Workday - exit Power of One, enter Power to Adapt

Workday’s shift to the Power to Adapt has been a while in the making. In fact, the predecessor strategy, technology and messaging was from a decade ago. That timing wasn’t lost on some of the crowd at the recent Workday Innovation Summit. In fact, some of them were already dragging out a piece I did on Workday’s Power of One from 10 years ago. That piece described the Franken-soft and how Workday was going to avoid that kludged early cloud creation by many of its old-school ERP competitors.

Franken-soft then

What is the Franken-soft? Colleague Stacey Harris noted a definitional sentence of mine from 2012:

The ultimate manifestation of ERP’s Franken-soft occurs when a vendor continues to expand their solution via more, redundant application parts of cadaver software firm donors.

Okay, that’s a very descriptive sentence. But, if you could go back in time, on-premises ERP firms were buying a lot of cloud solutions back in the day and doing a very minimalist job of integrating them to their ERP suites. Franken-soft was mostly the result of on-premises solution providers trying to make their firms seem more market relevant or ‘cloudy’. What they ended up with were a number of redundant applications, numerous user interfaces (UIs) or user experiences (UXs), multiple data models, redundant and/or latent data found in both their on-premises solution and one or more cloud data stores.

There was another problem with the Franken-soft back then. The old ERP vendors’ cloud-based acquisitions were going to have to interface/integrate with numerous versions of old ERP software that could be heavily customized, several versions out-of-date and worse. It’s hard to connect new cloud apps to all of that old, potentially obsolete on-premises product that may also possess a ton of technical debt. Maybe the reason ol’ Frankenstein plodded along was that it was dragging a ton of old code and customizations with him.

Many ERP vendors’ ’strategy’ to rationalize all of these products was to either stall or eventually rewrite the old and acquired products into a single solution set. One major vendor took over a decade to rewrite and rationalize their acquired apps.

What I wrote almost 10 years ago (November 2012) is still valid:

the acquisition path may present a faster way to achieve certain financial goals but could create longer-term issues. In the acquisition model, acquired applications are often lightly integrated to the vendor’s legacy applications. These products are stitched together. They often look like they originated from different vendors and with different underlying tools/architectures. Vendors may promise that future versions will eventually coalesce into a single unified solution but that may take many years to occur.

In contrast to the Franken-soft, Workday was, in 2012, defining their approach as the 'Power of One':

Dave Duffield (co-CEO) spoke of the power of one. In the context of his remarks, he spoke of how having all customers on one release, one code base, one tech stack, etc. was permitting customers to spend less on software maintenance and to take advantage of the latest functionality as soon as it was available. But, there’s another part to this. Workday’s power of one also applies to the singularity of their product line and architecture. There is only one set of applications, one user interface, one mobile solution set, etc. It is this singularity that permits Workday to move at least as fast as businesses and technological innovations occur. Franken-soft solutions cannot move that fast.

 

Today - Power to Adapt and inorganic growth

Workday has evolved over the last decade and the Power of One needed a rethink. In recent years, Workday has acquired a number of firms that, in a departure from many prior deals, are application solutions not technical platform additions. These recent acquisitions included Zimit (a services configure to quote solution), Scout RFP (a sourcing solution) and Adaptive Insights (a planning/forecasting solution) to name a few.

Analysts have been bugging Workday the last couple of years to reconcile the Power of One with all of these acquisitions especially since aspects of these solutions weren’t being completely rewritten to exist solely within the one Workday stack. Last week, Workday provided some illumination re: its new strategy. The new positioning is one part of the Power to Adapt and one big component of the Power to Adapt is in how Workday will handle inorganic growth.

Colleague Josh Bersin did an excellent recap of the summit in this piece. He had this comment on the Power to Adapt topic:

The first few acquisitions (Cape Clear, Identified, Mediacore, and others) were technology deals, designed to help Workday build out its core platform. Later Workday acquired Platfora (where Pete Schlampp came from) to greatly extend its data services and then application companies like Adaptive Insights, Peakon, VNDLY, and Zimit. These later acquisitions are real applications which had lots of customers, so Workday had to find a way to integrate them.

As Sayan Chakraborty, EVP of product and technology, discussed, this means Workday needed a new model. Realizing that these apps have their own data structures, application logic, user experiences, and security schemes, Workday now “blends” these apps into the Workday object model and business process framework, giving customers access to the new application without losing any of the security, identity management, and system of record profiles they have in place. It’s an architected and “tightly coupled” integration, so these new systems (and development teams) can grow and thrive as “Workday properties.” (Sayan’s words.)

