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Flushed from the success of its recent IPO (see here), Workday is now in the midst of its conference and is making product direction announcements that will further unsettle established tier 1 enterprise software vendors like SAP and Oracle.
The litany includes additional financial capabilities, recruitment software, and a move into big data via analytics to enable enterprises to assess employee performance. There is a lot under the covers for each of these application areas. For instance the end game with financials is to build up the functionality so Workday becomes a viable replacement for Oracle and SAP financials in large enterprises. The analytics move makes use of Hadoop and MapReduce, which combined with Workday’s own in-memory columnar database, enables it to address the high performance, big data trend. The combo also means it will be able to challenge SAP and Oracle in the big data area too, which both see as an important growth area. Factor in Workday’s target customers, which are large enterprises, and the news that Workday’s average selling price is c$480k and getting bigger and its clear that the established players do have something to worry about with Workday.
It has the potential to steal away large customers - and their revenue - and given the founders’ PeopleSoft background, they have the big business experience to manage large enterprise customers. Workday’s current situation should not be overlooked. Like all SaaS pure plays, profitability is an issue and its customer base is just a few thousand. There is also the ‘bubble’ question, see Is Workday another bubble? However, it is amassing the tools to hit the established providers hard on multiple fronts and the IPO money will further support its drive - and they know it. This is not a SaaS company run by relative youngsters with limited experience or primarily targeting the SME market, it is developing enough credibility to rejig the old enterprise software order.
