Workday is one of the leading software-as-a-service (SaaS) companies in the world. On this episode, three respected industry analysts examine Workday, its products, and competitive position in the market. It's a rare opportunity to see inside the mind of top industry analysts as they examine this important enterprise software company.
Brian Sommer founded Vital Analysis in 2007 based on the market success that accompanied his TechVentive, Inc. launch several years earlier. Brian closely follows what C-level executives think, feel and need. He is also in a unique position to diagnosis the winners and the losers in technology as he was the longest running (10 years) and most senior director of Andersen Consulting’s (now Accenture’s) global Software Intelligence unit. This position required him to pick the best possible software solutions for hundreds of clients globally.
Jason Averbook is currently a leading analyst, thought leader, consultant and keynote speaker in the area of human resources, the future of work and the impact technology has on that future. Jason co-founded Knowledge Infusion LLC in 2005 until 2012 when the company was sold to Appirio and served as its Chief Executive Officer. He was responsible for the groundbreaking vision and strategy. He served as the Chief Business Innovation Officer at Appirio Inc where led Appirio’s human capital management business. He held the position of CEO of The Marcus Buckingham Company (TMBC) from 2014 through 2016 until recently leaving to focus on his thought leadership and analyst career.
Bill Kutik is considered one of the top four influencers in the HR technology marketplace. In 2015, he started Firing Line with Bill Kutik®, a new independent broadcast-quality video interview program about HR technology. Since 1990, he has been Technology Columnist for Human Resource Executive®, also serving as founding co-chair of the magazine's famous annual conference, HR Technology® Conference & Exhibition, since it began in 1998 until 2013.
Video Transcript: Workday in Focus: HCM and Financials
Michael Krigsman: Welcome to Episode 201 of CXOTalk. I’m Michael Krigsman, you host, our host; and CXOTalk brings together truly the most interesting, the most innovative, the most forward-thinking experts on technology in business for in-depth and really meaningful conversation. And today, we have a really interesting show. We’re going to be focused on Workday, which is one of the most well-known of the software as a service enterprise software vendors. And we have a truly all-star panel of industry analysts, who are going to explore this topic for the next 45 minutes. And, in no particular order, to start introducing our panel, let’s begin with Bill Kutick. How are you?
Bill Kutik: I’m well, thanks for having me, Michael. My interest in HCM is 27 years old, when a short-lived magazine that I ran had the first review of PeopleSoft 1.0. And for the 27 years since, I’ve written a column about the subject for Trade Magazine and Resource Executive, started now-famous show called the HR Technology Conference, which I ran until three years ago, and now I have a broadcast-quality TV show called “Firing Line with Bill Kutick” that’s never as up to the second as your CXOTalk, Michael.
Michael Krigsman: Well Bill, your show “Firing Line” is just great. And what’s the URL for that so people can find you?
Bill Kutik: Well, they just go to YouTube and they search for “Firing Line with Bill Kutik,” you know, the whole name and they’ll get it. I mean, it’s a bit lame but that’s the easiest way to get there.
Michael Krigsman: Fantastic. And now our next guest, a star industry analyst, is Brian Sommer. I’ve known Brian as with all of these gentlemen for years, and Brian Sommer, how are you? You’re in a hotel room here in Boston, in fact.
Brian Sommer: Yes I am, and taking a break from another conference from another vendor, who shall remain nameless. My short little quick bio bit: I’m an ERP analyst, and I think I’m the token finance guy on today’s group, since I know Jason and Bill will overwhelm us all, I’m sure, with HR kind of commentary. I’ve been doing the game for a number of years. I don’t want to say how many decades, but a bunch. And I do a lot of client work with folks on things like software selections, shared service projects, and the odd ERP litigation or any true steal. So that’s my kind of story.
Michael Krigsman: What Brian did not mention, because he’s a pretty humble guy, is that in the world of enterprise software and finance, he is truly one of the top analysts and observers in the world, and that is absolutely the case.
Brian Sommer: Thanks.
Michael Krigsman: And last but not least, Jason Averbook, and Jason, hi, welcome.
Jason Averbook: Hey, Michael. Hi, thanks for having me. So, really excited about the topic today, and the workplace human capital management and financial applications, their entire platform is one that we see on fire across all of our customer base. My background is I spent 15 years in the vendor space between two different organizations; spent ten years in the consulting space helping CHROs and CEOs and CFOs really think about platforms and think about applications. And now, I’m [in] Next Venture, which is a new enterprise consulting organization as well. So today, well, I’m going to talk about human capital management and the whole workday space. Brian, I do have a dollar with me, so we’ll see how many times I can bring up finance. I do know something, do know something about finance, and the fact that I’ve got the dollar with me.
