Workday Inc. might be ready to flex its financial muscle, experts say. The bulk of the new features in the Workday 18 release announced at Workday Rising on Monday are aimed at strengthening the financial management offering, a longstanding weak spot for the vendor of Software-as-a-Service human capital management.
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Bill McNee, founder and CEO of Saugatuck Technology Inc., based in Westport, Conn., said Workday Financial Management is now fleshed out enough so that it can spearhead adoption, not just be lumped in as an add-on to the human capital management (HCM) offering.
"Early on in their development, Workday's financials had been the tail that the HCM dog has wagged; now their financials are robust enough to lead a sales cycle, and drag along interest in HCM," McNee said. "That is a significant shift for Workday."
Paul Hamerman, vice president and principal analyst at Forrester Research Inc., based in Cambridge, Mass., agreed with McNee's assessment. "I think Workday is in a position now to take financials out and sell it on its own merit independently of the HR [human resources] platform," he said.
Other new features in Workday 18 include custom fields and enhanced mobile capabilities. The vendor also made two major announcements at Workday Rising: the emergence of Workday Big Data Analytics in early 2013 and plans to build a recruitment platform by 2014.
"I think it's a significant release for Workday because it shows that they are advancing rapidly in the areas that are most impactful today: social, mobile and cloud," said Yvette Cameron, principal analyst at Constellation Research Inc., headquartered in Monta Vista, Calif. "With this release, Workday puts itself even more squarely in the sights of vendors like Oracle and SAP."
Workday Financial Management rises to the level of HCM
The bulk of the enhanced financial capabilities in the new Workday release center on supporting globalization. "New global capabilities include enhanced global tax support, more international payment formats, and more powerful real-time reporting across divisions and business units for multinational organizations," the company said in a release. According to Workday executives, 40 customers are now using financials in conjunction with the company's HCM offering.
Although the vendor claims to have the ability to cater to global companies, Saugatuck's McNee said it will likely concentrate on U.S.-based multinational businesses for the time being. "I see this as a continued incremental expansion of the financial footprint as they are preparing [the product] for broad-based use," he said. "There are a number of features that they need to continue to enhance, in particular around support of a variety of complex accounting requirements on an international basis."
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"They have pretty much rounded out what the suite will focus on, and are now going functionally deep as the product gets ready for prime time," McNee said.
As CFOs become more comfortable with the idea of putting financial information into the cloud, experts say the tide is changing in favor of Software as a Service (SaaS) financial management. "Finance has been sort of latent in terms of getting to the cloud in comparison to HR and CRM [customer relationship management], but I'm now seeing a tipping point in the market where the demand is materializing for a cloud-based delivery model for financials," Forrester's Hamerman said.
McNee said the category of cloud-based financials was poised to grow rapidly through 2016 -- which could spell trouble for legacy on-premises ERP vendors. "I think that Workday is offering a very rich and sophisticated cloud-based set of capabilities, and they will clearly be gaining share on Oracle in particular," he said. "SAP we view as a more formidable competitor, as they have a very rich heritage in financials as well. The other major player for upper-mid and larger enterprises to be on the lookout for is NetSuite, which is aggressively moving up-market."
Hamerman pointed out that although Oracle and SAP are making strides to embrace the cloud, Workday is still in a position to take business away in the meantime. "We'll see more and more competition around enterprise-class financials in the cloud. Workday will definitely be a player in that and will have the opportunity to convert customers who are on older platforms," he said. "I think all the stars are aligning for financials to become a cloud-based application."
Custom fields can help businesses customize SaaS HCM
One of the features in the Workday release that Constellation's Cameron was particularly excited about is custom fields, which she said could remedy a key sticking point in the adoption of SaaS: the inability to customize. "For years, people have been able to add user-defined fields in an on-premises environment, but that carried with it quite a lot of baggage -- maintaining them from release to release," she explained. "What Workday has done in 18 is they've created a pretty simple way to create custom fields, and then they operate just like any other normal Workday-delivered field. They've overcome that obstacle of no customization in SaaS."
Custom fields could also lead to increased vertical specialization, Hamerman said. "As Workday grows from an HR to an ERP company, being able to deliver industry-specific capabilities is going to be important in their growth strategy," he said. "Custom fields are an interim step that can take the platform deeper into not just customer development but development by partners to add verticalization."
As for mobile capabilities, Workday said its applications can now support HTML5; before, they were limited to Apple iOS. "Now they can support any device. It was a gap in their offering, so that's really good news," Cameron said.
'Big data' and recruitment on the Workday horizon
Although Workday already has analytics built into its platform, the company also used Workday Rising to announce plans to harness the power of "big data" starting in 2013. "We are combining Workday data and any type of third-party data into our unified platform to create the analytics and dashboards in the intuitive Workday user experience," Aneel Bhusri, Workday's co-CEO, said in a release. Workday Big Data Analytics will not be automatically rolled out to all users; customers will have to pay a fee to upgrade their analytics.
"Workday's new big data initiative opens up its platform to a variety of data types and sources, with a range of data connectors available to offerings such as Salesforce, Google, Marketo, Jira, LinkedIn, Twitter and a variety of government publicly available data sets," Saugatuck's McNee said. "While no doubt in direct response to customer demand, and will clearly add significant customer value, I believe this is a move to better compete against SAP and Oracle."
The vendor also revealed its intention to build a recruitment platform by 2014, which Hamerman differentiated from Oracle and SAP's preference for acquisition. "Usually [Workday] announces things that they're ready to sell, but I think the recruiting market is evolving so fast that they wanted to reassure their customers that they're going to have that capability available," he said.
With all of the new features in mind, the sentiment among analysts after Workday Rising was that Workday is indeed rising. "This release is just evidence that Workday is continuing to innovate and deliver solutions that I think are highly engaging and kind of challenging [their competition]," Constellation's Cameron said.