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Workday Introduces ERP as a Service

Saturday, May 24, 2008
Workday Introduces ERP as a Service
By Michael Hickins

Workday Introduces ERP as a Service
( Page 1 of 3 )

SAAS is moving from being just a CRM tool to enterprise resource planning applications.
Those looking for signs that Web 2.0 applications are becoming an increasingly dominant part of enterprise IT systems need look no further than Workday.
The company, founded by former PeopleSoft founder and CEO Dave Duffield, announced new additions to its HCM (human capital management) suite on May 19. And while SAAS (software as a service) offerings have generally been restricted to simpler, self-contained processes such as CRM (customer relationship management) and compensation management systems, Workday intends to build out a complete ERP (enterprise resource planning) suite to compete with the likes of Oracle and SAP.
Big, bulky enterprise systems, with their perpetual license agreements and maintenance contracts extracting perpetual expenses from customers, are the dinosaurs of the enterprise IT world, while the future of the IT infrastructure is with Web-based, less expensive and more flexible systems.
SAAS vendor Netsuite has offered an on-demand ERP suite since 2003, when it was still known as NetLedger. But despite a relatively long existence in Internet years, it has never been able to announce anything like the deal Workday just made with electronics manufacturer Flextronics, to which it will provide software service for more than 200,000 employees.
Workday is also announcing a deal with McKee Foods, which has 6,600 employees, and has already landed contracts with the likes of Chiquita (25,000 employees) and ITT Defense (16,000 employees). This kind of momentum stands in sharp contrast to the struggles of SAP, which has had to delay the rollout of its on-demand ERP platform, Business ByDemand, and is becoming the poster child for the struggles of on-premise, perpetual license vendors trying to come up to Internet speed.


Workday is also introducing the first elements of a business management suite, with an end-to-end procure-to-pay application.
The irony of the deal with manufacturer Flextronics is that Workday is focusing on services-oriented companies. Thus, the focus of the application is on tracking resources, whether human or nonhuman, rather than on the accounting treatment required with businesses that rely on a physical plant.
“We do a better job of tracking what used to be called a small item, but which is becoming a more and more important part of expenses,” Swete said



Workday revs on-demand ERP

Workday 4.0 gains major new payroll component

On-demand ERP vendor Workday announced an update to its software Monday as it rides a wave of publicity from a recent high-profile customer win.

Payroll is a major new component of Workday 4.0. To date, the company, which was formed by PeopleSoft founder Dave Duffield, has focused on human capital management (HCM) -- otherwise known as human resources -- as well as financials and procurement. A company spokesman described the payroll capability as key to landing bigger customers.
"I think as we get into these larger enterprise deals, those are the places where payroll is tightly coupled with HCM ... We'll continue to link to [payroll providers such as] ADP or Ceridian, but this does open up new opportunities in larger enterprises," said Andrew McCarthy, communications director.
McKee Foods is serving as a pilot customer for the payroll function, which will be generally available later this year. Initially, Workday will support processes for U.S. payroll, with Canada and Europe to follow. The company claims its underlying payroll framework and calculation engine mean it won't have to rewrite the entire stack from scratch for new regions.
Workday made the right move by developing the capability, according to one observer. "Definitely, payroll is a must," said China Martens, an analyst with the 451 Group.
"Clearly, they've learned from the past on the internationalization front," she added. "Where PeopleSoft, like its peers, to be fair, ran into some trouble was in not doing enough on the internationalization of its software when going global."
Workday is also integrating its software with third-party products. A link to Salesforce CRM will enable users to automatically activate and deactivate users from the Salesforce system as they are hired and leave the company.
While customers would require a separate license for those third-party applications, Workday will support the integration, spokesmen said.


"Workday is on the forefront," said Ray Wang, an analyst with Forrester Research. "Their win against Oracle and SAP proves that SaaS can scale in the big leagues."
But as Workday begins servicing such sizable accounts, there are lingering questions about the cost efficiency of the on-demand model. ERP juggernaut SAP has drawn back its rollout plans for Business ByDesign, its hosted ERP offering for the midmarket, saying it needs to fine-tune it to ensure a satisfactory profit.
Workday's product has a smaller footprint, which will help it avoid such growing pains, spokespeople asserted


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