Brian Sommer: Well, you’ve sold a few more software companies than I ever consulting firms I have, so I know you know something about money.
Jason Averbook: And maybe it’s not as much of a Workday financials, but let’s go at it a bit.
Brian Sommer: Ok.
Michael Krigsman: Ok. So, Workday. Let’s begin with an overview: why is Workday important in the market? Why are we spending our time? Workday has gone public their revenue guidance is about 1.6 billion or so, this year. Why is Workday important in the market? Who wants to start?
Bill Kutik: I’ll start. Workday’s important in the market because it was the first true SaaS vendor in HCM. Little-known to people outside, we in face had hosted applications in the late 90’s, mostly recruiting applications from companies like Taleo and Brassring, which always drove me crazy when Marc Benioff proclaimed his software to be the first hosted SaaS software. Not true! We have for a while. But Workday was the first one to be really rigorous about it, and caused their competition, SAP, Successfactors, and Oracle, to line up behind them and into the cloud. I remember vividly, as I’m sure Brian does, hearing Larry talk about how the cloud sucks, and Oracle’s never going there, and they’re certainly there now.
Brian Sommer: I also remember them, how Brian’s talking about how multitenancy was a bad idea, and we go on and on. As far as their relevance in the marketplace, I would argue they were formed in 2005, and what was also really interesting is unlike so many of their competitors, they have the luxury of not worrying about bringing along an install base of customers who are on some very old, antiquated products and trying to help them step-by-step, through a thousand of incremental marches, modernize their applications. That’s really tough and expensive for customers to do, and it’s also tough for a software company to do it, because they’ve got so many other customers out there running on so many different versions. If workday becomes a multitenancy, essentially, probably 99.9% of all their customers are running on the current release within probably 60-90 days of the new release coming out the door. That’s the value and the beauty of it.
The other thing I think is really important for people to realize, is that Workday was actually built using a memory database technology. They have subsequently added additional capabilities for Hadoop, and they even used the traditional relational database storage mechanisms for persistent storage. But this was a product that was designed for a much more modern era. It was not designed backward-looking when technology was so constrained, and there was no, you know, you have this ability to process vast amounts of information, in very different ways than what you did before with the old legacy products.
Bill Kutik: Brian, how did God manage to create the universe in seven days?
Brian Sommer: They started that in 2005.
Bill Kutik: No, it’s a joke Brian. And it’s because he had no install base.
Brian Sommer: Yeah.
Bill Kutik: So, a clean sheet of paper is a luxury that companies occasionally have, and it’s pretty great!
Jason Averbook: And Michael, if I could just get a word in, which I know will be hard for me. I’m going to be like, which debate camp will be hard for me. I think it will be hard for me. So, I’m going to need your help with that. I think the biggest thing about Workday that’s most relevant, and the technology stuff aside because the technology is really important, is Workday is the first organization, the first vendor, that actually brought the work to the worker. We tried with little things like self-service, we tried with little things like pushing things out, but the cloud and the concept of the cloud, where I didn’t have to install software on devices, I didn’t have to think about it, and I actually designed the software for the worker: not for the HR function, not for the design function but only for the worker. Workday said, and the have that realization, that the only way I’m going to get good data from an HR and finance standpoint, is if I design the applications from the worker into the HR and finance function, instead of the HR and finance function out to the worker. To me, that’s a hallmark of what Workday brought to us. The whole market has followed the law, in its own unique ways, but to me, that was the hallmark of the Workday solution.
Michael Krigsman: But Jason, Workday was not the first SaaS company, so maybe put a finer point onto what they did.
Jason Averbook: Well I think what’s very interesting, and it’s a great, great point. Thank you. Workday wasn’t the first SaaS company, but Workday was the first SaaS company that actually designed their solution. Once again, like I said, for the worker not thinking about the HR department and the finance department first. So the first SaaS company took old software and put it online; put it online in the SaaS world; took old processes and put them online in the SaaS world. What Workday did is Workday actually reimagined those processes, put them online with the worker being the center of it, and then having HR and finance be there to consume that data and to use that data in a way that drives business decisions.
Brian Sommer: Michael, if I could go back on one. You asked the history, the historical perspective on why it’s important. I think anytime Dave Duffield decides he’s going to get into the software business, it’s going to send some shockwaves to the market from their competition, because Dave, this is his fourth HR software company; Information Associates, then you get Integral, then you get PeopleSoft, then he has Workday, and …
Bill Kutik: There’s actually a fifth, Brian, but not worth talking about.