What I understood the new inorganic growth strategy to entail is this:

• Some technology stack components in newly acquired applications may get the full re-write while others can remain as-is or have components targeted for reuse in other Workday applications.
• Workday may keep the parts of an acquired application as-is so that they can then reuse them again in other use cases or applications. For example, Workday gave several examples where ML (machine learning) algorithms in an acquired learning solution could remain intact and also be referenced in other Workday applications (e.g., to identify needed training for potential jobseekers (Recruiting), for operations personnel (HR or Workforce Management), for persons to advance their career, to better plan headcount requirements, etc.).
• Workday may transition some aspects (e.g., UX) of an acquired product to their own standards and technology and keep other portions of the acquired solution intact.
• So, yes, this does mean that some components of an acquired solution aren’t getting a complete re-write to the Workday tech stack but it sure sounded like other aspects would be.

Workday spent a lot of time discussing this with the analysts. I found much of the discussion to be technically focused and I doubt it’s a major concern with many software buyers. Specifically:

• Workday’s not suggesting some lightweight integration or interface between acquired application software products and the core Workday suite. It sounds like it’s more than that and it will vary from deal to deal.
• Customers will likely see most acquisitions acquire the same UX as Workday’s core suite. Ditto for parts of their data model and more.

This is a more nuanced kind of integration that was, frankly, not present or possible a decade ago unless an application was completely re-written.

When software buyers are looking at integration issues as part of a selection, they’re likely looking at things like:

• All of the other messed up, incomplete, late, error-ridden and semi-manual integrations business people still have to deal with in their existing application portfolio. For example, many large firms may have many dozens of integrations just with their HRM system and dozens more between their General Ledger and their numerous country-specific payroll applications. Software buyers are most focused on the most broken integrations they have and are generally less concerned about the application-to-application integrations within an ERP suite.
• Replacing their own poor integrations. Some systems that clients use today are only, and I’m being charitable here, integrated in name only. I recently saw one of these environments where users must export records from one system to a CSV file, upload these to Microsoft Excel or Access, manipulate the data to work within the other system, pump the file into the next system, run reconciliation checks to ensure all records made it across successfully, and, pray it still works the next time.
• Ensuring their various banking systems, numerous country specific applications, custom applications, etc. will connect to the new ERP and what kind of support load (and process inefficiencies) it will generate for the firm. That’s the big integration issue and not the technical product stack integration that some analysts were getting excited about this week.

Power to Adapt & Workday Extend

Workday Extend is a full stack of technology capabilities that permit customers and Workday partners to extend a Workday application’s capabilities in a supported manner. It’s a toolkit to permit customers the ability to add/alter screens, workflows, objects, etc. and other capabilities to support customer specific requirements.  As such, Workday Extend is another way Workday helps customers adapt to an ever      more dynamic business world.

With Extend, I saw that at least four different vaccine management application extensions (to the Workday HR modules) have been created. I saw another where a major e-commerce firm wanted a faster, streamlined sourcing process. To date, Workday customers and partners have created over 450 unique Extend applications.

Extend is intended to help customers rapidly adjust/adapt to a more volatile/dynamic world whether the new requirements are driven by regulatory, legal, industry, health, privacy, competitive or other triggers. As told by Sayan last week:

Workday Extend and Orchestrate enable customers and partners to build their own applications that utilize the value of the Workday platform -- its data, processes, UI components, security and scalability for use cases that are business, region or industry-specific - that Workday is not solving directly.

Extend is NOT designed to help persons develop standalone applications or full industry-specific application suites. It is, as its name suggests, designed to push, extend and/or stretch the functionality found in Workday’s applications.

Extend (via its Orchestrate capabilities) offers some business process management (BPM) functionality. According to Workday:

Workday Orchestrate, included with every Workday Extend subscription, supports orchestration of processes that run within Workday and interact with external systems. With Workday Orchestrate, developers visually build orchestrations using an intuitive drag-and-drop user interface (UI)—called Orchestration Builder—providing guided capability to define flows, map data, and perform transformations, all designed to reduce development time and effort. With Workday Orchestrate, developers can build orchestrations for new use cases requiring deep interactions with native Workday business processes, data, experiences, and third-party services. And all orchestrations are built from a trusted source of data, keeping data in place where it maintains context, stays secure, and ensures privacy. This removes the risk and extra effort that comes with extracting data out of the core system to meet unique process needs.

Support for new data and logic components for developers to build their own business objects and business processes to store, process, and secure Workday Extend app data. These net-new customer-delivered objects and processes extend Workday’s data model—which are unique Workday capabilities. Customers can associate these newly built objects with Workday-delivered business objects and processes to build sophisticated data models. And, by leveraging the existing Workday security model, new objects and processes inherit the same secure, auditable, and resilient features customers expect from Workday applications. And, as new objects and processes are built, a public REST API is automatically created—unlocking access for other developers and processes to use, continuing to increase the ability to build new capabilities with speed and scale.

