Workday is one of the most successful enterprise software-as-a-service companies in the world. On this episode, co-founder and CEO Aneel Bhusri discusses technology and transformation in the enterprise.

Aneel Bhusri is co-founder and chief executive officer at Workday. He is also a member of the company's board of directors, and served as chairman of the board from 2012 until May 2014. Aneel has been a leader, product visionary, and innovator in the enterprise software industry for more than 20 years.

In addition to his role at Workday, Aneel serves on the boards of Intel, Cloudera, Okta, and Pure Storage. He is also an advisory partner at Greylock, a leading venture capital firm that he has been associated with since 1999. Before co-founding Workday in 2005, Aneel held a number of leadership positions at PeopleSoft, including senior vice president responsible for product strategy, business development and marketing, and vice chairman of the board.

Aneel received an MBA from Stanford University and holds bachelor’s degrees in electrical engineering and economics from Brown University. He is a Crown Fellow at the Aspen Institute.

Transcript

Michael Krigsman:

(00:02) Welcome to episode number 160 of CXOTalk. I’m Michael Krigsman and today I am speaking with Aneel Bhusri who is the cofounder and CEO of Workday. Before I say hello to Aneel I just want to give a shout out to Livestream who is our streaming partner and those guys have been great. So I just want to say thank you to Livestream for everything that you do for CXOTalk. Aneel how are you today?

Aneel Bhusri:

(00:38) I’m great Michael thanks for having me on your show.

Michael Krigsman:

(00:41) Aneel, it’s so great to have you here. I have been of course following Workday for years. I’ve known you for a long time and thank you for taking the time.

Aneel Bhusri:

(00:53) My pleasure, my pleasure.

Michael Krigsman:

(00:54) So Aneel let’s start by telling us about Workday, just give us a sense of the company, your size, your market, your revenue and so forth.

Aneel Bhusri:

(01:04) Sure. Workday was started in 2005 with the basic idea of bringing HR and financials and large enterprises into the cloud. Back then it was called Software as a Service as the model. We’re a true cloud provider. We set out to serve the largest companies in the world.

(01:27) Today, 10 years later we past $1 billion in revenue and it’s important when you pass $1 billion in subscription revenues. We’re 52000 employees. Very importantly we are now over 1100 large customers on HR, 200 customers on financials and running at a 98% customer satisfaction level.

(01:49) Our customers range from some of the largest companies in the world, like HP, and IBM and FedEx and Morgan Stanley, and bank of America to mid-size high-growth companies across the globe.

Michael Krigsman:

(02:04) So what was the core market need that you were addressing when you and your cofounder, Dave Duffield founded Workday.

Aneel Bhusri:  

(02:14) So we as you know had a background at PeopleSoft and both of us had gotten backing in PeopleSoft towards the tail end of that company’s history, and we saw where the old legacy software model was breaking down. Upgrades were very painful, very costly. The user experience resembled nothing close to what people were experiencing in the consumer Internet. And innovation had come to a grinding halt in the world of HR and ERP.

(02:47) We saw an opportunity to bring a new vision to HR and Finance, leveraging the cloud architecture, bringing in a consumer Internet style user interface into the mix, and bringing back fun and innovation to the world of cloud enterprise applications.

(03:07) I give my good friend Marc Benioff a lot of credit for starting the shift in that industry. They just celebrated their 17th birthday a couple of days ago. Congratulations to Marc. We saw what Mark was doing and said hey, someone is going to do that for HR and Finance and it might as well be us, and 10 years later we’re here.

Michael Krigsman:

(03:38) So you saw that innovation had stagnated in the enterprise software market. You saw the rise of cloud, you saw what Salesforce was doing with at that time, salesforce automation then to become CRM and grow beyond that but you saw what Salesforce was doing and so your direct inspiration was to apply this new model to HR and finance was that correct.

Aneel Bhusri:

(03:58) That is correct. I would say it was a combination of what Salesforce was doing and then personally I had been involved with a venture firm that invested with Facebook and LinkedIn, and I saw at first hand of how important user interface technology could be to the uptake of an application, and how important it was to have happy users. And there was no reason you couldn’t bring that mindset to enterprise applications. No one had done that except we did. So really from the early days we thought of ourselves as a consumer Internet technology company from the underlying technologies we used, and we build enterprise applications on top of that.

(04:40) I love

Michael Krigsman:

(00:02) Welcome to episode number 160 of CXOTalk. I’m Michael Krigsman and today I am speaking with Aneel Bhusri who is the cofounder and CEO of Workday. Before I say hello to Aneel I just want to give a shout out to Livestream who is our streaming partner and those guys have been great. So I just want to say thank you to Livestream for everything that you do for CXOTalk. Aneel how are you today?

Aneel Bhusri:

(00:38) I’m great Michael thanks for having me on your show.

Michael Krigsman:

(00:41) Aneel, it’s so great to have you here. I have been of course following Workday for years. I’ve known you for a long time and thank you for taking the time.

Aneel Bhusri:

(00:53) My pleasure, my pleasure.