Brian Sommer: Ok. But the point being that the guy’s always been successful with these things, and every time he did it, it would then cause a loss of market share, or whatever, for some of the established vendors in the market. And it was also interesting because when he would do these things, it usually coincided with signal changes in the way that technology in this space is moving their offering. And you know, PeopleSoft really made its hay during the client server age, Workday in the cloud age, you could go backwards in support. I think, I don’t want to under-appreciate the importance of what the original founding team behind Workday did, and that it basically created a whole new kind of business, even using some of the talent and brains that had successfully built some of the other companies before.
Jason Averbook: And Brian, as someone who was there from a PeopleSoft standpoint, I think one of the things that Dave, and Neil, and that team is they learn brilliantly, from I’m not going to call them the mistakes, but from the technology that they were dealt with at the time when we built PeopleSoft to where Workday is now and the technology that it has available. They haven’t just taken it and said, “Hey, let’s move it over to the new technology.” They actually did it in my mind a great job of learning from the mistakes, and those mistakes being, “Let’s not customize everything so I can’t upgrade it. Let’s actually not build point-to-point interfaces but let’s truly think about integration in a unique and different way, and let’s truly think about how we design a solution that focuses on, like I said, the worker, not on the function.” And I think if you think about those three things that Workday’s done a great job of saying, “What can we learn from where the ERP space was, to now where the ERP space is today?” And what that’s done, is it’s brought the rest of the market up in a tremendous way. That whole Workday play has made us all better from a tech and consulting standpoint.
Bill Kutik: Jason you were there at PeopleSoft and you’re probably aware of the fact that PeopleSoft did commit the mistake you just described. They took basic functionality from integral and slapped it into client server without really redesigning it or making it special or different, because of the technology. This is not a mistake that Workday has made. Workday has really used the new capabilities of the technology that it has to do what you just described doing. Although, I’m not sure they were doing that from day one, I mean you’re very eloquent as you are on Firing Line with Bill Kutik about this issue of the work being brought to the workers. Was that true at Workday early, early on? I mean it’s certainly true now.
Jason Averbook: I believe it was a core design principle. I think that PeopleSoft and employee management self-service wasn’t going to work the way it was being pushed out; the adoption wasn’t there. We have to think about the experience; the experience of the worker at the core, and I think that’s just a different design principle that was from day one at Workday. And it still holds true today. And like I said, let’s not just talk about Workday, but now the rest of the industry has followed a lot. I give them credit for truly ushering that into the enterprise space.
Bill Kutik: I wouldn’t deny them that credit either, but I would point out to Brian, which he already knows, but to the audience, that though Dave started it, and Dave is the first one to tell you that he’s a technologist, and he’s now a functional person, and that new technologies get him excited, which is what happened at PeopleSoft, what happened at Workday. He’s pretty much been not terribly involved in the company for a good five years, and while he was once co-CEO with Aneel Bhusri, he’s no longer that, and I don’t know, is he still chairman of the board? But, it is Aneel’s company now.
Michael Krigsman: Right. But guys, let me ask you a question. So, you were talking about placing the customer at the center of the world, and I’m really interested in the corporate cultural dimensions of that. Why didn’t earlier software companies take that step? Is it a function of technology? Is it a function of the corporate culture? So maybe just your thoughts on that point, please.
Bill Kutik: I don’t know why other companies didn’t do it, but Workday truly does have a unique culture, similar to the PeopleSoft culture, which Dave will say, puts employees first. Every other company will talk about how they put customers first. Workday says “Employees first, because if employees are happy, they will make our customers happy.” And the fact is, at the last rising, Aneel announced that they got a 98% customer satisfaction rating from some outside agency…
Michael Krigsman: I’m sorry, that’s Aneel, for the people who don’t know …
Bill Kutik: That’s Aneel Bhusri, the current CEO of Workday.
Michael Krigsman: The current CEO of Workday, yes.
Bill Kutik: They got a 98% customer sat., and I would challenge any software company in the world to meet that! I mean, software, particularly enterprise software is usually something you’re pissed off about, not something that you’re happy with. And so, I think that comes from the culture and other things.
Brian Sommer: You know, let me pile on a little there. Customer satisfaction, or net promoter scores and the ERP space are notoriously terrible. And they’re terrible because either the products were a whole lot more expensive and more difficult to implement than anybody actually believed coming in, or more importantly, the vendors have such a notorious culture going for after their own customers doing what an attorney friend of mine calls “shale fracking,” they try to go in there and break up the wallet of the customer and get every little drop of money they can out of them. You’ve got a lot of Workplace customers who’ve been exposed to relentless numbers of software audits in the past by some of the older vendors, and they hate those vendors for that reason. They don’t like them during the depths of the recession in 2008, of 2009, of 2010, when companies may have lost half or two thirds of their revenues, and/or their employees, and they still couldn’t get a break from the old, established vendors on increases in maintenance costs and everything else.
