Workday knocks on SAP's door with German expansion

Profile picture for user gonzodaddy By Den Howlett January 21, 2015
Summary:
As Workday expands its German presence, is it now a credible threat to SAP on SAP's home turf?

Workday Way by @philww
Not many people know this but Workday has had a presence in Munich, Germany since 2008. Now it has made clear its plans to build upon the 170 businesses using Workday in Germany.

The extent to which Workday is taking this market seriously can be gauged from the implied level of investment the company is committing to the area that:

...now includes product management, sales, marketing, alliances, and services. Workday invested significant resources to engineer its suite of applications to meet the needs of the German business market, including the various aspects of collaborating with the German works councils and local data protection and privacy directives, as well as the important functional aspects of dealing with German vacation plans, overtime regulations, tariffs, and collective bargaining agreements.

Christoph Kull - Workday
Christoph Kull - country manager DACH, Workday

Although not spelled out in so many words, that suggests Workday is building data center facilities to meet with German law on data sovereignty. In addition, the company announced expanded German deployment practice partnerships with Accenture, DayNine Consulting, Deloitte, HP, IBM, Promerit/ realright and PwC.

Workday is nothing if not confident in its ability to achieve its objectives in Germany.

Christoph Kull, country manager DACH, Workday said:

"Most importantly, we think that German business leaders are ready to make the move to a new, unified and complete system built from the ground up, specifically in the cloud, and to realize all the transformative benefits this model brings."

My take

  • While diginomica is not one for making predictions, we are confident that 2015 will see major expansion by all the major SaaS vendors into Europe. All have their eyes on Germany, where SAP overwhelmingly commands the enterprise market. In the year just ended (PDF), SAP racked up revenue of €2.57 billion in Germany. The rest of EMEA accounted for €5.81 billion. That's a big target for any potential competitor.
  • Mutuality of interest has a habit of reaping rewards. My understanding is that German telcos favor US entrants since they believe the US experience in data center operation at enterprise scale is superior to that of German companies. Do not therefore be surprised to see rapid expansion, not just in Germany but in the other German speaking countries where Workday could be a very good fit for financial services and pharmaceutical businesses - as examples.
  • Workday is well aware of potential fragility among SAP's home turf portfolio. We have already seen that in the results of surveys published last year where DSAG members expressed concern with the value of Business Suite on HANA. Then there is the skepticism around maintenance fees and support.
  • One should never under estimate the extent to which SAP has been successful in keeping its home turf customers on board. While there is a sizable moat around this customer portfolio, SAP is not impregnable.
  • The extent to which SAP can stave off defections is unknown so the burning question becomes: Does SAP's ONE service cover the value proposition for tailored Employee Central implementations? Can SAP keep FI/CO customers on premises for as long as it takes them to roll out SFin? Or does Workday's combination of localized product that's ready to go now supported by a bank of familiar SIs win the day  in at least some key accounts? We will know when Workday announces its next set of net new customers.

Disclosure: SAP and Workday are premier partners at time of writing