Michael Krigsman:

(00:54) So Aneel let’s start by telling us about Workday, just give us a sense of the company, your size, your market, your revenue and so forth.

Aneel Bhusri:

(01:04) Sure. Workday was started in 2005 with the basic idea of bringing HR and financials and large enterprises into the cloud. Back then it was called Software as a Service as the model. We’re a true cloud provider. We set out to serve the largest companies in the world.

(01:27) Today, 10 years later we past $1 billion in revenue and it’s important when you pass $1 billion in subscription revenues. We’re 52000 employees. Very importantly we are now over 1100 large customers on HR, 200 customers on financials and running at a 98% customer satisfaction level.

(01:49) Our customers range from some of the largest companies in the world, like HP, and IBM and FedEx and Morgan Stanley, and bank of America to mid-size high-growth companies across the globe.

Michael Krigsman:

(02:04) So what was the core market need that you were addressing when you and your cofounder, Dave Duffield founded Workday.

Aneel Bhusri:  

(02:14) So we as you know had a background at PeopleSoft and both of us had gotten backing in PeopleSoft towards the tail end of that company’s history, and we saw where the old legacy software model was breaking down. Upgrades were very painful, very costly. The user experience resembled nothing close to what people were experiencing in the consumer Internet. And innovation had come to a grinding halt in the world of HR and ERP.

(02:47) We saw an opportunity to bring a new vision to HR and Finance, leveraging the cloud architecture, bringing in a consumer Internet style user interface into the mix, and bringing back fun and innovation to the world of cloud enterprise applications.

(03:07) I give my good friend Marc Benioff a lot of credit for starting the shift in that industry. They just celebrated their 17th birthday a couple of days ago. Congratulations to Marc. We saw what Mark was doing and said hey, someone is going to do that for HR and Finance and it might as well be us, and 10 years later we’re here.

Michael Krigsman:

(03:38) So you saw that innovation had stagnated in the enterprise software market. You saw the rise of cloud, you saw what Salesforce was doing with at that time, salesforce automation then to become CRM and grow beyond that but you saw what Salesforce was doing and so your direct inspiration was to apply this new model to HR and finance was that correct.

Aneel Bhusri:

(03:58) That is correct. I would say it was a combination of what Salesforce was doing and then personally I had been involved with a venture firm that invested with Facebook and LinkedIn, and I saw at first hand of how important user interface technology could be to the uptake of an application, and how important it was to have happy users. And there was no reason you couldn’t bring that mindset to enterprise applications. No one had done that except we did. So really from the early days we thought of ourselves as a consumer Internet technology company from the underlying technologies we used, and we build enterprise applications on top of that.

(04:40) I love to use the analogy that Amazon is a very complex order management system and has a nice user interface. There’s no training manual for Amazon, why should there be a training manual for HR and Finance.

Michael Krigsman:

(04:52) So was that essentially shall we say your design goal to create enterprise software with the ease of use and the level of customer satisfaction that you were seeing in the consumer world.

Aneel Bhusri:

(05:07) Absolutely, absolutely. We got off to a good start on the desktop and when mobile took off the idea with the iPhone and ultimately the iPad, and now the android devices that are really presented a great opportunity to even take that customer experience a step further.

(05:26) We were very early on mobile devices, we were the first HR and Finance app to be on the iPad as far as I know and we are now on our seventh or eighth iteration of those applications and their phenomenal. I run Workday off of an iPad. I need to get on the desktop maybe once or twice a quarter, but I can do almost everything I need to do off of an iPad and I think that is just a major transformation full where applications are to go.

Michael Krigsman:

(05:55) So because the industry has moved quite a bit since the days of the founding of Workday, so where has the industry gone and what are you seeing in the enterprise software industry today.

Aneel Bhusri:

(06:14) I think first and foremost cloud has become mainstream and when I say cloud I mean true cloud, I don’t mean what some of the legacy company’s talk about as a hosted version of legacy and software. That’s not true cloud. When I talk about cloud I mean the Amazon, I mean Salesforce, I mean Google, I mean Workday and I would add Microsoft in there in the way that Microsoft has embraced cloud.

(06:38) It has become mainstream. Many of the applications now or enjoy a cloud first mentality. You don’t hear about customers deploying CRM on premise anymore, you see them deploying it over the cloud. The same thing happen with HR. HR pass that tipping point a couple of years ago, and now we are beginning to see that same trend in finance where customers are taking to cloud first mentality.

(07:03) The reason is the systems are far more nimble, they have a great user interface. They continue to move forward and we are coming out with a new version every six months, but we make the upgrade as seamless experience, and not the one year upgrade, tens of millions of dollars process that costs that upgrading legacy system used to be.

(07:26) And so we’ve left the legacy systems in the dust from a functionality and performance perspective. So now the market is defaulting to the cloud applications, not just as being a better way to do things, but actually in some cases even being more functionally rich than the legacy applications.