There’s a reason why the customer sat. scores are so low in the competition. Workday, because of the way it’s subscription-based technologies are priced, is based on the consumption. Yes, they do have some long-term contracts they’ve cut with some customers and so forth, but as long as they don’t get greedy, they probably have a really good chance of keeping a really happy, satisfied customer. Now related to that, they continue to keep pumping out releases at a relentless pace, even though they now bundle them down to, like, three good ones every year. The fact that people get a lot of good, new functionality quite frequently and that the vendor is maintaining that version of the code for them, instead of their IT department, you’ve got customers that are very happy because they never have to wait on their own internal IT department to implement this backed up technical data. So it’s great!
Jason Averbook: Michael, if I could, I mean I think the thing that’s really important here, and Workday was one of the first, and you’ve seen vendors follow along with this. In the SaaS space, what I have to do is I have to drive customer satisfaction, and not customer satisfaction at the level where, “Hey, I’m mediocre, I’m okay with the software.” I have to drive customer satisfaction in a “customer love” kind of way. “I love” is a soft, touchy word for your show, that may not be used a lot, but in this case, I have to get my customers to love me. Dave Duffield and Aneel Bhusri and what Bill says Dave hasn’t been involved for the last five years. Dave still lives and breathes in many of the people that every single day wake up to make their customers love.
Bill Kutik: They’re absolutely right. You go to Rising, and you feel like you’re at a hippy love-in.
Jason Averbook: And by the way, a lot of other vendors in the space have gotten a lot better at this. So, I don’t think this is a … I mean, workday is great. As a former PeopleSofter, I feel the same way, but now we’re starting to see other vendors learn from it that in a SaaS world, I don’t drop of the software and leave. In a fast world, I have to make sure that I am keeping the customer happy. And if I am not keeping the customer happy, and in lots of different ways, that customer’s going to fall back to mediocre, and there are too many choices in the market today.
Michael Krigsman: Okay, but guys, wait a second! Wait, wait, wait…Wait a second. Hold on, hold on. As the moderator, I’m going to take my privilege and jump in here. So, yeah Workday is great, but was Workday built by God? I mean, nothing in life is perfect. So what are the challenges that …
Jason Averbook: Yeah, Michael so if I can get started, I mean, this was turning into a little bit of a Workday lovefest, which is not good for anyone. Because while Workday has done a lot of these things, anytime you’re rolling out enterprise tools, I always say it’s like an organ transplant. You’re basically taking out an organ and putting in a new organ. You’re doing a heart transplant. And if you think about all the things that are connected to the heart, it’s crazy! Absolutely crazy. So, when we think about Workday, what Workday is, you have to think about Workday as a core solution for HR and finance that serves as a master data tool. Now, it has so many other things that it touches, that where Workday itself doesn’t fall down, but where it falls down in the customer’s eyes, is when the customer starts to implement it without a given strategy, without the skills to sustain it, without the concept of being able to run and optimize it, and innovate it consistently. And when you have systems integrators that jam it in to go live an X period of time, without thinking about what the bigger, longer outputs are, that gives Workday a black eye. And I always say this to my clients, that the easiest person to blame in all this stuff is the vendor. Why? Because they’re not sitting in the table, they don’t have feelings.
So, there’s lots of things that Workday needs to do to make sure that it’s ecosystem gets stronger. There’s lots of things that Workday needs to do to make sure that customers adopt more. But, I think that’s something every single SaaS provider needs to do. So no, Workday is not perfect. Not all their capabilities are strong, let’s say global payroll is not as strong as X and Y and Z, you have to think about fit for your organization. But that’s something you have to do with every enterprise tool, every heart transplant you’re doing today.
Bill Kutik: Michael, I’ll tell you something else that’s wrong, and it’s so oddly a repeat of a bad development at PeopleSoft. There was a moment at PeopleSoft when the salesmen got so arrogant that when a selection committee cut them out, they would go over the committees head and say, “Hey! Your committee doesn’t know what they’re doing! I’m PeopleSoft! They just got rid of me!” Well at Workday now, there’s the feeling of foot that everything we do there is perfect, and everything we do there is first, and nobody else is doing it, and nobody else could possibly compete with us. And, I fear for them, that that may lead to the similar kind of arrogance, which there’s a lot of strong DNA passed from PeopleSoft to Workday. Incredibly strong, not to mention the number of people there who’ve worked at PeopleSoft. And you know, they should be on their guard against the bad things they know happened.
