Workday seeks growth, not profit, as it expands in Europe

Europe: A key market

Europe is a key target for Workday, with European businesses accounting for 100 of the 1,000 organisations using Workday worldwide.

Its most recent wins include Northern & Shell – owner of the Daily Express – and Dutch financial services group Aegon.

“We are focusing on Europe and leading international expansion in Asia-Pacific, Japan and Australia, which is already a mature market for us. We have customers in China – such as Lenovo – and in Japan and South Asia,” said Fernandez.

The company sees huge potential in Germany, Europe’s largest economy. It has also built datacentres in the Netherlands and Dublin to provide a European alternative for businesses that may be reluctant to store confidential data on US territory.

Workday has been criticised in the past for lacking the breadth of integration its rivals have with payroll systems used worldwide.

Now, however, it has developed its own payroll applications for the US, UK, Canada and France. It has also built “connectors” to integrate its technology with payroll systems used in 200 other territories.

Workday has “grown up a lot” in Europe over the past 18 months and is no longer seen as a predominantly US company, according to Wilson.

“Its ability to engage with Europe, the Middle-East and Africa multinationals with the questions and challenges they have has improved quite a bit,” said Wilson.

Financial times

Despite initial scepticism, interest in Workday’s cloud-based financial management and accounting service is growing. The company claims to have 150 financial customers worldwide, with 70 or 80 already live, since its launch in 2014.

“Financials are a hidden gem,” said Wilson.

The combination of HR and financial data in an integrated system platform offers more than the sum of its parts, said Fernandez. For example, companies can combine HR and financial data to look at the impact of hiring decisions on the bottom line.

“Workday has more than 400 developers in Dublin, but it is hiring very fast. If it delays 60 or 70 of those for a quarter, it can ask what the impact is going to be on some of the business systems it is planning,” he said.

Ahead of the competition

The company is also diversifying by developing modules for specific business sectors. One is inventory management software for hospitals and healthcare companies, which will help keep track of medical goods in the supply chain.

“That gives you an indication of how we are trying to evolve,” said Fernandez. He also sees insurance and supply chain management as other potential areas for development.

Workday’s priority is to continue to develop its existing product set over the next few years in the face of competition from traditional ERP suppliers. Its recruitment module has attracted 100 customers after 18 months, said Fernandez.

“Workday is going to keep maturing and investing in core products to make sure it can keep three to five years ahead of the competition,” he said.

These claims are not completely exaggerated, said Wilson.

“Workday is growing faster than the market and it is clearly stealing market share. It is riding the wave of HR in the cloud,” he added.

Analytics for businesses

In the long term, Workday is setting its sights on offering businesses better analytics capabilities by integrating Workday into other business IT systems in a more seamless way.

“When people are making business decisions, not all of the information they potentially need to make a 360-degree decision will be in the Workday family set of applications,” said Wilson.

The company is developing what it calls machine-learning technology, which will analyse this data and present intelligent business recommendations to managers.

Investing in the future

Workday Ventures, an investment fund set up in 2015 to back high-tech startup companies, will help make this possible.

The fund is backing a company developing an application that will assist people in finding jobs by learning what positions are most suitable for them.

It is also investing in big data technology, an intelligent security platform and a web translation service – all of which have potential applications in Workday’s cloud services.

Intelligent machines

One of the first fruits of this approach is a new suite of software that will help companies identify high fliers who may be at risk of leaving. It will then recommend the steps the company can take to keep them.

The software will also be able to identify employees who have been overlooked for promotion or are underpaid compared with the market rate. It will take into account regional variations in pay, so it will recognise salaries in New York will be higher than those in Greece, for example.

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“We believe international growth and investment in the product remains a higher priority” 

Chano Fernandez, Workday

“Some of our largest customers have 40 or 50 years of history. We will be looking at data and trying to find out why people left,” said Fernandez.

The software will learn and improve by analysing the success of its own recommendations.

“The models will give you the likelihood chance – if you recommend A or B, what is the likelihood chance for this person to stay longer in the company,” said Fernandez.

Another potential application is to use machine learning to identify customers who are likely not to pay their bills and recommend appropriate courses of action.

Workday has a significant opportunity in this area, said Wilson. When companies move their systems across to the cloud, they clean up a lot of the mess in historical legacy data, presenting Workday with a clean sheet to work from.

“Workday does have issues with data integration and accuracy that other systems have, but it has a strong analytics potential because of the technology it has acquired,” said Wilson.

More interest from CIOs

Since Workday broadened from pure human capital management into finance, the company is finding itself speaking to as many CIOs as it is heads of HR, said Fernandez.

“There is no question for CIOs that cloud is here. They are looking to find the best cloud platform to support their transformation, their growth and their business needs,” he said.

Fernandez is not reticent when it comes to talking up Workday’s design philosophy, which is to create cloud services beginning with a blank sheet of paper, rather than by bolting together existing technologies.

Cloud does not mean losing ability to customise

Fernandez rejects suggestions that businesses risk losing competitive advantage by moving their HR and financial applications from on-premise IT systems they can customise to a standard cloud service.

“The first thing I would say is that people are moving to the cloud because it has more business value. It makes them more productive and competitive,” he said.

Businesses have the flexibility to implement Workday in different ways, according to Fernandez.

“If I go to Workday’s 1,000 customers, I would find it hard to find two that have their business processes configured in exactly the same way,” he said.

Growth is priority

For now, Workday is more worried about growing its market than about turning a profit. The company has a large cash pool to play with and is investing close to half of its revenues in research and development.

“We could make profit should we wish to do so, but we believe international growth and investment in the product remains a higher priority,” said Fernandez.

If Workday has one weakness, it is that it lacks the large sales networks of its rivals, said Fernandez.

“Workday doesn’t have as many feet on the street, talking to customers, as SAP and Oracle do. If you asked what would I like to have, it would be to have the same distribution capabilities,” he said.

How Workday learned to learn

When Workday set out to build employee-learning tools into its cloud HR, it knew from the beginning it did not want to build a traditional learning management system (LMS).

“We did design thinking, interviewed the workers and interviewed the employees and managers. We set out to do something visionary because the existing learning management systems were not helping,” said Leighanne Levensaler, senior vice-president of products.

The company filmed video interviews with 100 people in 14 organisations to understand what they needed from work-based learning. In parallel, it also set up discovery groups and advisory councils to gather ideas from its customers.

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“We learned everyone is a teacher in an organisation” 

Leighanne Levensaler, Workday

“They described a system that would let them create and share content with each other and link to outside information that would help them learn. They wanted recommendations from people in the same job and they wanted to know what they should learn from their next job,” said Levensaler.

The result is what Workday calls a “learning environment” that will allow employees to create and share their own learning materials and consume it in bite-sized chunks on their mobile phones.

It will use analytics technology to recommend learning material to employees, based on their current role, the skills they already have and their career aspirations.

The system will also support commercial learning materials and online courses provided by universities through massively open online courses (MOOCs).

“We learned everyone is a teacher in an organisation. Everyone is good at something and they want to share that with each other. We have the tools that will allow them to do that,” she said.