(07:43) The other issue that has largely dissipated is the security on, and I think for the most part’s CIOs see true cloud vendors investing very heavily insecurity, and understanding that most of the breaches are actually along premise technologies and not cloud technologies. So security and privacy were major concerns in the early days. But the cloud I don’t see those at the same point, but still important, and still something that every customer should check into and make sure they’re comfortable with that. But for the most part, you know the cloud vendors do a better job insecurity than what customers can do for themselves and largely because they have to deal with it on a daily basis and it’s far more secure and partly legacy applications could ever provide.

Michael Krigsman:

(08:31) You’re talking with the largest companies in the world and what are their feelings at this point about moving to the cloud. Were they willing to do it without any hesitation, where do they have reservations or concerns or obstacles? What are you seeing as far as that large enterprise cloud transition in general?

Aneel Bhusri:

(08:57) I’m good friends with many of the CIOs of the fortune 500 companies and I’ve seen their perspective change pretty dramatically over the last five years. I think it’s across industry application, likes CRM, like human capital management, like financials, IT, email, productivity applications. Those are all largely becoming a cloud first choice for most CIOs I talk to. If it’s an industry specific system like manufacturing, or a patient care system, a billing system for utilities, I don’t think the cloud has reached a place yet where we can take those into the cloud. Those are still being run on premise, and maybe they are moving to a private cloud model.

(09:46) But everything that’s crossed into industry, and not specific to a trading application, those are moving into the cloud pretty rapidly. And that’s why do you see the legacy competitors after fighting the shift to the cloud and having to just embrace it because no one is buying those cross industry applications on premise anymore.

Michael Krigsman:

(10:12) So the cloud applications are essentially giving them a great deal of flexibility and that’s what they want, plus coupled with lower implementation costs and shorter upgrade cycles that are easier.

Aneel Bhusri:

(10:29) I think there are multiple reasons that the cloud is doing so well. Number one, if the business case didn’t work for cloud, you wouldn’t see the adoption you’re seeing. It is a lower cost alternative. It is a lower cost alternative than traditional IT, so we save the customer money. That gets us in the door.

(10:51) We put them on a platform that allows them to innovate very rapidly, and we’re in a world today that’s a real time, very fast changing world, legacy systems could not keep up with that. And you talk to any CIO of any fortune 500 or fortune 50 companies, they’re trying to keep up with the pace of change and Workday allows them to do that.

(11:13) The other piece that is really an important element of why we have been successful is the embedded analytics, and we’ve taken that a step further and I hope we will get into some more details around that. But people want to analyze their data, and they want to do it in real time, and they want to make better and faster decisions and we enable them to do that. Those are the reasons why people are choosing us.

Michael Krigsman:

(11:36) Okay so the analytics point is an interesting and important one and we hear analytics and data almost as buzzwords, but what are the practical implications of this for HR and finance.

Aneel Bhusri:

(11:54) You know I’d say the first iteration of analytics and reporting in Workday was just to do a better job of business intelligence and do it within the system so you wouldn’t have to have a third party business intelligence system with a different user interface and different security model and by the way, additional cost. So, we first tackled the complexity of BI and built that into Workday.

(12:18) Now where we are going is taking advantage again of many of the technologies that have been born in the consumer Internet around mass normalization of data, classification of data, and then complex machine learning algorithms against that data to make predictions about where business is going.

(12:38) So, the first one that we came out with, Talent Insights, we now have over 50 customers who have subscribed to that application. It will predict what your top performers might leave over the next 12 months based on a variety of inputs into the system. That takes a transactional system like HR, which is really important to get transactions right, and it turns into a strategic system that helps customers make better decisions. It doesn’t take decision-making away from the customer’s but it highlights areas where they might want to focus.

(13:07) We all care about keeping our top performers. If you knew there was a top performer at risk, you may want to do something about it. The predictive nature of where applications are headed allow that to happen, and it’s a huge breakthrough. I think in five years we won’t be talking about transactions and analytics as two separate platforms or two separate areas of expertise. One system will do both and that is the path that Workday’s on now that our transactional system will also be your core analytics system, and beyond the predictive analytics we talked about, we’re moving into planning, budgeting, and that application comes out in the fall of this year and that just adds another dimension where you can do everything you want in one unified system, and that’s what our customers are asking us for.

Michael Krigsman:

(13:59) And I know Workday has invested in data science. You acquired technologies and I know that you’re investing a lot in this, and maybe talk a little bit about the kind of investments that you’re making in this and other areas of innovation inside the company.

Aneel Bhusri:

(14:21) Sure so we acquired a company a few years ago called Identified and they had some technology, most of which has now been rewritten into the Workday platform. But more importantly, it was a group of brilliant data scientists that knew how to make sense of the large amounts of data we had and draw conclusions against that data by writing machine learning algorithms.

(14:43) They have now been with us for two years. They’ve helped us create this new line of applications called Insight Applications. Some of those will be separate apps like Talent Insights. Some of those like the credit collection insight app will actually be bundled into the product at no additional charge but it makes that application smarter. So the data scientist role is very important investment for us, and it’s very clear to us it’s a very different skill set and mindset than traditional application development. I think the beauty of what we have done at Workday has been to marry the two.