Michael Krigsman: That is always a risk for success. For anybody that is successful. Workday emphasizes its platform. It’s not the only software company to do that, but it really presents the platform in a central way. So, what is the importance of platform? Why is it important to Workday? Why does this matter to customers?
Brian Sommer: I’ll weigh in on this. On the platform: theirs is an interesting one, in that it predominantly uses a number of open-source technologies, which gives them an incredible cost advantage over competitors. They can scale and add customer, after customer, after customer and they owe no additional fees to some third-party systems software company. So that’s a good thing. Number two is the platform only really has to support one technology stack and one set of code. So, many of their competitors have multiple different product lines that they’re supporting. In some cases, one vendor has promised to support old applications on the old platforms in perpetuity. That just adds cost to the vendor. Cost, you’ll have to get eventually passed down to the consumer or the customer, or whatever you want to call the vendor. They don’t have that. They’ve got one stack, one set of technologies. And the architecture of this stuff, to run predominantly in memory. So now, they’ve run all these additional extensions so that the product line can support other types of data, not just structured, heavy order kind of database transaction and information.
With that, there’s been a big push from customers and integrators. They wanted Workday to open up their platform for years, so that third parties could start building extensions or wholly surround-sound kind of applications around the Workday suite. And based on what we heard at Rising a couple weeks ago, it looks like they’re finally coming around to opening up a platform for third parties, which I think will usher in an interesting new generation of new, additional add-ons that will drive sales for the company even further.
Bill Kutik: The other thing that’s impressive is with their object-oriented programming, it makes them very nimble in creating new applications as for instance, they just created a video function which will be used in learning. You know, the five minute video’s considered the sine-qua-non right now of learning objects. And then they immediately said, “Well, after we’ve used it in learning, we’re going to put it in recruiting.” And I haven’t seen other vendors be that nimble when they create new functionality. And Workday does that all the time with reusable pieces.
Jason Averbook: And Michael, could I just add one thing real quick? On the platform? Real, real, real, real quick? The concept to me of platform really ties into the fact that the worlds of HR, finance, and IT have shifted, And what the platform allows is it allows that shift to happen. So in my old world of applications, and this happened across the board, where 10% of the deployment responsibility was from the function, 90% was from IT, what the “platform” to me has done, is it allowed 70-80% of responsibility to go to the function. The people that are truly establishing business rules, the people that need that agility, and then 10-20% tying back into IT being able to support it. It allows HR finance to have much more control over how its processes and tools work, and allows IT to be much more strategic in how it supports the enterprise. I think that right there is the holy grail of the platform.
Michael Krigsman: And we have a question from Twitter, and this is actually from the hacked CXOTalk account, which is being managed by my friend Elizabeth Shaw. And Elizabeth is asking, “What is the role of technology in driving your supporting workforce stability and improving the workforce? And are there other factors that are really more important than technology?” So the relationship between technology … So, in other words, why should we really even care about all this?
Jason Averbrook: So Michael, if I can just jump in real quick, 90% of a deployment of a solution has nothing to do with technology. It has to do with process, it has to do with change, it has to do with culture, it has to do with marketing, it has to do with what my processes around HR and finance stand for? But at the end of the day, the way to get stuff done is through technology. The way I touch the people is through the technology. So, complete … her comment is so spot-on. You have to have that process-people aspect in everything you do. And you have to have it formed up-front. And the technology is just there to support that and deploy that. So, it’s totally important. It’s totally important to create that experience that you’re trying to create from a people and process standpoint. But know that technology does not create that.
Brian Sommer: Yeah, but what will happen with all this new technology, just putting the microscope on the HR functional: if you look at all of what’s in the stack that Workday has with all their in-memory and other capabilities, they have the ability to incorporate huge amounts of outside, non-transactional data. And they have this technology stack that could be exploited by HR groups that have more skills than just filling job slots that the recruiting function is responsible for. If they have more data scientists they can do more algorithms, more analytic tools, they can do a better job of identifying and coordinating talent that they want to bring into the company. And, in fact, they’ll be managing things that require knowledge of algorithms, artificial intelligence, machine learning, and on, and on, and on. You know, the point of this is not to do a recitation of three-letter acronyms, but it’s to point out that the HR function, the people within HR, are fundamentally going to be changed. Either they’re going to have to acquire new skills themselves, or they’re going to have to bring different kinds of people into HR to use some of these new technologies. And if you only look at products like Workday, or any of the newer solutions in the HCM space, or finance space …
Finance is actually more intriguing in that regard. You tend to lose sight of the fact that … We’re not here to automate just the old accounting transactions anymore, for example. We’re actually here to stop major fraud in a company, and the way you do that is by analyzing a whole bunch of other data that never made it into a general ledger in the first place. And that’s where the future’s going to go, and that’s the interesting people impact of these new technologies, is around the new uses of the new capabilities that these newer platforms can deliver.
