story we hear a lot from the business side of HR, which is that on premise ERP just isn’t letting them get on with the transformation work that they need to do,” Swete says. “Most HR leadership today has aggressive transformation plans, but is blocked from putting them into practice due to the need to upgrade their on premise technology.”
But because traditional technology upgrades tend to trump business requirements, the SaaS model offers “a way around that”, he claims.

Swete also points out that the average HR director has been less than enthusiastic about their HR systems in the past. “HRDs are not so much focused on the technology as on the product that we are able to put in front of them,” he argues. “What they value the most is access to more information globally.”

A key problem to date has been that HR systems are often implemented locally, which means that global or distributed organisations are unable to obtain an overall view of their business.

But SaaS is able to offer that unified view, provide employee self-service and analytics capabilities, “all things that support the internal transformation plans that HR has”, Swete attests.

As to what HR directors are looking for right now, he believes that top of the list is analytics functionality built into their applications in order to make information more meaningful. But there is also a lot of interest in how best to employ mobile devices, and tablets in particular, as well as in social networking.

Market heats up
As a result, in the firm’s latest Workday 17 software release this summer, it respectively reworked its Apple iPad applications and created commenting streams to enable users to pass their observations directly on to colleagues.

Of course, the HCM front line has also seen increased competition from its key incumbents, with SAP buying SuccessFactors and Oracle adding Taleo to its Fusion HCM range. But Swete insists that the sector has benefited from the increased interest generated by Oracle and SAP’s move into the space.

“The large companies have a weight to their brand so they will get their share of attention,” he says. “But the way forward isn’t a binary choice between the right and wrong cloud.”

Instead Swete believes that cloud-based conversations need to start focusing on business value rather than “whether it’s a box with an X on it”.

“SAP bought SuccessFactors as a way to buy into the cloud. Our perception is that SAP has become energised around cloud and HCM and they expressed that by spending a lot of money on SuccessFactors,” he says. “SuccessFactors has a lot of traction as a talent management provider, but the positioning still continues.”
With Oracle’s Fusion HCM offerings, meanwhile, “it seems like there are a lot of early deals that are going with a hosted option”, which may or may not be a true cloud offering. As to how customers take to it will depend on whether they want to “receive frequent updates or whether it’s still the traditional year-on-year release cycle”, Swete claims.

So now that Workday has finally gone public and both Oracle and SAP place more and more sales and marketing effort behind their offerings, it seems that the sector is only set to heat up even further.

One Response

  1. While some big and
    While some big and flourishing companies are yet privately owned, but there are many others moving toward a publicly owned firm with the aim to raise funds. A company executes a three-part IPO transformation process i.e. a pre-IPO transformation, an IPO transaction and a post-IPO transaction, all their details you can read here An IPO signifies first offering of equity to public investors by an company which was privately owned. This process is usually highly intensive with many hurdles to cross over.

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Stuart Lauchlan

Head of Editorial At Sift Media

Read more from Stuart Lauchlan

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