(15:19) We can predict changes in revenue based on whether they are going forward. We’ll be able to predict people that might not be telling the truth on their expense reports based on looking at patterns and we’ll see customers wanting to buy that application.

(15:36) We then as a complimentary move decided that we wanted to move into the world of budgeting and planning. And you know, that’s the world that has historically been led by companies like IPierian, but those systems are legacy systems to. There are a handful of startups who thought we can do a better job because we already have all the data, we’ve got in memory database, so it allows us to do analytics and in the same pace as we do transactions. What we were missing was a spreadsheet metaphor, so we acquired a company called GreatCraft, a brilliant group of developers from Colorado, sewed in their spreadsheet into the Workday platform.

(16:14) And in the fall you will see budgeting and planning within Workday, where data is not going back and forth between a planning system and transactional system; it’s the same user interface, it’s the same security model. It’s the first time in the industry this has been done. Is only possible because of our in memory database technology and I do think it is something that’s going to change the world of finance.

Michael Krigsman:

(16:36) So link all of this then to this higher level theme innovation and how you think innovation and also connect it to this very important theme you raised earlier of customer satisfaction.

Aneel Bhusri:

(16:55) Well you know innovation is core to who we are. I think a big part of what makes us unique is that we really do think like a consumer internet company and if you see what’s happening on the consumer internet over the last 15 years there’s just been an explosion of innovation. Whether it’s first consumer internet user interface, whether it was the scaled out cloud architecture, the use of open source, the growing use as a core data management, data analysis platform, the emergence of mobile. All those things first happened on the consumer internet. So we pay very close attention to what’s happening on the consumer internet. We’ll see a new technology and then we’ll look at how we can solve an enterprise problem with that new technology. And that’s how we really stay on top of the innovation curve.

(17:40) I think we’re in a cycle of technology that’s the most exciting that I’ve ever seen. There’s so many new technologies coming to market to manage transactions, to manage analytics, to lower the cost of computing and we frankly look at it as a schmorgasboard of options and pick the ones that work for Workday. And we have a laundry list of additional ones that we’re going to add over the next few years to continue to make the system better and better for our customers.

(18:14) It’s very important that we don’t do technology for technology’s sake. We have very very close relationships with our customers. We have a CIO advisory board, a CHRO advisory board, a CFO advisory board. We show them these new technologies, these new capabilities and they tell us which are the ones that are important and which ones to invest in, and frankly which ones may not be so important to them right now so we really do listen to our customers very closely.

Michael Krigsman:

(18:42) So when you are making your investment decisions in innovation, deciding what to prioritize, where to focus your resources it’s linked back very closely to what your customers are telling you.

Aneel Bhusri:

(18:57) You know I say 80 to 90% of what happens in any given update is driven by our customers. There are things like our big architectural changes we’re adding to do where a customer might know that they need to ask for that. So as we’re advancing the technology those are the 10 to 20% of the investment we make based on our best and new technology.

(19:20) On a feature function basis for HR and financial, I can’t think of any new feature function that hasn’t been at the request of our customers. We actually have something called Brainstorm that allows our customers to actually vote on new features and the ones that rise to the top get into the products. It really is it’s almost like a constant pulsing of our customers to find out what’s at the top of their priority lists.

Michael Krigsman:

(19:46) And you also have Workday Labs which is focused very specifically on what’s coming down the road, new user interfaces and experience and stuff like that.

Aneel Bhusri:

(19:57) Absolutely, again taking a page out of the consumer internet and I know I sound like a broken record, but I do think that they are on top of innovation more than the typical enterprise companies these days. Google, Facebook they have labs like Facebook has labs where they try out new technologies. There’s no reason why Workday shouldn’t have labs so we set up a lab. You know, will test out things like Google Glass, we’ll test out things like some of the new virtual reality technologies; that’s where mobile first emerged from. We’ll look at all these different technologies.

(20:31) Some make it into the product and some don’t, but we are constantly experimenting and we show all what we are working on in the labs to our customers, and they give us a sense of whether that is a worthwhile project or not. And what that allows us to do is to continue to innovate on more than just an evolutionary way. Do evolutionary things underside, and if that makes sense bring that into the core product.

Michael Krigsman:

(20:57) so again it seems that everything that you’re doing and this has been a common thread as we’ve been talking. Everything that you’re doing is making reference back to what the customer wants and you have dialog with the customer. But I also know that every year you conduct a customer satisfaction and they’re very serious, large customer satisfaction survey. And again, maybe talk about the relationship f customer satisfaction and this customer focus to your success with the business so far.

Aneel Bhusri:

(21:36) You know I think it’s a trait that Dave and I brought from our previous company or focused on in our previous company, and our reason for being is to have happy customers. And if you’re a technology company or a services provider, that should be a reason for being. We’re in business to make our customers successful. And we’ve really built that into the culture. We’ve annual goals of which one of them is always having customer satisfaction, about 95%. I’m pleased to say that this past year was at 98%, and if we hit that goal everyone in the company gets reward, gets a combination of cash and stock awards. So it’s not just the purview of customers services, or sales or development, it’s a purview of everyone in the company to make sure we have happy customers.

