Flextronics will install Workday's on-demand human capital management software for 200,000 employees.
According to InformationWeek, Workday beat out SAP and Oracle for Flextronics business in what Mary Hayes Weier described as tipping point deal for SaaS. Workday also won a 26,000 employee deal with Chiquita.
InformationWeek quotes Flextronics CIO David Smoley:
"HR should be simple. When you look at the usability of Workday it's a natural compared with traditional vendors that make it incredibly complex to implement and make changes."
So what about this tipping point? Two thoughts: First, the Flextronics deal is clearly a tipping point for Workday, the brainchild of former PeopleSoft founder Dave Duffield. In fact, Workday really resembles PeopleSoft in its early days. PeopleSoft specialized in HR and financials. So does Workday. The founding father is the same person. And both companies had good timing as they were founded just in time for a shift in the software model.
Vinnie Mirchandani outlines the Duffield magic:
If you have met Dave, you know he is genial, very untypical of a tech zillionaire. Someone who strives hard to live up to his initials - DAD. Still gets nervous before a speech. But underneath it all, there is a competitive streak.
As for the second takeaway it's clear that SaaS is moving upstream to large companies. Salesforce.com has increasingly been landing big companies as customers. And for categories that don't offer competitive advantage like HR and CRM SaaS makes a lot of sense.
(The Workday deal) is a definite shot to the On-premise wheelhouse. Given that it’s a Human Capital Management deal, it’s also kind of a shot in the wheelhouse for the other SaaS HCM vendors like Taleo and SuccessFactors. The system replaces 80 disparate HR systems deployed in 30 countries. This is the kind of job SaaS is ideal for. Getting through such a blizzard of legacy systems takes some real streamlining if you’re going to live to tell of the story. The savings potential on such projects is enormous, but the risks around a conventional On-premise install are what led to the phrase “boiling the ocean”. Choosing SaaS minimizes that risk.
What remains to be seen is whether ERP suites go SaaS. But it's probably just a matter of time before SaaS becomes a viable alternative for other enterprise apps. There's a reason SAP is building an on-demand ERP suite.