The BPM aspects of this are now a competitive necessity for Workday as competitors have acquired BPM and process mining technologies to supplement their ERP offerings.

Workday will have a developer’s conference this year that will focus on those persons using the Extend capability set and other Workday platform technologies.

At this time, some Workday advanced technologies are not yet exposed to developers. I’d expect RPA (robotic process automation) to be one that customers will want ASAP as its potential to drive down back-office costs and remove inefficiencies is huge today.

Power to Adapt and integrators

There’s a big ecosystem of systems integrators, implementers and consultants that orbit the Workday world. These firms would like to have a way to better differentiate themselves and deliver more value to Workday customers than just providing basic implementation services.

Extend permits them the opportunity to create a number of value-added product enhancements that can be used to deliver better business outcomes for customers and create competitive advantage for the integrator. Extend provides a way for them to enhance revenues and provide an IP (intellectual property) driven income stream for them. It can also help these firms stand apart from those that simply offer low-cost, standard implementations.

This can also benefit Workday customers as many are hungry to understand what else can be done to Workday applications that could deliver outsized benefits to their firm. Workday buyers may not have the time to develop these extensions and acquiring them from a third-party could be both convenient, time-efficient, and, potentially lower risk.

Power to Adapt & advanced technologies

Power to Adapt is also about all kinds of advanced technologies (e.g., big data support, chatbots, robotic process automation, machine learning, etc.) and what they do to existing business processes, applications, insights, reports and more. It’s the use of these capabilities (in conjunction with new extension tools) that help organizations adjust to ever more rapidly changing business conditions     .

I’m not sure Workday’s ready to fully unleash these on the market just yet. Workday takes a measured approach to opening up their technology to others and I suspect it will be a bit before we see large numbers of customers pumping in (or integrating) external big datasets into the Workday stack.

Power to Adapt and growth

The Power to Adapt is not necessarily a replacement of Power of One. They each address a different set of architectural concepts with some commonality. Nonetheless, the Power of One has run its course. We’re now in a multi-cloud world – something Workday acknowledged. Workday’s customers are integrating many other vendors’ solutions with their own. And, these integrations are possible via new integration capabilities that Workday can use with its acquisitions, too.

Workday intends to make the Power to Adapt a reality as it will either build, buy or partner to get new solutions or capabilities fast. The new competitive market its customers/prospects live in demands vendors provide new capabilities immediately. No business has the time to wait months or years for a vendor to organically create a new application. So, the Power to Adapt is really about Workday’s ability to adapt to rapidly changing customer needs AND its customers’ ability to remain competitively relevant. It is adaptability on two dimensions.

To power all of that change in a limited time, Workday will need to do acquisition deals and encourage partner firms (e.g., systems integrators) to create new applications or product extensions to the Workday product line. There will likely be too many requests for new capabilities and too little time to do it all organically. Inorganic and partner-driven product line growth is needed for the Power to Adapt to work.

My take

The Power of One was a great way to differentiate Workday at a time when many competitors were struggling to move to the cloud. Now that many of those same competitors finally got to the cloud, the differentiation Workday must emphasize must change, too.

The Power to Adapt acknowledges the accentuated level of change businesses confront today and the kind of change that ERP vendors must support. At another level, it acknowledges that even vendors must adapt and that inorganic growth or partner-driven innovation is needed for the solutions to be as dynamic as the customer’s business world. I’ve seen other cloud ERP vendors realize that they must open up to third parties and third-party solutions as no vendor can build (or extend) the applications that customers need in the time required without help. No vendor can do it all or all alone.

I also believe that we’ll someday see a Power to Adapt in Amazing Ways. This will occur when customers or third-parties can develop entire vertical solutions, numerous robotic powered processes and so much more via the native and advanced technologies within an ERP vendor’s tech stack. That’ll be tricky as there may be significant controls, security, data model, monetization and other bridges to cross for this. But, I believe it will happen.

I’m not sure the Power to Adapt messaging is all there for now.  The concept is nuanced and most of what we heard concerned acquisitions. Workday needs to really emphasize what it and its partners will do (or already have done) with the new open development capabilities in the product. The solutions (vertical, horizontal, analytical, etc.) Workday and others build into the software are the proof points re: adaptability and they should be the unquestioned stars of the Power to Adapt concept.

So, as we say adieu to Franken-soft, we should maybe consider a new creature to represent the new world of ERP. My vote is the ultimate in adaptability: the shape shifting changeling character of Star Trek: Odo.  The only question is: “Would Mary Shelley approve?”