In an exclusive interview with HR Zone, Stuart Lauchlan talks to Dave Duffield, CEO of SaaS start-up Workday and founder of leading HCM solution provider PeopleSoft, about his impressive career to date and how a successful business is all about hiring people with the same “corporate DNA”.

There are only a handful of people in the software industry that can be described as legendary and among them is Dave Duffield. He’s also something of a rarity: a Silicon Valley CEO about whom no-one has a bad word to say – and that includes his rivals as well as his employees!

Duffield is today the CEO of software as a service (SaaS) start-up Workday, but he’s probably still best known as the man who founded PeopleSoft and served as its CEO and chairman for many years.

In that role, he was responsible for the creation of a corporate culture, promoting core values that focused on people, integrity and simple fun. When PeopleSoft was acquired by Oracle – after a long and bitterly-contested hostile takeover – the demise of the PeopleSoft culture was mourned almost as much the aggressive acquisition was resented by staff. Following the buyout, Duffield put up $10 million of his own money to help laid-off workers.

“It’s a genetic thing,” says Duffield of his reputation. “It has to be part of the DNA of a company. You can say that you care and then show that actually you don’t or you can say that you care and do something about it. The whole company is going to operate according to what you care about. You have to gravitate towards things that cater for your company. If you’re all about profitability at all costs, well that’s what you’re about. I eat, sleep and breathe happy customers and happy employees. As we grow bigger, can I stay in contact with 35,000 customers personally? Well no. But I can hire people who have the same corporate DNA and then we can. I keep my promises.”

HR and IT: A close relationship

Duffield’s latest venture is Workday – a SaaS firm which aims to revolutionise the enterprise resource planning (ERP) market, beginning with HR and accounting. While the intention is to deliver a wider suite of on-demand ERP, Workday kicked off by focusing on the HR sector because, according to Duffield, that area of the business is so closely dependent on IT.

“It might have been a little easier for sales organisation to do their own thing without the IT people being involved, but IT has to be involved in HR and in payroll,” he notes. “In fact one of our fears was that there might be too much interest in what we’re doing.”

The SaaS model is a different approach to the deployment of applications. Instead of running applications on your own servers, you access them remotely via a browser from the data centre where they are run by a third party provider, such as Workday or Salesforce.com, in the customer relationship management (CRM) space.

There are also significant cost benefits to the SaaS approach. Whereas with traditional software customers pay up front, typically on a tiered-licensing model, with the SaaS approach you pay for as much or as little as you need on a ‘rental’ or subscription basis. So if you have 20 users this month, you pay for 20 users; if you have 30 next month, you pay for 30. The result is that your outlay maps directly onto your usage – you only pay for what you need and what you get.

SaaS is still relatively in its infancy, but with giants such as SAP and Microsoft committed to delivering offerings this way and start-ups such as Salesforce.com and NetSuite enjoying strong growth rates, it’s increasingly being seen as a mainstream approach.

Workday’s biggest deal to date is Chiquita Brands, which has signed to use Workday HR applications across ifs 26,000 strong employee base. Other customers include Life Time Fitness, fellow SaaS firms Salesforce.com and RightNow Technologies, and McKee Foods.

“I’m a big fan of Geoffrey Moore and his ‘Crossing the Chasm’ theory,” says Duffield. “CIOs have always followed the same curve. You have the innovators, then the visionaries, then the relative visionaries, then the new markets people and finally the after market people. SaaS has appealed to the larger and more visionary CIOs. The old way of thinking people wouldn’t be talking to companies like us or Salesforce.com. We address the service industries, people who don’t make anything physical, such as financial consulting firms and banks and the public sector. That said, we also feel we can address corporate functions in large manufacturing firms for example.”

Workday has international ambitions, of course. “We are going to be in a number of countries,” says Duffield. “The easier part will be the English-speaking countries of course. We’ve built a global architecture with international IDs and phone numbers and so on and that infrastructure is in place.

“We need to roll it out and to tackle certain regulatory requirements. We talk to local customers about that. Customer help us to understand what the rules are; how does French legislation work in practice, for example? Eventually when we round out the number of companies that it makes sense to address, then there will be a platform that can be extended by the customers, but until then we’ll be on the development side.”

A good reputation

Inevitably, Workday is able to get access to potential customers on the basis of Duffield’s reputation and their previous experience of using PeopleSoft. In fact, the firm finds itself replacing Duffield’s former offering with the new SaaS solution.

“We are replacing PeopleSoft in some sites, but it’s not by design, we’re not setting out specifically to target PeopleSoft customers,” insists Duffield. “But there are a lot of PeopleSoft customers who want to look at what we’re doing. If they’re looking for something new and they want to have the same vendor experience that they had with PeopleSoft, then they come to us. But I still have respect for PeopleSoft applications. I say that if customers don’t want to buy from us, then they should buy the PeopleSoft applications from Oracle.

“With bigger organisations we find it’s invariably the CIO who is involved in the decision to invest in SaaS,” he adds. “We are currently talking to a large public company in California which has SAP installed on premiee, but the CIO is very supportive about the on-demand model and understands that it can drive out costs and give the business agility.”

SaaS is sometimes spoken off as a possible alternative to full scale outsourcing, especially among the mid-market where outsourcing is often perceived as too costly. But Duffield doesn’t see Workday as a simple alternative to HRO.

“I don’t think we’re that – we’d be a viable alternative to the platform part of an outsourcing deal but not the business process part,” he argues. “We wouldn’t be the answer to HR business process outsourcing (BPO), but we could be the platform part of an offering from such as Accenture. We’re talking to a number of people about this. If you want to outsource the IT part of HR then we’d be the right answer, but if you want to outsource the business process part then we’re not.”

But does Workday not potentially pose a threat to the role of the HR department? After all e-procurement has largely failed to take off in organisations because purchasing managers have seen it as a threat. Won’t HR directors take a similar stance on HR as a service?

“Ideally our stuff is so good that you don’t need an HR department, but really that blue sky thinking is an ideal rather than a reality,” says Duffield. “There is a middle ground where we are a major support arm to the director of HR. We should be freeing him or her up to get a lot more done in other areas than they currently can. We are an enabler in that respect.

“Companies that have HR departments who would act as a barrier just aren’t going to be interested in our stuff as much as other firms, in the same way that companies that love to push bits of paper aren’t going to be as interested in purchasing solutions.”