Workday raises $85 million, fleshes out finance cloud
Workday opened its fifth Rising event with the announcement of $85 million in a series F funding. This brings the total amount raised to $250 million, valuing the company at $2.1 billion and puts Workday on course for a solid IP in 2012. Dave Duffield, co-CEO Workday said the company does not need the new funding but it provides customers with the comfort they will be around for years to come. But if that's all the 1,300 delegates had turned up to hear then it would have been a short conference.
My attention was on the Zuora and Tidemark partnership announcements. Up until recently, Workday has focused most of its announcements on HR. In recent months, that focus has been extended to include financials. Taken together, these represent the core administration functions that service organizations cannot avoid but which have been in sore need of a refresh for some years from the incumbent providers.
Larry Dignan has covered the main parts of the Zuora announcement. The importance of this deal should not be under emphasised. As part of a presentation I made to the company some weeks ago, we talked about the difficulty in developing solid billing applications. It's a topic I've discussed on my personal weblog. Billing systems represent a large whitespace that has proved difficult for enterprise app vendors to properly fulfil. There are so many different ways to invoice and every company likes to think their way is unique. Offloading that problem to a partner makes a lot of sense because it allows the specialist to do what they do best without it becoming a distraction for the main app developer teams. As a side note, the day I met with Workday, Zuora were presenting to the company. Things move fast in this industry.
On the Tidemark deal, I asked Aneel Bhusri, co-CEO Workday why the company would do this when it already has embedded analytics and has some outline plans for the future in this area: "Tidemark comes in where Workday leaves off [in budgeting, planning and forecasting] so it's a very good fit." During the keynote, Bhusri also pointed to predictive analytics coming in the future. Think maybe one year out at the pace Workday brings functionality to market.
The sense I got is that Workday is rapidly maturing its technology to position itself as attractive to the largest companies in the world. The fact it is working towards processing 100,000 person sized payrolls in the coming months from the current 35,000 person limit speaks to scale out and up as it seeks to attract those global 2000 companies. At the same time, picking off much needed integrations while not becoming distracted by attempting to boil the ocean or straining financial recourses is the logical way for relatively new companies to expand their reach.
Both co-CEOs packed a lot into the two hour keynote without managing to bore the audience into leaving. That's a rare feat when viewed against the backdrop of today's marketing led customer conferences. More telling was their willingness to hang back after the presentation and field questions from customers and prospective customers. They were not for being whisked away to customer selling sessions.
The pre-conference partner soirée saw Dave Duffield co-CEO welcomed to generous applause as he thanked Accenture for sponsoring proceedings. It is not without reason that Accenture, Deloitte, PWC and Wipro are taking center stage as sponsors for this event. These SIs have the most to gain from deals that see companies shift emphasis from managing all their systems in house to the cloud. It will be interesting to see how this shakes out. At the pre-keynote breakfast, I met with a prospect that has 50,000 under headcount currently looking at both Workday and PeopleSoft 9.1, They have been PeopleSoft users for 20 years. When I asked why they would consider moving, the answer was sharp and to the point: "If Oracle is abandoning PeopleSoft why shouldn't we?" On the implementation part of their story I asked what their thinking is on using the Big Four. Once again the answer was telling: "We're not sure whether these SIs have figured out what implementing for the cloud is about. We ran a governance project where the initial costing was $2 million. We brought it home for $250,000."
During the keynote, Dave Smoley, CIO Flextronics was streamed in. He talked about bringing his project home a year earlier than planned and well under budget. Some months back, a few of us met with Smoley. At the time, he was cautious about the outcomes of their Workday project, explaining the company has taken some big risks in deploying Workday. How things change after go live?
As he closed out the keynote Duffield showed how he uses his customers products and services in his everyday life. Apart from the 'let me share my family' feel good aspect, he made a great joke at Oracle's expense: "I wear Fusion moccasins I got from Zappos because I want to walk all over Fusion every day." Right at the end he gave his top ten tips about how not to be a good citizen of the cloud. Number 10: Invite Marc Benioff (CEO Salesforce.com) to speak at your conference....and then withdraw the invitation at the last minute." While these references to Oracle drew hearty cheers from the crowd, there is a serious intent here.
Most of the initial $90 million investment to kickstart Workday came from Duffield. In describing the course of inward investment since 2005, Duffield explained how he had to agree to investment from Graylock Partners in order to secure the full time services of Bhusri. "They're good partners nonetheless," he mused wryly. Workday is rapidly becoming a company that credibly competes with Oracle and SAP. In order to maintain that position, the company must remain independent. Given that both Duffield and Bhusri were part of the fallout of the hostile PeopleSoft takeover by Oracle, this may be one target that Oracle will not be able to acquire. At least for the time being.
Disclosure: Workday was a recent client. They covered my travel and expense for attending Rising.