Workday to continue investing heavily in APAC

With more enterprises in the Asia-Pacific (APAC) region turning to the cloud to ramp up their digital initiatives, it should come as no surprise that Workday is one of the fastest-growing cloud application suppliers in the world.

According to Chano Fernandez, the company’s newly promoted co-president, the company is growing at about 60% a year in international markets, and is looking to maintain similar growth rates and continue to invest in the region.

In an exclusive interview with Computer Weekly, Fernandez shed light on the state of cloud adoption in APAC, his priorities for the region and whether Workday will expand its suite of cloud applications beyond its HR and finance strongholds.

What is your reading of the state of adoption of cloud-based applications in the APAC region? 

Fernandez: Our customers from different industries are facing challenges on how to transform their businesses through the cloud. They started with moving CRM (customer relationship management) to the cloud, followed by HR and finance, and later we’ll start to see supply chain moving to the cloud as well. Across the APAC region, we are growing quite evenly, and we have also grown our investments, including people and assets, by more than 50% over the past 12 months. Besides being in countries like Singapore, we are also opening offices in Thailand and South Korea.

Are your customers moving to the cloud from on-premise systems or from rival cloud services?

Fernandez: We are seeing both, though more are moving to the cloud from on-premise systems. Some large global companies are also moving from one cloud service to another. In our case, they have chosen Workday because we are potentially more proven, less risky and likely to have higher employee adoption in their organisations, especially for those that want to understand their employees better in digital transformation efforts.

What are your priorities for the region?

Fernandez: Last year, we doubled the number of net-new customers in the region, including low-cost carrier AirAsia and integrated resort developer MGM Macau. Publicly, we have said that we are growing close to 40% in terms of subscription revenue on a year-on-year basis, while in international markets we’re growing at around 60%. Our ambition is to have similar growth rates and keep investing heavily.

What about a market like China, which is dominated by local players?

Fernandez: It’s an interesting and huge market, and we have many users in China, including local firms and big companies like Lenovo. We also have a services team in China to support those customers. The question is how we can keep growing and investing amid a number of priorities on the table. Meanwhile, we are keeping a close eye on how cloud adoption in China is panning out.

One of the barriers to cloud adoption in the region is uneven or patchy infrastructure development. What are your thoughts on that?

Fernandez: Some of these perceived barriers are also the reasons why companies move to the cloud. Cloud service providers with more resources can often do a decent or better job than most organisations in providing a more resilient and secure infrastructure. With the upcoming GDPR, for example, companies are moving to the cloud because they believe they will be better prepared for what is needed to secure personal data. They know that we will wake up in the morning thinking about security, and invest heavily to be as secure as possible. Not everything is perfect, but they trust that we will do a better job than them in security and compliance.

More countries are now looking at enacting data sovereignty laws. How do these laws affect Workday’s strategic decisions on datacentre locations?

Fernandez: We are not in the datacentre business – we are more focused on providing the best potential software applications to improve employee engagement and money management for our customers. We have built datacentres to deliver our applications on the cloud, but if you were to create Workday again today, you’d wonder whether to run off Amazon Web Services (AWS). In our case, we will support the requirements of our customers who have to comply with data sovereignty regulations. Today in Canada, for example, our customers can host their Workday applications with us or with AWS. 

A senior IT executive from a Malaysian bank recently remarked that cloud suppliers often talk about helping customers get onto the cloud, but not so much about getting out of the cloud. What are your thoughts on that?

Fernandez: To be clear, in the financial services industry in some countries, we are bounded by compliance rules to provide a way for customers to get their data out of the cloud. We are only data processors, and if our customers want to move out of the cloud, we will help them to get their data out of their system promptly. I would welcome that financial institution to talk to us, because that is part of our contract with customers on data processing.

Workday’s sweet spot has been in HR and financial applications. Are there plans to offer a broader software-as-a-service portfolio?

Fernandez: Right now, we’re pretty much focused on HR and finance, as well as the analytics around those applications. If you look the market worldwide, we are looking at a market of around $70bn to $80bn. It’s not a small market in terms of addressable subscription revenues on a yearly basis. Bear in mind that we’ve done everything organically with our own solutions. We invest 30% to 40% of our revenue each year on research and development, whereas some of our competitors are investing around 15% to 20%. So we still have a big market opportunity today and we pride ourselves in having great solutions, and a customer satisfaction rate of 95%.