Customers are talking among themselves about Workday - and that's paying off

Stuart Lauchlan Profile picture for user slauchlan August 30, 2017
Customers are delivering other customers to Workday's door - and that's resulting in growing traction in the Fortune 500 enterprise market.

A fourth successive quarter of 40%-plus growth, reduced quarterly losses and increasing evidence of traction in the Fortune 500 enterprise market all added up to a strong set of numbers for Workday.

For the second quarter, total revenue was $525 million with a net loss of $83 million, down from $107 million for the comparable year-ago quarter. Subscription revenues were up 42% to $435 million.

For his part, CEO Aneel Bhusri pointed to a strong proof point by noting that 30% of the Fortune 500 companies now use Workday for core HR, 17 of which are in the Fortune 50. New HCM customers in the second quarter included Citigroup Management Corporation, Nordstrom, Qualcomm Humana and Siemens.

The German manufacturing giant can be assumed to be a particularly prized scalp, being both now Workday’s largest customer outside of the US and also a company parked on arch-rival SAP’s homeground. That said, Bhusri wants to take a more global view:

The perspective that we have always had at Workday is that a multi-national in the US and a multinational in Germany or the UK, they face the same needs. They face the same challenges in terms of running a global organization. So a lot of what worked in the US has translated very well to Europe. We had to build a great sales team, a great services team, the product was meant to be global from the start.

But when you look at a company like Siemens, they are not necessarily looking at just local German companies, they are looking at other multi-nationals that are of similar size and scale and complexity around the globe, because they compete on a global basis. So as a result the success we have had in not just winning the Fortune 500 accounts, but actually making them successful through the deployment and post-deployment areas, has just played as well in Europe as it does everywhere else. The same thing is happening in Japan, it’s happening across Asia, across New Zealand, Australia.

The Fortune 500 stat is a strong percentage number to boast, but it’s only the start, argued Bhusri:

Our best guess is 50% of the Fortune 500 has not made a decision yet. It’s our best guess, I am sure data has got some inaccuracies, but directionally I think that’s about right. So probably half the market hasn’t made a decision, tons of market in front of us and those kinds of opportunities continue to show up in the pipeline.

In terms of financials new wins, Ohio Health Corporation, The Children’s Hospital of Philadelphia, Giant Tiger Stores and Carlyle were name-checked, while the likes of Denny’s and Yale University were among those to have gone live during the quarter.

Bhusri said that the expanding Workday product footprint is paying dividends, noting that the forthcoming entry to the Platform-as-a-Service (PaaS) market is the latest addition:

I have long been fond of comparing Workday strategy to the process of sending a rocket to the moon. Workday HCM was our first booster rocket that launched the company. International expansion was the second. Financial management was the third stage and the combination of planning and Workday Prism Analytics was the fourth and most recent step in our journey. Opening up the Workday Cloud Platform and entering the PaaS market will be number five. We believe strongly that our Platform-as-a-Service initiative is a major step forward for Workday as we continue to innovate and bring increasing value to our customers.


He also cited increasing ‘word of mouth’ networking among prospects:

Success begets success in terms of customer deployments and having happy customers. I do think that we are beginning to see a network effect of the large Fortune 500 companies talking to each other and comparing notes on which solutions work and don’t work. I share that view with that [Salesforce CEO] Marc Benioff has, that we are relentlessly focused on customer success and that scale is beginning to really pay off. It always has paid off, but now we are getting to such big numbers that the customers really do talk a lot amongst themselves.

He added that successful enterprise use cases are bringing contact from companies which would have been hard to crack a few years ago:

These large companies look around and don’t see a lot of success on the other platforms. They might see it in a medium enterprise company, but they don’t see [it] in a large enterprise, other than Workday customers. That’s that network effect where, as with the CIO of a Fortune 10 company who we have been trying to get into see for 5 years, finally he called me and said, ‘Hey, I have had so many of your customers tell me what a great experience they have had with Workday and you are a good company to do business with and your products are up and running and working really well, why don’t you come and see me?’.

You can’t buy a lead that gets you in the door like that, the customer referrals because of the great work that our products and services people have done. We are getting those kinds of meetings now that a couple years ago I think people would have waited to see what SAP and Oracle would deliver and now as they are moving they want to make sure that they at least consider Workday.

My take

Use cases, word of mouth referrals, customer stories as the most powerful proof points - music to diginomica’s ears! Bhusri is talking our language and, based upon another strong quarter, reaping the benefits of investment in customer success.

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