Michael Krigsman: And what about the fact that you have… So Workday has got HCM, it has financials, it now has learning as well. And, Workday Student. But, focusing particularly on HCM and financials for the moment, what are the advantages of having them integrated into a single platform?
Bill Kutik: Well, they … The newest application from Workday is called simply Planning. And it for the first time for them, incorporates elements of HCM and finance into one application. And, it makes perfect sense, I mean, how can you be deciding to hire X number of people without knowing the financial repercussions of that? How can you know whether or not you can afford to hire Y number of people without having the finance behind that? The fact is that HCM finance has been sold as a bundle since mainframe days, I mean, last 40 years, and that continued during client server, and then there was a pause, a little pause, during the cloud because HCM got to the cloud first, and finance didn’t get there for another three, or four, or five years. But, those two that have now been rejoined in the cloud, and Oracle’s suddenly selling them together, and Workday’s working very hard to sell them together. I’d say these success factors have some elements of complexity with its SAP install base, but it now has the multitenant version of finance that it’s selling with its cloud HCM. So, it’s sort of the most natural order of things in back-office software for the last 40 years.
Jason Averbook: Yeah, and Michael, I think what’s really important about this topic is we’re onto the next generation of what this means. So, before, in the ERP space, this meant interfacing data from solutions to solutions, or maybe if we’re really sexy, integrating data from solutions to solutions.
Michael Krigsman: I like that. Interfacing vs. integrating. I won’t even ask what that actually means, and I’m sorry …
Bill Kutick: [unintelligible] … mainframe distinction.
Jason Averbook: But Michael, hold on! We live in a world today where employees don’t work in modules. The workforce doesn’t work in modules, the workforce works in processes, and the only way to integrate processes together truly, is if they’re in a single platform. We can interface data all day long, but to integrate processes to create a seamless experience, that is hard, hard stuff. And it’s something that people shouldn’t discount. Whether it’s Workday or any of these tools, when they think about platforms, why should things be in one platform? An integrated experience is key.
Brian Sommer: I’m thinking… Okay. You know… But I think my learned colleagues here are maybe giving you the quick textbook or elementary school version of the problem.
Jason Averbook: Well that’s all we can speak, Brian, compared to you.
Brian Sommer: Well …
Michael Krigsman: And I know …
Bill Kutik: I’ve been in this for 34 years, Brian, tell us the revealed truth!
Jason Averbook: You’re the one that’s in the tie, my friend. You’re the one that’s in the tie.
Michael Krigsman: But he’s not wearing a jacket, and Brian, you should not let your learned colleagues fall back on jargon and intellectual cliches. You should never let that stand.
Brian Sommer: What’s really going on here, guys, is businesses today should never be buying a bunch of little best degree stuff in the finance and HR area, unless it’s for some peripheral, small add-on piece, and here’s why: Moving forward, what businesses want out of a toolset is they want a single place to find operational, financial, human capital, as well as big data and a whole bunch of other external stuff. Unfortunately, in a lot of companies, they’ve got 20-30 years of experience building what I would, if I could use the British term, a “dog’s breakfast,” lightly, loosely integrated, spreadsheet-ridden junk.
Michael Krigsman: Ok, hold on! I just need [you] to repeat that back, just to make sure we got that, and I quote: “A dog’s breakfast” of speadsheet-ridden junk.
Brian Sommer: Right. And so, you’ve got blatant piles or islands of data, stuff that’s being pumped into spreadsheets, and manipulated, and re-pumped back into something else, and that’s in the existing finance and HR world. And then when they try and go shop for new software, God help them if they recreate that same, loosely-interfaced kind of world together, when what they really need is they need to get as much integration as they possibly can from a core provider of all the ERP stuff they can get, because they’re going to have to now connect those technologies to weather data, to geopositional data, to smartphone data, and to a million cloud solutions that are powering their employees’ mobile devices among other things. So there’s social sentiment data. I can show you guys, line-by-line on a PNL, just about how to use big data to do a better job of planning and forecasting and doing your budget than what companies do today, which is rely on, “Let’s take last year’s number, add 6% to it, and tweak it a little bit.” That’s terrible. So, we need to get out of this thinking about having a bunch of disconnected finance and HR kind of products. Yeah, go buy all that you can from a single vendor, because your world is going to get changed by all the other sources of data that you’re going to need to integrate in there.
Jason Averbook: And Brian, what’s the opposite of a dog’s breakfast?
