Workday expands suite of applications into supply chain management

Workday expands into supply chain management, but this functionality is only available for the healthcare industry.

Last week Workday announced a new application designed to serve the supply chain and procurement needs of healthcare providers. This represents a functional extension of its traditional HCM and financial management capabilities.

Here I'll dissect the news and highlight implications for the industry.

PLEASANTON, CA -- (Marketwired - July 9, 2015) - Workday, Inc. (NYSE: WDAY), a leader in enterprise cloud applications for finance and human resources, today announced plans to deliver a new application, Workday Inventory, as well as new features for Workday Procurement - designed to meet the supply chain management needs of healthcare providers. Combined with Workday Financial Management and Workday Human Capital Management (HCM), this new supply chain management functionality will equip healthcare providers with one system that offers visibility into talent needs, the flexibility to quickly adapt to new regulations and industry standards, and the ability to manage inventory and supplier interactions. Workday plans to design the expanded suite based on feedback from charter members of the Workday Healthcare Advisory Council, including Christiana Care Health System and Community Health Services of Georgia.

MyPOV - The Healthcare industry has been a Workday power user, so this added functionality will help the vendor, its customers and prospects in this vertical. The Healthcare industry has some specific inventory requirements (expiration, storage requirements, access, replenishment etc.) so it is a good industry for Workday to focus on as it offers differentiation without full-fledged, horizontal SCM capability.

Extending the Power of One System for Healthcare Providers

Healthcare providers - such as hospital systems, academic medical centers, and long-term care groups - are faced with dramatic industry changes including widespread industry consolidation and new business models which are forcing them to rethink their talent and organizational needs. Current systems are inflexible and costly to maintain, making it difficult for them to adapt to changes, and get the insights they need to move their organizations forward.

MyPOV - This is a nice way of Workday saying that many of the incumbent systems in the healthcare industry are older, non-cloud systems. This is an opportunity for Workday and competitors to replace many of these older systems, however most healthcare providers won't want to replace existing integrated automation assets just for the sake of modernization.

With Workday, healthcare providers are already equipped with one system that:

• Adapts to Change: Customers are able to navigate reform-driven changes, mergers and acquisitions, and organizational restructuring via a flexible business process framework.

• Delivers a Comprehensive View of Talent: With Workday, customers are able to better attract and retain talent through powerful recruiting tools, rapid onboarding, performance and talent management, and insights to help increase retention.

• Provides Visibility to Drive Growth: To continually drive operational efficiency and business growth in a dynamic industry, Workday offers analytics to monitor the financial performance of different business models - including new service lines such as outpatient clinics - and insights into developing talent.

MyPOV - This is the Workday value proposition--one cloud-based system to manage HCM assets.

The planned introduction of Workday Inventory and new Workday Procurement features will give healthcare providers the supply chain foundation they need to:

• Closely Manage Supplier Relationships: With Workday, customers will be able to manage supplier and group purchasing contracts, track inventory, and automate replenishment to reduce costs. In addition, they will be able to more clearly understand detailed supply utilization and costs to make better contracting and standardization decisions.

• Drive Sustainable Cost Savings: Workday will enable customers to increase compliance with standard purchasing processes such as applying requisitioning and approval controls. In addition, purchasing teams will have one centralized view of spend by category that they can monitor and analyze to identify opportunities for cost savings. Mobile access, real time analytics, and the flexibility to configure procurement practices based on an organization's preference will also allow for quicker decision making and adaptability.

• Effectively Manage and Cultivate Supply Chain Teams: With Workday, customers will have a comprehensive view of talent, and insights on how supply chain teams are performing against business goals. Additionally, supply chain leaders will be able to better develop their teams, measure talent utilization, and cultivate employee skills to better serve the needs of patients and clinicians.

MyPOV - Actually the procurement functionality is not new for Workday. Remember Workday rolled out procurement functionality as part of Workday Financial Management (see here), but that was more of a horizontal, self-service purchasing functionality that didn't manage inventory. Employees place orders as demand rises and contracts, approvals, budgets, suppliers etc. are engaged to make those orders happen. Healthcare requires a more robust inventory management solution (see e.g. above). Workday does a good job at what all suite-level vendors do - leverage existing automation assets to manage supplier relationships from Workday Procurement, mobile access, analytics and the whole HCM aspects for talent, goals etc.

Availability

Workday plans to make Workday Inventory generally available to customers in September 2015. Healthcare-related features in both Workday Inventory and Workday Procurement are scheduled to be delivered in calendar year 2016.

MyPOV - Interestingly the press release doesn't expand on the horizontal implications of this announcement. What can a non-healthcare customer / prospect of Workday expect from Workday Inventory?

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My Overall POV

Workday keeps extending its automation portfolio capabilities. This is further evidence that Workday is in the game to create a suite of enterprise functions that extends beyond HCM. It makes sense for Workday to limit new functionality to specific verticals, especially verticals that are strong users of the existing product. It's too early for Workday to compete in breadth and depth with full-fledged SCM / purchasing automation vendors, so testing this application on superusers is a valid and viable strategy.

On the concern side, this is one more investment area for Workday, no matter how small and well defined it may be. With new automation capabilities come commitments to roadmap, support, maintenance and education. Expanding into SCM also requires Workday to ramp up go-to-market efforts and expertise, including a partner ecosystem in SCM that differs from its existing service industry and HCM / finance portfolio. This will require more investment from Workday, which is already committed to investment on many fronts.

Personally I would like to see Workday invest more in HCM. Workday needs to keep its HCM offering (very) compelling - as HCM will be the fundamental element to getting new products like today's launched.

For more closer SCM coverage, follow my colleague Guy Courtin here.

Resources

Inside the Future of HCM

10 HR Trends Chief People Officers Need to Know in a Digital Age

Workday: 6 Things to Watch