Sunday, 22 September 2019 16:23

Workday and the evolution of ERP Featured

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ERP has come a long way since it was flavour of the decade in the 1990s. Enterprise Resource Planning was the name given to software suites that handled an organisation’s core activities – finance, manufacturing, distribution, etc.

The biggest vendor was German company SAP, still a market leader. But, like most technologies, ERP has evolved. On the cusp of the 2020s the enterprise applications scene looks very different than it did twenty or thirty years ago.

The most important change has been the move to the Software-as-a-Service (SaaS) model. Many organisations resisted moving mission-critical applications to the cloud. But as the technology has improved concerns about security and performance have largely disappeared, and the imperatives for cloud are now hard to argue with.

SAP and Oracle and other ERP vendors have been making the transition from selling on premise packaged software to cloud-based applications sold on a subscription basis, but the inertia of their large installed base has made this a difficult process. They are being challenged by newer vendors who have been cloud-based from the start and who come without this legacy baggage.

One such vendor is Workday, which has become one of the fastest-growing software companies of the last decade. Founded in 2005, its growth has accelerated since it went public in 2012. It is now pushing US$3 billion in annual revenues.

Workday is located on the west side of San Francisco Bay, about halfway between San Jose and Oakland. Earlier this year it moved into a futuristic new HQ building (pictured), consolidating employees who were spread across a number of buildings in the area.

Workday is particularly interesting because it also demonstrates one of the other major evolutions in enterprise application software – the rise of what has come to be called Human Capital Management (HCM). As its name suggests, HCM has to do with an organisation’s people – its human capital.

As the economy continues to evolve away from manufacturing and towards service-based industries, an organisation’s people and the way they are managed are becoming much more important. HCM software integrates the traditional functions of HR and payroll with the finance function, bring new functionality to how people are trained and managed.

Industry analyst with Gartner says there are three major aspects to HCM - workforce acquisition, workforce management and workforce optimisation.

To get a feel for how HCM is challenging the traditional ERP model, iTWire spoke to Workday’s VP of Financials Product Management, Rob Zwiebach. He knows the ERP scene well. Before joining Workday last year spent 13 years with Oracle in senior positions in that company’s financial software division.

“There are many reasons to run these sorts of applications in the cloud,” explained Mr Zwiebach. “The advantages of the SaaS model are well-known, but there are also sound technical reasons.

“Traditional on premise applications are based around relational database technology. Workday uses in-memory processing. That means it’s faster, but also that is much more flexible. The application structure is defined as metadata, which means applications can be changed on-the-fly without having to restructure the database.”

This approach has been successful. Gartner places Workday as a leader in its well-known Magic Quadrant for HCM, alongside archrival Oracle and ahead of SAP and other traditional vendors and niche players. Gartner references Workday’s high level of customer satisfaction and application functionality.

Over the past few years Workday has expanded into the traditional financials market, long the exclusive preserve of specialist ERP vendors. Its financials are now mature enough that it has customers who use only that part of its application suite.

“We’re doing well in financials in the same reason our HCM has been successful,” says Mr Zwiebach. “The flexibility of our in memory processing means that we can enable our users to be much more agile. Our users tend to be services companies whose biggest expense is their workforce.”

The in-memory processing model, which Workday internally calls ‘object graphing’. The company has a large team of developers, many of whom are now working on a range of new data analytics capabilities utilising Artificial Intelligence (AI) technologies.

In 2018 Workday acquired a company called Adaptive Insights, an HCM planning and analytics company that significantly boost its capabilities in this area. It is also working with Amazon Web Services (AWS) to incorporate that company’s increasingly sophisticated AI-based analytics.

Mr Zwiebach was in Australia to visit the company’s customers and prospects and visit its small planning and budgeting R&D team in Brisbane. Local users include direct marketing company Salmat, toll road operator Transurban and growing FinTech company Latitude Financial. Deakin University is also a major user, where Workday has been successful against Australia's most successful ERP vendor TechnologyOne, which specialises in higher education.

Enterprise applications are the most essential software any organisation runs. Everybody has a general ledger and accounts receivable and payable. And every organisation has human capital. Bringing it all together is what companies like Workday are all about.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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