Workday’s annual Innovation Summit promises to provide IT industry analysts with insights into the vendor’s achievements, current initiatives, and future directions. This year’s Summit, held again at one of my favorite spots—Cavallo Point in Sausalito—lived up to its billing. During a day and a half of sessions, Workday executives discussed why and how Workday is positioned to lead in the enterprise software market.
Although capturing the depth of these sessions in a single blog post is challenging, here are my key takeaways.
Leadership Insights
Doug Robinson, Workday’s Co-President, kicked-off the event by discussing the essential role of customer, prospect, partner, and analyst engagement in driving innovation. He emphasized that Workday designs its Innovation Summit to listen and foster deep discussions with analysts, reflecting Workday’s commitment to learning from its stakeholders.
Carl Eschenbach, now the full-time CEO of Workday, followed up and played a very visible role throughout the event. Eschenbach had been a member of the company’s board of directors since 2018, and joined Workday in December of 2022 as co-CEO alongside Co-Founder Aneel Bhusri (now Co-Founder and Executive Chair) before becoming sole CEO in February of 2024. During his remarks, Eschenbach reflected on Workday’s journey and noted the foundational values and culture that have steered the company’s success over 19 years. Workday’s total revenue for FY24 was $7.3 billion, up 17% from fiscal 2023. At $6.6 billion, subscription revenues accounted for the lion’s share.
Doug Robinson, Co-President and Carl Eschenbach, CEO
Eschenbach noted that 50% of business growth came from new clients, a rate that he said surpassed that of their top competitors. He outlined the company’s focus on expanding its presence in vertical and horizontal markets, and internationally in its quest to capture a bigger share of the $140 billion total addressable human capital management (HCM) and financial solutions market.
Eschenbach emphasized Workday’s commitment to innovation, which combines organic development and strategic mergers and acquisitions, like the recent purchase of HiredScore. He mentioned the importance of introducing new pricing and packaging strategies to accelerate customer adoption; expanding partnerships and market opportunities through partnerships with Amazon and Google Marketplace, and bringing new leadership into Workday to strengthen its innovation and go-to-market capabilities.
The integration of AI into Workday was another focal point, not just for Eschenbach, but throughout the event. He noted the advantages that Workday’s extensive user data (65 million users and 600 billion transactions a year) provide to developing AI functionality and delivering a seamless experience to customers.
The Power of Workday’s Cloud Platform
Workday developed its initial HCM as a cloud-native application from the start. Today, the platform uses a single data model to blend human capital management (HCM), finance, and related functions into one seamless user experience, and real-time insights and decision-making across the enterprise.
A unified, agile, and adaptable architecture is central to this approach, allowing the platform to continuously evolve in response to new business demands without disruptive overhauls. It ensures that when data changes in one area, such as HR, updates are automatically reflected in financial records to maintain data consistency and accuracy.
Developers and partners can build and deploy custom applications using Workday’s development tools and APIs. According to CTO Jim Stratton, CIOs are the fastest-growing cohort at Workday Rising, the vendor’s customer event, and they are very receptive to Workday’s platform strategy, which positions Workday as both a foundational system of record and a dynamic platform for continuous business transformation and growth.
Workday’s Approach to Artificial Intelligence (AI)
Workday’s approach to AI revolves around embedding AI directly into the core functionalities of its products, rather than treating it as an add-on or separate feature. According to Workday, this ensures that AI-driven insights and automation are seamless and intuitive.
Workday takes a measured approach to AI, using where it can significantly enhance productivity, reduce costs, and improve the accuracy of data-driven decisions. Workday’s unified platform allows AI-enabled features to draw on data from HR and finance, and other applications that integrate with the platform. For instance, AI in Workday can automate routine tasks like data entry and transaction processing, predict employee turnover by analyzing engagement and performance metrics, and optimize financial planning with predictive budgeting and forecasting. The vendor builds and uses its own large language models (LLMs), based on Workday data to optimize data accuracy and security.
AI functionality to enhance core system operations is included in Workday’s standard subscription pricing. Workday will charge additional for wholly new products built on AI, such as HiredScore, a recent Workday acquisition. Workday’s pricing model sets it apart from some competitors who charge separately for some core AI capabilities—which could create an innovation divide between customer haves and have-nots.
Emphasizing Trust, Security, and Privacy in AI Deployments
Data security and privacy were prominently featured, particularly in the context of AI. The company clearly recognizes customers’ sensitivity about handling extensive HR and financial datasets and the potential risks associated with AI technologies.
Kathy Pham, VP, AI and ML, and Kelly Trindel, Chief Responsible AI Officer, jointly discussed Workday’s “North Star” principles for AI, which are to:
- Amplify human potential
- Positively impact society
- Champion transparency and fairness
- Deliver on privacy and data protection commitments
Kelly Trindel, PhD, Chief Responsible AI Officer and Kathy Pham, VP, AI and Machine Learning
The company has a dedicated AI team, including a legal arm focused on ethics, and a tech group that concentrates on innovation. Workday brings them together in monthly meetings to collaborate and ensure adherence to its principles.