(22:24) That relationship with our customers has allowed us to move very quickly because they give us great feedback. We listen very closely. Frankly, it has also enabled us to grow rapidly. It’s not just the right thing to do to have happy customers it happens to also work for your business model.

(22:41) We have great salespeople, but I will tell you our best salespeople are our customers. Many times we have a user conference in Europe, and we were asked to step out of the room and some of our customers just basically grabbed the prospect and to say, you’ve got to go with Workday. And I don’t think you see that from our competitors. I think they’d probably shake and say get out of here as fast as you can.

(23:02) Our customers really like us and we like them, and we want them to be successful. And they want other companies to be part of that ecosystem because they know the more successful we are, the more we can invest in products. And there’s nothing more valuable and more important to us than having happy customers, with the one exception of having happy employees because happy employees get us happy customers.

Michael Krigsman:

(23:25) Now what about the role of this in creating trust with customers because I know when you started the company with Dave Duffield one of the reasons you were able to get such initial customers because they trusted you and they trusted Dave, and you were obviously the founders and therefor a reflection of the company as a whole.

Aneel Bhusri:

(23:50) Well a huge part of having happy customers you have to be transparent and honest with them. You know a great story along those lines is HP. We talked to HP for about two years before they chose us, and Dave told them early on, look we’re not ready for you. As much as we would like to have you as a customer, we’re not ready for your skill, we’re not ready for the functionality and requirements that you had. When we’re ready come back, and I went back to them and sat down with Maggie and said we’re ready we can do this and we had a phenomenal relationship with HP. They’re one of our big partners now, and they actually launched a services organisation of of this successful implementation of Workday at HP.

(24:36) If you want to have happy customers you want to be honest even when it’s not the easy thing to do. You have to be transparent. You see what we do with our data centers. We have a trust center now that just really shows that everything that we’re doing with respect to data centers, there’s no opaqueness about where people are in production, where our sandboxes are. We’re all out there. That way when there is an issue we can look each other in the eye and say, here’s the issue and we both see the issue, how do we solve this issue.

Michael Krigsman:

(25:06) So you said happy employees are the foundation of the good customer relationships and it’s very easy to talk about happy employees as kind of this relatively meaningless abstract ideal, but in your case you invest personal time, effort into the culture of Workday. And so would you share with us some of the investments, not just in terms of money but it could be that time, focus, energy, whatever it is into building the kind of culture that creates these attributes of trust and desire to please the customer that leads to the levels of customer satisfaction you were describing.

Aneel Bhusri:

(25:53) Well first and foremost Dave and I interviewed the first 500 people who joined Workday, and we were not interviewing them for their skillset in marketing or engineering or in sales, we assumed our teams got that part right. We were interviewing them specifically for cultural fit and our belief was that if we got the first 500 right, they’d get the next 5000 right. And that really has played out that way.

(26:18) During that interview cycle, what we look for was people that you use ‘we’ versus ‘I’ filter out the I’s and looking for the ‘we’. We do work as a team and that is a huge part of why we have been successful; we run fast as a team.

(26:34) We look for people with success with focus on integrity, but we also look for people that had stayed at their companies for long periods of time. Some think that that’s not great, but for us we’re trying to avoid the job offers and there are some in Silicon Valley that go from hop company to hop company. That doesn’t really work in our model. We invest very heavily in the employees and we get the return, and the employee gets the return if they stay with us for a while. So, we really focus on people that will commit to us for the long run.

(27:05) And then we tell them you’re going to have a great time working here, live by our values and take care of customers, and be nice to your fellow employees and have fun. If you’re not having fun go to one of our competitors, because if you aren’t having fun you probably shouldn’t work at Workday.

(27:23) I mean in the other way, that translates, and we have very fun company meetings. I will be launching soon a series of town hall meetings, because as we get bigger it’s harder to keep on top of all the new employees and culture and what is changing. So we have got to get ahead of that.

(27:40) We have a great HR department and people organisation led by Ashley Goldsmith that really hooks are on rewarding and taking care of employees and making sure that they feel like part of a big family. Performance orientated as well though, and I mean there is a lot of things that go into it.

(27:58) But part of it is just the tone that you strike. Dave and I sit in cubes, and my cube is no different to other people’s cubes, although they might be a little bit messier at times. But we sit in the middle of the cubes and we are very accessible, and I just think that creates a culture of being accessible, and a culture of being open and friendly.

Michael Krigsman:

(28:18) So you started the company, you and Dave, your cofounder Dave Duffield personally interviewed the first 500 employees looking for the right cultural fit. Now the company grew to 500 people, now obviously it’s much larger, how do you prevent the culture from kind of stultifying into bureaucracy, how do you prevent that from happening?

Aneel Bhusri:

(28:48) That is a great question, there are a couple of things. Number one, the people that are the leaders in the cultural organization have to continue to drive our culture. If they see someone come in that’s not a cultural fit, we’ve got to figure out how to part ways with that individual if we can’t get them to embrace the culture.