Brian Sommer: Nirvana.
Jason Averbook: Okay. So, in this world of Nirvana that Brian speaks of, the future is all about, and Brian and I, you and I tweeted about this a little bit yesterday, is all about using these AI tools, this box. And in order to use these tools, and once again, not to say HR is turning into AI or Box, but what’s really important is these tools rely on data. And what Brian is saying is if we’re going to use these sexy new tools, some of the shiny objects, or like I said on Kutick’s show, frosting on top of a cake, I have to have data in a single place so those tools can consume it. And I think that’s what we’re going to see more and more, as people look at a platform like a Workday or another one of these SaaS tools, so they can make sure that this data is right and then take it to the next level of service in Workforce.
Michael Krigsman: So Bill, we’ve got less than ten minutes left. And, what advice do you have for people in the enterprise who are looking at these products, who are looking at Workday, looking at others who are being told on the one hand, by some vendors, best of breed is the only thing that is going to save you! And other vendors, like Workday and there are others saying, “The platform is the only thing that’s going to save you!” What should we do?
Bill Kutik: Well, it’s not as crucial a question as you might think, Michael, because Workday has 100% mindshare in HCM, and any large company that thinks that it’s time for a change, Workday is on their list. In finance, things are slightly different.
Jason Averbook: Bill? I don’t want to interrupt you, but wouldn’t you say SAP and Oracle are also on the list?
Bill Kutik: Oh yeah! Of course SAP and Oracle are on the list, and they will be considered, but I think Workday just gets on there first simply because it’s sexier, it’s newer, it’s made a bigger splash.
Michael Krigsman: They’re all platforms, though.
Bill Kutik: I’ll include that. I think the big problem in finance, and Brian will back this up I’m sure, is that the finance guys have had the budget for years, so they got no pain points with their software because they’ve been getting exactly what they want, because they have the money to pay for it. And, I understand, Brian can probably tell me…
Michael Krigsman: But they’re also completely risk-averse, I mean, finance… talk to a payroll person and say, “Hey! Would you like to change over payroll systems?”
Bill Kutik: No way! And, I understand also that they’re still not sold on the cloud being the next generation computing, right? How are they?
Brian Sommer: Well, funny you bring that up, Bill, because in some of the selection work I’ve done lately, I have a … I rented a lot of aging boomers who were about to retire, and their CFOs and controllers. And one of them sat me down the other day and said that he wants to retire, but he will not retire until the finance technologies have been modernized. And, his view, that he would not have been a good steward of the company because, or the finance function, because they actually have more spreadsheets, more old junk than everything else than they had when he got the job, and he needed to change that. Their company, in fact, had failed to complete two big acquisitions in that last year because their old technology, while it felt like a comfortable, broken pair of shoes, just wasn’t up to the task of twice the volume of transactions they would have going forward. So, I think there’s a lot of introspective work going on with a lot of aging out boomers, who are looking at some of their finance operations and asking themselves, “Have I been a good steward of the company?” And if they haven’t they’re going to be looking at new technology, because they cannot keep continuing with all of the stuff that may have got them through the recession, but isn’t going to get them going any further going forward.
Michael Krigsman: Jason, your advice for people who are looking at the enterprise… Your advice for the enterprise buyers: What should they do? How should they make sense of all of this?
Jason Averbook: Well, Michael, I think that what’s really important is that organizations look at right fit versus future function. I think we spend way too much time on future function, and we spend way too much time on RPs, I think we spend way too much time on saying is this vendor, is this vendor, is this vendor ready? I think if we look at the top three vendors in the space, they’re all ready, and they can all do this. I think what’s most important is how am I … I’m basically renting someone to move into my house. That’s a weird way to say it, but I’m renting someone to move into my house. And as I do so I’m going to be like, “What’s it going to be like to live with them? Do I have the ability to sustain them? Do I have the staff to sustain them? Every vendor talks about analytics, do I have anyone who even knows what an analytic is and how to read it?” I mean, there’s so many different things to me that tie into the solution other than future function. Do I have an IT staff than can support what I’m trying to do? Do I want HR and finance staff to do more configuration than the average IT staff? All of those things are important, and then, we haven’t even talked about price until cost of ownership, I mean, we’re not even going to have time to get there, but that’s another component. Where am I coming from? Where am I going? How am I going to think about TCO, because each one of the big three are completely different from a TCO standpoint.
The last thing I’m going to say, Michael, is about best-of-breed. I don’t think you rule out best-of-breed completely. I think that there is a space for best-of-breed, and I think you have to look at best-of-breed and say, “If best-of-breed drives a competitive edge, or a competitive advantage for me, that I can’t get today, I can’t get today from my platform, I’m going to put in a place, until I get the platform to where I need it.” So, you don’t say “No best-of-breed,” you say “When best-of-breed” and “How long best-of-breed,” and I always call it a “bridge to somewhere,” which is where am I going in the future.
