Imagine a place were companies can access the latest HR and finance software tools without having to pay hefty license fees and endure lengthy installations. Welcome to the world according to Workday.
The firm, which specialises in Software-as-a-Service solutions for the management of global businesses, currently has around 280 clients, including mid-size enterprises to Fortune 50 Operations, all of which can take advantage of Workday’s cloud-based systems as an alternative to antiquated ERP services. Indeed, Workaday prides itself on updating its software regularly to make sure it’s clients are always ahead of the game, and this could be the secret to its continued success.
This success may also hinge, in no small part, on the fact that the business was founded by former PeopleSoft CEO Dave Duffield and Aneel Bhusri, who have brought their considerable experience in Human Resource Management Systems (HRMS), Financial Management Solutions (FMS), Supply Chain Management (SCM) and Customer Relationship Management (CRM), to the Workday table.
Following an impressive stock market debut which saw Workday’s stock soar to $7.8 billion, founder and former PeopleSoft exec Bhusri believes Workaday are in a great position to challenge more established providers, who, he says, offer a ‘mishmash’ of different kinds of software and that are using their size and power to coerce companies into buying whole suites of solutions from them.
Increasing Revenues and an Increasing Workforce
Despite the fact that Workday lost around $47 million when it floated, it has managed to accrue $120 million in revenue and these figures are predicted to increase. Many industry experts feel that Workday’s annual turnover will continue to double for the foreseeable future. This makes them extremely attractive to investors, potential employees and clients.
The company makes its cash by selling subscriptions to software and services, rather than simply selling software. All payments are agreed up front when a new customer signs on the dotted line, but any associated revenue is recognized over the life of these agreements. While the company doesn’t expect to be profitable right away, this doubling of revenue in the six-month period that ended July 31 2012 certainly inspires confidence and despite its recent success, Workday is not ready to rest on its laurels just yet.
According to Bhusri, this IPO signals the completion of a four-part model of cloud-based enterprise software. The first looks at customer-facing technology, such as that offered by salesforce.com, while the second looks at internal processes. This is the space in which Workday currently sits.
The IT automation cloud is the third cloud, while a fourth would comprise industry and business-specific programmes developed independently or by in-house experts.
Sounds like common sense doesn’t it? Bhusri certainly thinks so: “From a customer standpoint, if you can get the best of breed from each, throw in Google for e‑mail and documents, how is that not better? How is a large vendor going to compete?” he said.
Following the flotation, Workday has shown it can take on the big boys due to its commitment to cloud-based solutions and the fact that it’s constantly upgrading its services and improving its clients’ systems. The apparently endless potential of the cloud as a place in which to do business means that if it keeps its eye closely on the cloud and carries on developing those innovative solutions, Workday should have Salesforce, SAP and Oracle quaking in their boots.
Glenn Solomon of Seeking Alpha said: “Investors are certainly excited about Workday. Duffield and Bhusri have done an amazing job building Workday to where it is today, and investors are betting the best is yet to come for the company. Entrepreneurs should learn from Workday’s success.”