Breaking away from ERP as bookkeeping

Modern computing allows business software to revolve around tracking real objects and the events that happen to them rather than having to force everything through an accounting-centric record of transactions. Workday's new release shows how.
Written by Phil Wainewright, Contributor

Most traditional business software revolves around transactions — the movements recorded in purchase orders, stock movements, bills of materials, invoices, journals and every other document that has evolved to record business operations over the past several centuries. But this is a roundabout way of representing reality that has evolved through historical happenstance. Modern computing can track real objects and the events that happen to them as they move from make to ship, or from order to pay. As fellow Enterprise Irregulars blogger Sigurd Rinde pointed out recently, this vastly simplifies the computing task: "Most important result — one data-object only per real-object, simple as in reality. A reality-model."

Workday's new release of its financials business management application, announced yesterday, illustrates this principle in action (along with a new graphic, right, to show how it all revolves around a global object core). Its Business Resource Management module, for example, tracks assets and inventory as objects rather than as bookkeeping entries. To the uninitiated, that may not sound like much of a difference, but in fact it's a breakthrough because it allows the organization to track its property in a way that makes sense in business terms rather than merely accounting terms. A simple example is the treatment of a mobile phone. An accountant will usually treat this as an expense rather than a capital asset, but that decision means it never appears on the fixed asset register. If you want to track it, you have to invent some new zero-book-value asset category to store information about it.

In Workday's object model, the accounting treatment is just a status flag (in software terms, a 'property') attached to the object. The bookkeeping happens without impacting how the system stores that information. The identity of the employee assigned the phone is just another property of the same object. If the employee leaves, then it's a simple computing task to deactivite all the objects assigned to that employee — the mobile phone contract, a WebEx account, a security badge. Workday's object-centric model means that its resource management module becomes just "a single system to manage all the stuff you've got," as VP of applications strategy Mark Nittler put it in a briefing the other week.

The object-centric model is part of a service-oriented infrastructure that is allowing Workday to roll out incremental functionality as it builds out its underlying application infrastructure. The latest release introduces payroll, expense management and procurement, all of them making use of the same underlying calculation engine. Workday has defined additional frameworks that define how the engine is used for each function, and then, for example, applies country-specific payroll localizations as metadata.

The object model's ability to cut across historical categorizations means that Workday believes it has some unique advantages in fields such as performance management, where it can measure performance across multiple reporting lines, for example. In conventional HR systems, said Christine Cefalo, director of public relations, "performance is based on only one view of the workforce — everyone falls down on managing matrix teams and horizontal relationships." Meanwhile, the system can easily handle contingent labor as an element of human capital as well as a procurement item in the new procurement module.

At the same time, Workday is taking advantage of Web integration in many of the new modules. It has packaged integration to a number of benefits providers for use alongside the human capital and payroll modules, while the expense management functionality can either be used natively through the Workday interface or connected to external systems such as Concur. "Underlying each Workday process is a web service," said Nittler. "For people who want the benefit of [extra functionality] we connect to the web service and don't use the UI. We're not going to compete in the standalone travel and expense market. It's completely the customer's choice."

Of Workday's more than 40 customers, four have now signed up for financials and four are signed for the new payroll module, including a 7000-user food processing business. Fifteen are currently live with another ten due to go live by the end of next month. The new release is already available to all of those customers. Although the number of financials customers is currently small, the company will be ramping up its sales effort for this functionality in the second half of the year, Nittler said.

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