Michael Krigsman: Bill Kutik? Thoughts on the bridge to the future for buyers?
Bill Kutik: Well, I’m not as sanguine about best-of-breed as Jason is, because the fact is that any small benefit best-of-breed may give you is going to be copied by the integrated guys in a reasonably short period of time.
Jason Averbook: But what if I need it today?
Bill Kutik: You need it today? Then if you can rent it for six months, sure.
Jason Averbook: If I’m going through a talent crisis, do I say, “Oh, sorry! I have to wait for my vendor!”
Bill Kutik: Right!
Jason Averbook: Do I want to take care of that talent crisis?
Bill Kutik: No, obviously get it today. But, how many best-of-breed vendors are there left out there, that really do it significantly better than the guys who are offering suites? There aren’t that many. And I was recently at…
Michael Krigsman: Touché, Bill; touché, Bill.
Bill Kutik: Sorry?
Michael Krigsman: I said “Touché for you!” That’s right.
Bill Kutik: I was recently at a recruiting vendor’s analyst day, and they had one of the customers there talking, who happened to be a Workday customer. And she said, “Oh, it was clear to me that they didn’t care about learning. And it was clear to me that they didn’t care about recruiting.” And I wanted to grab her by the shoulders and shake her and say, “You’ve got to do something last. Just because they did recruiting and learning last doesn’t mean they don’t care about it.”
Jason Averbook: Bill, I mean, I want to hear Brian talk about this also but these are names of modules. You’re talking about recruiting and learning as a name of a module. I’m talking about deep capability. Am I really developing the stuff today that recruiting and learning needs? These people get there. They’ll all get there. But today, what they need? Brian, like the finance space like expenses, huge area. I mean procurement, huge area. I mean, where do you tell Brian where people say, “Go with best-of-breed versus platform.”?
Brian Sommer: The counsel to those companies is always try and get as much as you can through the core vendor, and then you’ll have to probably round out for some of the other stuff that’s best-of-breed. And that’s different than what we probably espoused for strategy for years. And, someone was making, well it probably was Bill, you know, people buy software as kind of a discrete, point-in-time event that may come up only every ten years or so. And, they can only choose what is available at that point in time. If it happens to be that a software vendor is in the middle of remodeling or retooling its product line, well, that vendor probably won’t get the business during that changeover. It is what it is. It’s a point-in-time decision.
Michael Krigsman: So guys, we are just about out of time. Would you like to each take ten seconds and just add your final, final thought? Bill, why don’t we start with you? Literally just a tweet. A tweet-like statement!
Bill Kutik: Sure. I’m never again talking to my good friend Jason Averbook, after what you said.
Jason Averbook: Wrong! [laughter]
Michael, I think that because this topic was Workday, I think Workday has changed the enterprise software space forever. I think there were a lot of doubters at first. I think it changed the space, and it’s made the space a whole lot better, as far as how it’s working with customers.
Michael Krigsman: Alright. And Brian, you’re going to get the tippy-tippy last word.
Brian Sommer: I think the fun thing to watch in the next few weeks, months, and years to come will be the changes around the ecosystem around Workday, and we should expect to see a whole new list of characters who will come in to help customers implement this stuff, given that so many of the initial ones have already been acquired. So I think we’re going to see something cool happen there as well.
Michael Krigsman: Fantastic. What a great show! You have been watching Episode #201 of CXOTalk, and our focus has been an industry analyst perspective on the software company Workday. We’ve been speaking with three, and this is literally true, three of the top, most well-respected industry analysts covering Workday, covering this field in the world. We’ve been talking with Bill Kutick, we have been talking with Brian Sommer, and we have been speaking with Jason Averbook. Gentlemen, I just want to say a hearty thank you. Thank you all for taking the time.
Jason Averbook: Thank you for having us, Michael!
Brian Sommer: Take care, guys!
Michael Krigsman: And, with that hour episode, tune in tomorrow when we will be speaking with Oliver Bussmann, who is the former head CIO for the huge UBS bank, and now is a major expert in fintech and blockchain, and new technologies relating to financial services, so that is tomorrow, at 1 o’clock Eastern Time for Episode #202. Thanks so much, everybody! And especially I want to thank Livestream, because Livestream provides our video infrastructure and man, those guys are great. And so, if you need anything to do with livestreaming video, conferences or internally, you should talk to Livestream. Thanks a lot. Bye-bye!