Fast-growing enterprise cloud application vendors face many challenges. One that's often overlooked but is now becoming critical is the need to manage their expanding partner ecosystem. After writing last week about how traditional systems integrators are evolving to meet enterprise needs in a digital era, I looked out my notes of a conversation I'd had back in November with Workday co-President Phil Wilmington, for a vendor perspective on this challenge.
I began our chat by observing that when enterprises adopt cloud applications, many are slow to realize the extent of business transformation that accompanies a roll-out. This is another challenge vendors face, in which partners can play an important role. But in Workday's case, that's less of a problem, says Wilmington, because its customers are already eager to embrace change.
It's usually a qualifier for us quite candidly. If organizations are looking to just lift and shift the same processes that they're using currently, if they're not committed to change, then there are probably easier ways to do it than to move to Workday.
If you truly want to enable the employee, if you want to empower them to take control over their interactions between the organization and themselves, then that's where we do very well. It's actually a very good qualifier in our process, to see if companies are ready to engage in that. If they are then that's probably a very good fit for Workday.
For implementation partners, therefore, the emphasis has to be on helping clients with business transformation. This is where partners can earn their keep, he says, while reducing the time and cost of technology implementation.
The cost of implementing the application, the cost of going live in that application, should be driven down. That's what our responsibility is and that's what we've been very open with, not only our customers who want that, but our business partner community.
What that opens up is the opportunity to have more of an investment in business transformation and process re-engineering. I think ultimately that's where the consulting dollar will be spent.
Forward-thinking firms in the systems integrator community recognize this is the way forward, he says.
I think the progressive firms are certainly adopting that thinking and recognize that we're very sincere in our efforts to drive down the cost of standard implementation, so they've got to get onboard with that.
Workday's partner ecosystem has been growing to keep pace with expansion in its customer base, even though, as Wilmington explained to me when we met the previous year, the vendor holds its partners to a high standard:
The way that Workday has gone about that is to treat the ecosystem and the partners exactly the way you treat your own employee base as it relates to customer success. The administration of those resources needs to be just as diligent ... we require the same adherence to the same standards.
Growth has been accompanied by a marked trend towards consolidation, as smaller Workday specialists have been snapped up by more established firms. In the latter months of 2016, Accenture bought DayNine and Wipro bought Appirio. These had been the remaining largest independents after IBM bought Meteorix a year previously. Workday has been watching these acquisitions carefully, says Wilmington.
There's always a little apprehension when organisations like that get sucked up into larger organizations that over time have been traditional systems integrators. They have Peoplesoft, Oracle, SAP practises that have been long term engagement focused — go in, do a long term implementation, stay for a long time.
That's not the methodology that's made Workday great. Our guys know when to get out. They go in to help organisations be successful quickly, cost effectively, and step back and let that company take ownership for that application.
Hopefully, those will be the same characteristics that we continue to see for these organisations as they become part of larger entities. We've seen it at IBM. Meteorix was acquired by IBM and I think it's transforming IBM to view how they interact with Workday projects differently. It's more of a Meteorix mentality that's driving IBM's methodology and process.
He echoed the view expressed by Workday CEO Aneel Bhusri that the larger firms will invest in expanding the reach of these acquisitions.
Is the glass half empty or half full? Half full would say here are great organizations that are now part of organizations that have more breadth and depth, so they'll expand good practise into those organizations. Hopefully, that's what we'll see.
While Workday can't dictate which partners its customers use, it does monitor partner skills and performance very carefully so that it can endorse customer selections, he says.
We have a vested interest in making sure that that selection of a business partner is the right selection for that individual's success story.
Workday remains on its guard against firms that might bring an old-fashioned approach to systems integration into its partner ecosystem. Its stance on the need for customers to embrace change gives it an advantage here against some of its competitors that have an existing installed base of customers with on-premise systems.
A vendor like Infor, for example, positively encourages its customers to lift-and-shift into the cloud, as the fastest way to move them into a position where they can then take the next step to a cloud-native platform. The problem with having a hybrid installed base is that it means you'll also have hybrid partner channel, with some diehard adherents of older, less cloud-amenable implementation models. This is the quandary that SAP SuccessFactors' Mike Ettling recently complained of — the cloud ‘haves’ and ‘have-nots’
It's a classic illustration of Clayton Christensen's innovator's dilemma. Workday is in a much simpler position than rivals that must grapple with an on-premise heritage.
But that's not to say Workday doesn't have challenges of its own. Managing the growth of a closely-controlled partner ecosystem takes a lot of investment. Salesforce seems to have woken up to the need to invest significantly in training and infrastructure to build out its partner skills base. I'm still not convinced Workday is doing enough to make sure the skills base and partner ecosystem expands fast enough to meet its needs. Setting rules and guidelines is one part of it, but it also needs proactive engagement to inject resources — for example, working with education institutions to make sure the skills are being taught, or nurturing the growth of newcomers into the partner ecosystem.
With growth continuing at full pelt, there are bound to be stresses in the ecosystem. Cloud vendors are learning how important it is to nurture their partner base so that it aids rather than hinders future growth.