The vendor has implemented many security protocols and privacy safeguards, including:
- Designing AI systems to ensure data integrity and confidentiality, with encrypted data at rest and in transit, and strict internal controls to manage personally identifiable information (PII).
- Emphasis on transparency, to give customers control over their data with clear opt-in and opt-out choices and detailed documentation on data handling practices. Workday also offers customers notice of when, where, and how AI is used in the AI interface, at the point of user interaction and in documentation.
- Using a questionnaire to help developers assess AI risk from low to high risk, and unacceptable, to make decisions about when and when not to use AI.
Workday’s stance on AI underscores its dedication to maintaining trust and ensuring the security of customer data as it continues to innovate and expand AI capabilities.
Growing Market Share in the SMB and Midmarket Sectors
Workday has set its sights on small to medium-sized businesses (SMBs) and midmarket customers (which it defines as businesses with 100 to 3500 employees). That said, Workday is not targeting the broad SMB market, but focusing on growing companies that want to invest to prepare for the next level of expansion. To that end, it has tailored its enterprise solutions and services to be more accessible, affordable, and relevant for these companies.
Workday Launch for HCM, Financials, and for both solutions combined, is designed to speed up the time it takes to deploy Workday. The packages simplify the implementation process, providing pre-configured core functionality. Each package supplies essential features to drive efficiency, such as automated payroll, simplified compliance reporting, and intuitive talent management tools—crucial for businesses looking to grow without significantly expanding administrative overhead. Workday has also created fixed pricing for each package that scales and adjusts based on business size and the scope of the deployment.
Accelerate with Workday is a subscription-based service that helps teams adopt and optimize their Workday solution. The program helps customers start using Workday, gain faster time to value, and incorporate Workday’s full capabilities over time, with less need for external consultants or IT resources.
Expanding the Partner Network
Successfully growing the partner network is critical to expanding share in SMB and midmarket, additional vertical markets, and in geographies including Japan, EMEA, and Asia.
Workday is expanding APIs, building new development tools, and creating new programs to woo resellers, developers, system integrators, and consulting partners into the fold.
In its co-selling model, the vendor and its partners work jointly to sell Workday products, leveraging partners’ local market knowledge and relationships, and Workday’s advanced technological capabilities.
Skills and Talent Management Value Proposition
To help customers meet the challenges of rapidly evolving workplace demands and the ongoing war for talent, Workday’s skills and talent management strategy centers on helping its customers better identify, develop, and deploy talent.
Its approach emphasizes the importance of reskilling and upskilling employees to reduce attrition and increase productivity. Offerings include Skills Cloud, which helps companies build a skills-based organization by capturing, organizing, and analyzing employee skills data to improve recruitment retention; and Career Hubs, which makes it easier for internal employees to find new opportunities for career advancement within their companies. These solutions integrate with Workday’s HCM system, providing customers with a more holistic and data-driven understanding of the talent landscape.
Workday recently acquired HiredScore, which has developed an AI-driven “talent orchestration” solution. Together, Career Hubs and HiredScore will provide a combined offering that makes it easier and faster for recruiters to find and hire employees from across the talent ecosystem, and for employees to identify and prepare for new job openings at their company.
Athena Karp, General Manager, HiredScore, and David Somers, Chief Product Officer
Perspective
Workday’s 2024 Innovation Summit highlighted the many initiatives and innovations that point to Workday’s evolution into a more market-driven and open company.
Workday’s new focus on SMB and midmarket, along with international expansion plans and initiatives in additional industry sectors, is necessary for the vendor to significantly boost its share in the business solutions market. Initiatives to open up its platform and build its partner network are key to its ability to effectively execute its market growth goals.
The integration of AI into Workday’s cloud-native platform bolsters its ability to pursue these opportunities. With an extensive user base and a wealth of transaction data—all in the cloud—Workday is better positioned to provide customers with AI’s personalization, automation, and analytic benefits than competitors with customers running on-premises systems.
In addition, Workday’s emphasis on innovation through organic development and strategic acquisitions, such as HiredScore, underscores its focus on continuously enhancing its offerings and adapting to evolving market needs.
This doesn’t mean it will be all smooth sailing. The enterprise software market is intensely competitive, with constant technological advancements and shifting market demands. Workday also needs to successfully compete to recruit and skill qualified partners that it needs to support its growth—another area in which the competition is intense.
Data privacy and security are omnipresent concerns for all vendors, particularly as they expand their use of AI. Workday must continue to uphold its high security and privacy standards to maintain trust and compliance, especially as the global data protection regulations get more stringent.
All told, however, Workday appears to have a solid plan and strong execution capabilities, leading me to believe that it is on a positive trajectory to achieve its goals.
Note: Workday is an SMB Group client.
© SMB Group, 2024