(21:09) We’ve got to stay organized in small teams. What made us successful in the early days of Workday we’re small teams. We’d all sit around the table and make decisions. When you get big there’s a tendency to have big organizations get caught up in so much process and bureaucracy. We probably have some of that and we continue to strive to drive it out.

(29:31) The best way to do that is to have small teams of people who are empowered to make decisions and get their work done. In any time I see in an organization in terms of a decision making organization, that’s more than 15 to 20 people that’s when I get worried. So you want to just keep driving towards small teams and make sure that those teams embrace the culture.

Michael Krigsman:

(29:51) So that means you’ve got these small teams and that means there needs to be a very clear sense of guidance and cohesion for these small teams to be properly coordinated, both in terms to their relationship to the broader whole of getting the work done, but also in terms of the cultural values. So how do you ensure that the glue remains in and among many of these small teams?

Aneel Bhusri:

(30:21) You’re absolutely right and that is what we need to do and we count very much on our leaders and our managers to be very hands on in knowing on what’s going on in the organizations. We can give people guidance, but you know, you need to make sure they have all the tools they need to be successful and to have all the information that they need to be successful, that the group is organized and works as a cohesive unit.

(30:49) So we put a lot of emphasis on our management style and philosophy, and we can’t have managers and leaders that are just you know frankly overhead. They have to be able to do the job is to, and be hands on enough where they can help drive the organization for it.

Michael Krigsman:

(31:10) And how about you, I mean how do you find the time to do this given that you’re the CEO of a very rapidly growing public company that counts on some of the largest organizations in the world as your customers, you are responsible to your customers in a very intense way. So what’s your involvement in this and how do you find the time to do it?

Aneel Bhusri:

(31:37) You know it’s a great question. I try to divide up my time a third, a third, a third and then plus 10% that adds up to 110% and have to figure out how to make it work better. A third on employees, a third on products and strategy, and a third with customers and then the 10% is with investors. And when we go through some of the more volatile times in the market, that time probably pops up.

(32:04) You know over time I would like to stick to that model. As you become more global and even in California we’re spread out and I’m frankly working harder to be better on the employee front to get out to all the different offices.

(32:22) So myself or Dave or one of the senior team managers is travelling to a region for a sales all or customer visit, we really try to add a town hall meeting to that so that we can meet a bunch of people and make sure they feel good about the company, answer any questions they have.

(32:43) My next one is going to be in Australia sometime in April, so anytime I’m out on the road I’m trying to visit an office and I can do a town hall as well as meet with customers and prospects.

(32:54) But I think of that of my number one job and in the next few years is to ensure this culture remains special and unique and attracts the best and brightest and keeps the best and brightest we have here. That will keep us on the cutting edge of innovation and that will allow us to maintain high levels of customer satisfaction. And all the rest, all the other metrics like financial metrics, they’ve all come from having great employees innovating and having happy customers. All the rest follow from those three things, so that’s my job.

Michael Krigsman:

(33:32) That’s pretty extraordinary because you’re CEO of a technology company and we’re spending all of this time about culture and so the equation then or the path as I understand as you’ve been describing it is the culture and hiring the right employees together that creates ultimately the customer success and the relationship with customers and that customer satisfaction is the driver ultimately of revenue for Workday, and so therefor you’re making this linkage between your investment and the culture and in the people, and ultimately in the performance of Workday as a company.

Aneel Bhusri:

(34:24) Absolutely, that’s where I spend my time today. You know I love spending time on products but we have such an amazing products team, an amazing technology team, people like Pat Rose and David Clark, people like Lyn Christensen and Leanne and Dan Beck, Fran and Joe Korngable. I mean I keep doing down the list. We just have an amazing group of folks running our products and technology. Betsy Bland is driving financials now.

(34:54) My job is just to make sure that they have the ability and continue to innovate and lead their organizations and I need to remove obstacles to make sure they have the right development resources to continue to invest. And every now and then I might tweak things here, there, and we’re on the right path and I just need to make sure nothing gets in their way.

(35:18) So that has changed since the early days of the company where I was much more involved with the day to day products. You know, Stan has been with me from the start. He’s still very involved in setting technology strategies. So we have such great talent on the team and I don’t really have to worry about leaning in on the products, even though I am probably most comfortable in the products area.

Michael Krigsman:

(35:40) It is pretty amazing the impact of the culture on customer satisfaction and the revenue, but let’s shift gears here for a moment and talk about your customers and talk about CIOs. So first off, who do you sell to? Are you selling to the line of business, are you selling to the CIO? Who is your customer so to speak?

Aneel Bhusri:

(36:07) You know our customer is usually both; the line of business and the CIO. The line of business from a functionality perspective, can we solve their business needs. does our products check the boxes on their business processes on their workflows, on their reports, analytics they need to do.

(36:29) And then the CIO is really important in evaluating our technology. We’re very proud of our technology. I think it’s the thing that differentiates us most versus our legacy competitors. It’s a modern object oriented in memory database technology and lets us do incredible things.

