Amazon punts move to Workday HCM - what's the takeaway for customers?

Phil Wainewright Profile picture for user pwainewright July 29, 2021
In the wake of this week's revelation that 18 months ago Amazon discontinued a three-year deployment of Workday HCM to replace PeopleSoft, what are the takeaways for customers embarking on a similar journey?

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(Source: Amazon)

Questions remain concerning e-commerce giant Amazon's discontinuing of its wholesale deployment of Workday HCM and Payroll, which came to light this week after a report in Business Insider. Workday subsequently published a blog post confirming that the two companies had "mutually agreed to discontinue" the deployment more than a year and a half ago, which was over three years after Amazon first signed up to the deal in October 2016. The deal was announced in February 2017, shortly after Workday announced retail giant Walmart as a customer, a deployment that has since successfully gone live. Amazon continues to run HR on its longstanding Oracle Peoplesoft implementation, although it uses Workday at several subsidiary businesses, including Audible, Twitch and Whole Foods.

Quoting unnamed "people familiar with the matter," Business Insider alleges that some of Amazon’s most senior engineers had anticipated technical difficulties migrating to Workday, telling then CEO Jeff Bezos and the company's 'S-team' of top executives that it would be "costly and unlikely to succeed." Nevertheless, according to the narrative, the decision was taken to go ahead, "resulting in years of costly work," not only for IT but also for HR, who proceeded to make detailed plans for the transition to the cloud-based Workday system. One unnamed source apparently told Business Insider that "the database behind Workday’s software didn’t scale as planned to fully support Amazon’s rapidly growing workforce."

We should note at this point that Workday's version of events contradicts much of this, stating in a subsequent blog post that the decision to cancel the deployment "was not related to the scalability of the Workday system." Instead it attributes it to custom requirements that Amazon discovered in the course of the deployment. Headlined Clarifying Amazon’s Workday Deployment, this is the full body of the post:

Workday was founded more than 15 years ago with a set of core values including customer service and innovation. As part of that, we’re hyper-focused on meeting the needs of our customer community — which includes more than 8,000 customers and 50 million users — and innovating to support the needs of their workforces. At times, however, customers have a unique set of needs that are different from what we’re delivering for our broader customer base, as was the case with Amazon — one of the most unique and dynamic companies in the world.

More than a year and a half ago, both Workday and Amazon mutually agreed to discontinue Amazon’s Workday Human Capital Management deployment, with the potential to revisit it in the future. This was not related to the scalability of the Workday system, as we currently support some of the world’s largest organizations, including more than 45% of the Fortune 500 and more than 70% of the top 50 Fortune 500 companies. In addition, more than 70% of our customers are live, including one of our largest customers — a retailer — across its more than 1.5 million global workers.

Our relationship with Amazon remains strong with the Amazon Web Services partnership intact and other Amazon subsidiaries — such as Audible, Twitch, and Whole Foods — successfully using our system.

The decision to discontinue the deployment more than 18 months ago has no impact on our previously communicated financial guidance provided on May 26, 2021.

We approached Amazon for comment with a number of questions. An Amazon Web Services (AWS) spokesperson responded as follows:

A number of significant teams within Amazon continue to use Workday. Others have specific requirements based on their unique businesses. The partnership between the two companies remains strong.

A month after Amazon signed the Workday deal, Aneel Bhusri, Workday CEO, appeared on stage at the AWS re:Invent 2016 conference, along with David Clarke, Workday's then SVP Technology and Infrastructure, to announce Workday would be transitioning from its in-house data center infrastructure to the public cloud, with AWS as its preferred provider. That partnership continues in place today.

My take

Are there lessons to be learned from this story for others looking at or currently implementing Workday HCM or similar products? That depends what actually happened here, which is difficult to discern with any certainty. We asked Workday for further clarification, and received some responses but very little to add to what we already know. Having said that, here are our thoughts.

First of all, let's be clear that we don't know who Business Insider's sources are or what — if any — professional or personal motivations might or might not be at play in their version of events. This makes it impossible to assess the veracity or otherwise of their claims. Workday flatly contradicts the central allegation on scalability, stating that this was not an issue with the Workday system, and nor has Amazon confirmed this claim. It's important to note that parts of Amazon's empire continue to use Workday, and as Workday has pointed out, it has a long roll-call of customers successfully using its software, although occasional exceptions do come to light from time to time.

There are, however, a few points about this story that we can either verify or conjecture with varying levels of confidence. We know, for example, that the timing of the original announcement suggests that the HCM deal and the AWS deal were done in parallel. We don't know whether there was an explicit linkage — Workday was silent on this point — but we can also imagine that Amazon's leadership were eager to end their reliance on Oracle software, given how competitive the two companies have become. These factors might provide an explanation for BI's assertion that senior management pushed through the deal against the advice of engineers.

A further intriguing question that arises is to wonder why this story has surfaced now, more than 18 months after the deployment was put on hold. I'm venturing into pure speculation at this point, but could it be that there's a move internally at Amazon to restart the Workday deployment, and this leak is an attempt to spike that initiative? I can't imagine that Amazon wants to stay on PeopleSoft any longer than it has to.

Nevertheless, there's still the question of why the deployment was abandoned after three years' work. It's no wonder some of those involved are upset! Doubtless there were data migration issues — there always are in projects of this type — and when payroll's involved, these can be particularly brutal. But let's take Workday at its word that the cause was newly discovered custom requirements that couldn't be fulfilled at the time. Why did it take so long to discover these custom needs until after so much of the implementation work had already been done? Workday insists that this was simply a matter of Amazon's uniqueness as a company, which gave rise to many dynamic factors that needed to be navigated. Perhaps it's just the case that needs do change, particularly at fast-growth firms such as Amazon, and so this was always going to be a risk in such an extensive, multi-year project.

We may never know the answers to these questions for sure, but as I mentioned above, I suspect there are further chapters to come in this story, given that Amazon isn't going to keep using PeopleSoft for ever. For now, the main takeaway for others managing projects of this type is to do your homework on the migration effort required, and always be conscious of the risk that unexpected events or new strategies may dictate a change of direction, however far the project has progressed.

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