Cloud // Software as a Service
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8/28/2014
12:25 PM
Doug Henschen
Doug Henschen
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Workday Q&A: COO Talks Oracle, SAP

Workday COO Mike Stankey claims his firm has a three- to five-year tech lead on Oracle and SAP because the cloud is "more than a destination and a pricing model."

footprint, like a compensation system or a recruiting system, as a win against Workday. Most of the wins against Workday are preservations of existing SAP, PeopleSoft, or Oracle footprints. We call that a "loss to do nothing," but each quarter, about 20% of our wins are resurrections of previous losses to do nothing.

IW: What's a loss to do nothing?

Stankey: That's when a customer simply defers the decision to replace their core system of record and just augments it with a small edge application. They're just deferring the inevitable for another couple of years. Eventually they will come back around, and they will attempt to fix the larger mess. When they do that, we win.

[Want SAP's take? Read SAP Reports Cloud Computing Tailwind.]

IW: Two years ago, all Oracle and SAP could offer was edge apps, but hasn't that changed with all their acquisitions and Oracle's launch of Fusion Applications?

Stankey: They claim to have complete footprints in the cloud, but when we try to find reference customers running the complete footprint at scale, we can't find them. You have to start with the core employee record, which is the basis for any accounting or HR system for hiring, onboarding, pay increases, transfers -- all the nuts and bolts of any HR organization and operational efficiency. Recruiting and performance management are edge applications. If you try to find customers that have done the core plus edge applications, which is what our product represents, you don't find them among our competition. You'll typically find the edge or, if you find the core, you'll find it in a small company.

IW: What's the "mess" you mentioned and why does it exist?

Stankey: Companies that have grown via acquisitions typically have multiple core systems of record. They may have two PeopleSofts, three Oracles, or four SAPs running their core applications. They'll have just as many performance-management systems and compensation-management systems. They may have an onboarding system from a different vendor, or SAP or Oracle may have acquired those applications and tried to stitch them into their legacy systems.

When companies try to figure out how many employees they have, how many contractors they have, the cost of those workers, and the performance and capabilities of those workers -- so they can do human capital optimization -- they're left with that mess to try to divine the answers.

The fix for the mess, historically, has been data warehouses. You dump all of that data into a warehouse, but it's immediately stale, and it isn't normalized across countries, businesses, or job types. It also hasn't solved the problem. That's the problem that we're attacking.

IW: Can the cloud really solve the problem created by accumulating multiple systems through mergers and acquisitions?

Stankey: Systems tend to become obsolete is in terms of technology and architecture. We're now on our third major version of technology used to deliver the Workday user experience. When Workday was founded, a mere eight years ago, HTML4 was the dominant user interface technology, and it was implemented using Ajax. The market then migrated to Flash for a richer user experience, and we made that move about six years ago. HTML5 then became the technology direction, and we just completed our migration to that.

In each case we migrated our customers, and the only infrastructure requirement on their end was having reasonably up-to-date browsers. We break our architecture up into services, and as technology changes, we're able to advance with it and insulate our customers from technology change.

We update our customers twice a year with new versions, and as things change in countries, whether it be data-privacy laws that have to be enforced in the software, or changes in business processes around works councils in Germany or France, or whether there is some other data requirement placed upon us, we're able to evolve the architecture and deliver it to our customers. Since every customer of Workday uses the same version of the software, we do it once for the benefit of many. We're able to move faster [than on-premises deployments], and our customers move faster.

IW: We've talked to Workday customers, like Brown University, that have spent a year or more deploying the technology. And we've talked to on-premises customers, using SAP Rapid Deployment Solutions, for example, that have taken a similar amount of time to deploy. Is cloud agility overblown?

Stankey: They're using templates and methodologies that say, "Let me make my product fit your industry," but if you want to change the way it works, it's still a customization. You can go live fast, initially, but when you want to roll out and become more sophisticated, the cost- and time-penalties hit you. We're trying to go in fast initially and preserve the agility and the cost advantage. Anybody can build concrete forms and pour in the concrete fast, but when you need to change it, you have to chip out the old stuff, and it's a mess. That isn't the Workday story.

We're building products that are easier to implement. If you listen to everybody else talk about it, you'd think the cloud is simply a location and a pricing model: It runs at somebody else's site, and you can buy it on a subscription basis. But if that's all there is to the cloud, Workday wouldn't exist and Salesforce.com wouldn't exist, because that problem -- location and subscription -- was solved 25 years ago with application service providers. "Your mess for less" doesn't solve the fundamental business problem.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio
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Li Tan
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Li Tan,
User Rank: Ninja
9/2/2014 | 6:15:10 AM
Re: A year to deploy a cloud service?
I think the major factor is the amount of data and complexity. It's not a lightweight cloud app and the data migration will become a major concern of the project.
Jeff Jerome
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Jeff Jerome,
User Rank: Ninja
8/31/2014 | 5:39:23 PM
Re: A year to deploy a cloud service?

You can also look at the history of the people involved from the top down.  This is a group that has been there and done that.  When they were PeopleSoft they were innovative and doing well.  It was simply a hostile takeover that put this group on hold.  And now they are back, focused and doing what they have always done well and doing with innovation and new technologies.  Safe to say you will continue to see growth from them!

ukacw
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ukacw,
User Rank: Apprentice
8/29/2014 | 4:15:53 AM
Re: Workday: You're not quite there just yet
This is just the usual bravado that Workday go about. In the field they aren't winning A) because their product whilst being quite cute to look at lacks depth B) because their commerical offering is prohibitive to customers in terms of having to buy the kitchen sink regardless of their needs and C) because their product just isn't that good and as asksqn put so well SAP and Oracle are giants who have used their resource to surpass any lead Workday thought they had.
ukacw
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ukacw,
User Rank: Apprentice
8/29/2014 | 4:11:10 AM
Re: Workday: You're not quite there just yet
Spot on asksqn.
D. Henschen
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D. Henschen,
User Rank: Author
8/28/2014 | 10:48:44 PM
Re: A year to deploy a cloud service?
We're talking about the HR and financial systems of record, here. Those don't go in quickly, and at Brown, for one, you have the complication of working in an academic setting where committees and commonplace and command-and-control from on high is not. Small orgs can deploy in a little as three months and larger orgs in six, at a minimum. But HCM and financials are not like salesforce automation, Dropbox, or some other lightweight cloud app.
asksqn
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asksqn,
User Rank: Ninja
8/28/2014 | 5:18:58 PM
Workday: You're not quite there just yet
Despite Workday's Cinderalla act on the Dow, the fact remains that it doesn't have a snowball's hope when it comes to competing with either Oracle or SAP.  Workday has a market cap of approximately $16 billion, while Oracle stands at approximately $185 billion and SAP AG is valued at approximately $96 billion, not to mention that Oracle & SAP have much better brand recognition, much larger customer bases & gargantuan advertising/research budgets.  Not to mention that both Oracle & SAP can easily absorb smaller competitors to grow even larger. Further, the entire bulk of Workday's target audience is a US subscriber base which means that in order to be even a little bit competitive with Oracle & SAP, it has to grow its foreign markets.  Workday certainly has a very steep, uphill climb on the road to being a serious threat.
David F. Carr
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David F. Carr,
User Rank: Author
8/28/2014 | 5:16:07 PM
A year to deploy a cloud service?
Amazing that cloud deployment could take something simlar to the timeframe of on premises? Doe it cost less, at least?

I wonder whether what takes the time really has much to do with the software, or more to do with getting the organization to adapt to usin the software.
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