(36:49) The CIO is very involved as a facilitator of the business making the right decisions for them. ultimately they will be very involved in the project management and they will be involved in tow other aspects, managing integrations to other systems that are within their organization, and over time making sure that we stay on top of all the right SLAs and other business items as we build this long term relationship.

(37:20) So the CIOs job has changed pretty dramatically in the last 10 to 15 years, and I think that today’s job as CIO is a lot more interesting but also a lot more complex than it was 15 years ago.

Michael Krigsman:

(37:34) These days the core it seems of the CIO job is supporting business functions in terms of business outcomes as opposed to “merely or just” infrastructure and infrastructure itself is a huge job. But you say that you sell to both and that’s in contrast to some other software companies or many other software companies who say, well we sell primarily to the line of business or we sell primarily to the CIO, and their comfort level is with one of the other rather than as a uniting force in a sense trying to bring the two of them together, so maybe comment on that a little bit.

Aneel Bhusri:

(38:22) Sure so I think as a system of record vendor for HR and financials, we’re going to go through the CIOs office they own those large ERP implementations that we’d like to replace and put them into the cloud. So we don’t sell it for departmental solution. We’re not going to sell it for 15 to 20 people. When we sell a HR system it’s a full-on replacement of their legacy HR system. When we sell a financial system it’s a full-on replacement of their legacy accounting system and the CIO is very involved in those enterprise-wide decisions.

(38:56) I’d say early on we learned that the line of business always falls in level with Workday. It’s a modern user experience. It’s got a modern take on functionality, built in analytics, all the things that HR is looking for but if we didn’t win over the CIO it didn’t really matter. So along the way we realized we really need to embrace the CIO, and frankly, when the CIO is driving the ships to cloud, booth the sale cycle we experience and most importantly the deployment cycle we experience is just phenomenal. It’s just amazing when the CIO gets on-board and actually is the leader.

(39:54) I think people like Dave Smoley, first at Flextronics then at AstraZeneca, or Jane Moran, first at Thompson Reuters then at Unilever, they led their organizations down the Workday path. The HR organizations were happy to go down that path, but when the CIO gets behind it really is very powerful.

(39:52) And you wonder what does the ‘I’ in CIO stand for now, maybe it’s innovation. Maybe that’s the right way to think about it, the Chief Innovation Officer, bringing innovation into the organization either through internal development, which is the historical model or through managing a series of partnerships like with Amazon and Workday and Salesforce and Microsoft. That’s the way they drive innovations to organizations and then they have a smaller team building custom apps for areas that are not covered for those large vendors. So now I think the Chief Innovation Officer I think it’s a pretty exciting job these days.

(40:31) You know the CIOs better than I do, it’s just a fast moving fascinating world and I think the technology now is the core of so many companies business. It’s not something on the side anymore. It’s actually something that they do, so I think the CIO is taking a role in the front office as opposed to historically just being a back office organization.

Michael Krigsman:

(40:55) That’s really interesting, so in effect the message of what you have observed is that when the CIO is working closely or in lock step with the business and there’s strong lines of communication, then the entire innovation process moves forward at a much more rapid and I’m sure in a much more rapid rate and more responsive to what the business ultimately what the business needs as well.

Aneel Bhusri:

(41:26) You know we pride ourselves in customer success. We can make it work when the line of business doesn’t work so well with IT within a company, but it’s so much better when they work together. The best implementations, the most efficient deployments, the happiest customers are when the line of business and the CIOs office is lined up. It’s fun to watch the transformation as they see what is possible with Workday new platforms.

(42:02) The most recent example of a big go live there was Bank of America, and that was a partnership between there CIO and Chief Administrative Officer, there CHRO. Even there CEO got involved in the end and likes using the Workday application, but to see the whole team engage, it was a phenomenal project. This is one of the biggest companies in the world. They went live on Workday in 13 month. They ran a prenominal team and that’s because the partnership they had internal as well as a partnership they had with Workday.

Michael Krigsman:

(42:32) And you know we only have a few minutes left and I have a whole lot of questions and things I want to talk with you about. So let me ask you a few questions and give me back quick answers if you don’t mind, because there are thing I just want to pick your brain on but we’re just about out of time. So finally on this point about the CIO, what advice do you have or what thoughts do you have on the CIO working in collaboration with the business. How can they make that relationship most successful based on your observations of what works.

Aneel Bhusri:

(43:13) You know I think so much of what works within these organizations is just listening. When the business feels like they’re listened to by IT and vice versa, the relationship is much better. There’s a much better understanding of each other’s needs. So listening is just a key part of it.

And then for the CIO to be the eyes and ears for the business on the new technologies and have those new technologies solve problems, because if a business has a problem, they don’t know how to choose the different solutions. Whether it’s a new problem or just a cloud problem, It can really be at the forefront of picking out the new technologies and solve those problems.

