Specialist
Former Director at Workday Inc
Agenda
- Workday’s (NASDAQ: WDAY) success with cloud software for human capital management (HCM)
- Questions about growth sustainability in core HCM business
- Plans for new offerings and M&A to support growth and valuation
Questions
1.
Can you describe Workday and its primary solutions?
2.
What are some of the major trends that you think are impacting Workday and/or its peers or competitors?
3.
What do you think would cause Workday to make a transition? Why do you not think any of the tier 2 or tier 3 players have the chance to take share from the primary players? How would Workday win share from Oracle and SAP when people working with those companies have presumably done so for a while, meaning it might be difficult for companies to make that decision based on the strength of the solution set?
4.
It seems that while Workday has been taking share, Oracle and SAP have been investing in core offerings and engaging in large scale M&A to enhance and upgrade what they are able to provide to customers. Did you observe any impact from that at Workday, such as when Oracle bought NetSuite or SAP bought Concur? Is it something these companies could continue to do by targeting smaller players that do not have the scale and flexibility to become more competitive?
5.
Even if Oracle and SAP’s sales pitch was that those companies were to provide to existing customers as an opportunity to get them to transition to HCM [human capital management] or financials offerings from the companies, that would not necessarily have an impact on Workday. Is that right, in your opinion?
6.
Lower tier companies do not seem to have the ability to scale or invest like the three primary players. However, Paycom is a USD 15bn market cap company which has been successful in the SMB market in the US in particular. Historically, Workday has been focused on the large enterprises of the US and around the world. To what extent have you observed these companies in the context of RFPs [request for proposal]? Do you have any thoughts specifically on Paycom?
7.
Workday has highlighted going downstream to some extent. If it becomes increasingly penetrated in large enterprises, it may consider mid-market-type companies as targets as well. ADP and Paychex have been mentioned as competitors, particularly where HCM and financial management come together. Are those companies that you observed from a competitive perspective?
8.
Workday is rolling out and investing in financial management and other solutions connected to that. I think the company has indicated that 81% of this fiscal year’s subscription revenues will still come from HCM. Five years ago it was 95% or so. To what extent do you think the company has an opportunity to make headway and gain share in financial management and other areas? Do you have any thoughts on Workday’s efforts and the competition as it pertains to that area?
9.
You mentioned Workday being on one unified architecture. How difficult is it to find companies that meet your requirements for both filling a gap in the suite as well as being consistent with the power of one? Would the company consider a supply-chain-oriented acquisition down the line? What do you think about the M&A strategy and the company going into supply chain possibly?
10.
There have been concerns related to HCM growth. S&P Capital IQ consensus forecasts indicate 20% revenue growth in FY21, which is down from 28% in FY20. Is there a reason to be concerned in terms of notable saturation of the core US enterprise market? It might be more expensive or challenging to get more customers in that category or in international areas or going downstream. How real do you think that is vs a communication and execution issue, with respect to some of the acquisitions or new products?
11.
ServiceNow is perceived as similar to Workday, but the companies historically have been in different lanes. They have been partners but it seems the companies are overlapping into each other’s businesses. Did you ever view ServiceNow from a competitive perspective?
12.
How important are implementation partners or the systems integrators such as Accenture and KPMG to Workday, when customers are making decisions about going with a certain company and its technology? Is it the implementation partner, Workday itself or both?
13.
Are there any SIs that you thought were more critical to the company? If you think about the number of deployments or the revenue associated with them, were there a handful that were responsible for a lion’s share of the deployments or the related revenue, or was it spread relatively evenly?
14.
What is your outlook for 2020 as it pertains to Workday?
