Workday announced its second-quarter earnings this week and while the numbers slipped Wall Street's expectations a bit, a conference call with executives revealed a number of interesting takeaways for customers, prospects and competitors of the company. Here's a look.
Big Wins in HCM: Workday discussed its recently inked deal with IBM, that will see Big Blue use its HCM software to manage a number of HR processes. IBM has more than 350,000 workers. On the call, Workday executives revealed that Dell is now using its software for more than 125,000 employees in an expansion of an existing agreement. New HCM wins included Kering, a luxury goods maker with 47,000 employees.
Financials Rising: Workday's financial management module has apparently reached a point of maturity that is helping accelerate its growth. Nearly one-third of new Workday customers in the quarter purchased financials, CEO Aneel Bhusri said on the call. Bhusri also claimed Workday's win rates in competitive deals are "similar" to its win rates in HCM.
Moreover, Workday has an increasing number of lighthouse financials customers in the pipeline, he added. However, co-president Phil Wilmington acknowledged that financials deals aren't necessarily easy to win, and that Workday has a "long grind" ahead of it in financials.
Workday believes its new planning module is helping accelerate bigger and broader deals, Wilmington said:
Organizations don’t think of it just as Human Capital Management solutions or just as financial. What are they spending on money on? They’re spending their money on their employee base.
They’re trying to plan for that process. They’re trying to be predictable. All of those things are brought together through planning, forecasting and budgeting. The line is blurred between what’s HCM and what’s financials to the CFO or to the executive team.
Deep Pockets: Workday has made a number of strategic acquisitions, with a recent one being big data player Platfora. Although borrowing rates remain extremely low, should Workday decide to fund any other new deals from its reserves, it seems well positioned with $2.1 billion in cash and marketable securities in the till.
Midmarket Customers Betting Bigger on Workday: There were a "healthy number" of platform deals in Q2, primarily with midmarket customers, which Workday defines as companies with 10,000 or fewer employees, Bhusri said. He characterized NetSuite's partnership with Ultimate Software as a reaction to Workday's success in combination HCM-financials deals, adding that the pact seems up in the air now that Oracle is buying NetSuite.
Another featured item at Workday Rising next month will be new tooling that Bhusri says can bring down implementation costs by more than 50 percent. "Those tools are the critical piece for us to be more successful and gain even greater market share in that midmarket," he said.
Knocking the Oracle-NetSuite Deal: Like many observers, Bhusri long expected Oracle to buy NetSuite. But he called the deal "puzzling" and likely a good thing for Workday:
When you look at Oracle’s traction in Cloud applications and you listen to how their leaders talk about it, it’s primarily a mid-market phenomenon and I can just say from the Workday perspective, Oracle doesn’t compete well in large enterprises because their products are not proven at scale.
So they seem to be doubling down on the mid-market with an acquisition of NetSuite.
I’ve got a lot of respect for what they’ve done in that segment, we do bump into them. I think more than anything else it calls a question whether Fusion actually was working and whether this becomes the primary platform for Oracle Apps going forward because otherwise it’s thoroughly confusing and confusion is very good for Workday.
The Platfora Play: Workday has big plans for Platfora's technology and will feature it during the Workday Rising keynote next month, Bhusri said. On the engineering front, Workday plans to make Platfora work "in a true multi-tenant cloud environment," but has no intention of rewriting the core software:
The Workday analytics are very powerful, but they’re really good on Workday data, and as we're trying to move into this big data world where companies want to bring in third-party data, we felt like we needed a data discovery and insight tool that can help us do that.
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