Michael Krigsman:

(43:55) Okay, another quick question, you were at one point an important VC, Venture Capitalist investor in the industry, now you’re focused on operating Workday as the CEO of Workday but of course you’re still seeing interesting enterprise technologies coming down the pipe. Just very briefly what’s interesting out there? What technologies are you fascinated in.

Aneel Bhusri:

(44:21) I think where we are today a lot of cool stuff is happening within analytics. A lot of stuff is happening in terms of applications being built on top of the new data technologies and I think we’re basically seeing you know the slow disappearance of the relational database; it’s in place for the legacy apps. But new apps are taking advantage of new technologies that are not relational database and there is just an explosion of innovation happening there

(44:49) I think there are some very cool stuff happening on the productivity front, both led by incumbents like Microsoft and Google, but Box and Dropbox are doing some really neat things. I’m a big fan of Slack. I’m a big fan of Chatter and on collaboration, so I think Slack is one of those new emerging technologies and we use it to manage our senior management team. So I think there are a lot of cool technologies around collaboration and about data sciences and that feels like the next frontier.

Michael Krigsman:

(45:19) Let’s talk about disruption. There are so many industries these days that are being disrupted by smaller companies, by startups, by new technologies where it’s forcing the company to confront a business model shift. For an established company this is very hard, so do you have any advice, three or four point of advice maybe for established companies that are facing these business model changes and disruption. And at the same time they can’t just give up their existing business and they have to operate the new business model and revolve there while operating and maintaining their existing business and existing customers and products. Any advice for folks who are trying to juggle this

Aneel Bhusri:

(46:11) Well so I would take it from the perspective of non-tech companies I talk to of the CIOs of fortune 500 companies. They all worry about some company in Silicon Valley and just meeting them in some way and that doesn’t have to happen but they have to embrace these new technologies that leads for part of their business. So I encourage them to come out to Silicon Valley, come out and meet these new startups that have these new technologies and see how you can partner with them.

(46:40) So what we’re seeing more and more and this is really led by CIOs coming out to the valley and meeting all the technology companies, the disrupters and seeing if they can work together and actually leverage some of those technologies.

(46:53) If you’re an incumbent in the technology I think it’s a tougher road to hoe, you know as one very close advisor who is the CEO of one of the very biggest technologies in the world said, you’re either on the right side or the wrong side of the angels. And if you’re on the wrong side of tech you’ve got to find a way to get on the right side of tech. and the right side of tech is cloud, true cloud not fake cloud. It’s open source. Its scale out and commodity computing, I mean you name it, its big data. There’s a whole wave of these new trends happening, and if you’re an old tech company, you’ve got to figure out how to get on top of those, even if it means leaving some of their old business behind because that old business will disappear.

(47:38) You know, as large tech companies, they don’t disappear, they just become less relevant overtime. And I think some of the large companies like IBM and Microsoft are doing a good job and HP are doing a good job and trying to reinvent themselves but frankly the others aren’t.

Michael Krigsman:

(47:54) And finally you mentioned that this is an opportunity for CIOs to take a leadership role in helping drive the innovation that is related to transforming business models based on technology and platforms.

Aneel Bhusri:

(48:110 I think it’s an opportunity of a lifetime and as I talk to these CEOs of these fortune 500 companies, the person that they inevitably that they talk to about trying to find out what’s going on in the technology front is the CIO, which is one of the reasons why I think it’s such a cool time to be a CIO.

Michael Krigsman:

(48:29 All right, well I’m sure that the CIOs who are listening appreciate that. We have been talking with Aneel Bhusri, who is the CEO and the cofounder of Workday on episode number 160 of CXOTalk. Aneel, thank you for spending so much time today and for a very insightful conversation.

Aneel Bhusri:

(48:51) Thank you so much Michael and I hope to see you soon in person.

Michael Krigsman:

(48:54) I hope so, and we have a special show coming up on Tuesday, this coming Tuesday with the API architect of the New York Times, who is going to tell us about how APIs connect to the core mission of the New York Times, so join us next Tuesday and then join us next Friday again for our regularly scheduled show. Everybody, thank you for watching, thank you to Aneel Bhusri, thank you to Workday for making it all happen, and have a great weekend everybody. Bye bye.

 

 

Companies mentioned on today’s show:

Workday                                  www.workday.com

Amazon                                   www.amazon.com

AstraZeneca                            www.astrazeneca.com

Bank of America                     www.bankofamerica.com

Facebook                                 www.facebook.com

FedEx                                       www.fedex.com

Flextronics                               www.flextronics.com

Google                                     www.google.com

HP                                            www.hp.com

IBM                                         www.ibm.com

LinkedIn                                   www.linkedin.com

Livestream                              www.livestream.com

Microsoft                                www.microsoft.com

Morgan Stanley                      www.morganstanley.com

Salesforce                               www.salesforce.com

Slack                                        https://slack.com

Thompson Reuters                  http://thomsonreuters.com

Unilever                                  www.unilever.com

 

Aneel Bhusri:

LinkedIn:                                  www.linkedin.com/in/aneelbhusri

Twitter:                                   https://twitter.com/aneelb?lang=en-us