2012 Was Workday’s Year; Who Will Own 2013 In HR Technology?

And the winner is?

[Shout-out to my colleague Lisa Rowan at IDC.  Her recent guest post was the impetus for my finishing this post, which I had started right after Workday went public on 10-12-2012.]

1987:  Bloom & Wallace and PeopleSoft Founded

1987 was a big year in the history of HR technology.  That’s the year I founded my solo consulting practice, but Bloom & Wallace warrants little more than a footnote.  Much more important in the history of HR technology, 1987 was the year that PeopleSoft was founded by Dave Duffield and Ken Morris.

PeopleSoft changed the way that HR leaders thought about technology by giving them the ability, without programmer involvement, to add a data element here, write a report there, and use the software directly without a data entry shop.  But PeopleSoft also changed the way in which software company cultures were created and sustained, and that may have been just as important as the contributions that PeopleSoft made to the technical foundations of HRM software. 

Building upon the foundations of their last company, Integral Systems, Dave and Ken’s PeopleSoft challenged the then conventional wisdom that only mainframes could run the HR and payroll applications of large organizations.  With hindsight, we now know that the then dominant pre-PeopleSoft vendors, including Tesseract, Genesys, Integral, MSA, Cyborg and more, went from dominant to chopped liver practically overnight — and they never recovered. 

All these code bases and their historical peers live on in the back rooms of various aggregators for their still meaningful maintenance revenue streams.  But their heyday ended when PeopleSoft changed customer expectations, buyer behaviors, and our perceptions of how much fun it could be to hang out with an enterprise software vendor. 

For all the bad habits that PeopleSoft’s flawed data and process designs brought to HRM for the last twenty-five years, we learned a ton from this company and its software architecture.  And many customers (not to mention industry watchers) shed a tear when Mr. Ellison succeeded in his hostile takeover of PeopleSoft in 2005.

2012:  Workday’s Year

When someone writes the history of the next twenty-five years of enterprise computing, I think that they’ll mark 2012 as just as important as 1987 for HR technology.  It would be nice to think that they would be celebrating the 25th year of my solo consulting practice, but no such luck.  Rather, 2012 will go down in history as the year that SAP and Oracle became more concerned with newcomer Workday than with each other — and with considerable  justification.

From the surprise Saturday announcement in December 2011 of SAP’s acquisition of SuccessFactors, and the strategic about-face that marked their all-in commitment to true SaaS,  to the very much expected acquisition of Taleo by Oracle in early 2012, we’ve been struck by how much of the coverage of these two bastions of enterprise software has been about the real or perceived threat of that upstart Workday.  And you only had to listen to Larry Ellison’s comments on Oracle’s last quarterly earnings call to know just how focused he is on Workday as a competitive threat.

Not only have discussions/coverage of Workday dominated the HR technology landscape this year, but discussions of Workday have included everyone from financial analysts to cloud aficionados, and from SaaS pioneers likes Salesforce.com (with whom Workday is deeply partnered) to the computer science super geeks.  And Workday customers — let’s not forget that customers are the folks who really matter in the HR technology industry — have added their voices to this discussion, supporting Workday with their enthusiasm, published case stories, and intense collaboration.

2013:  Who’s On First?

But what about the future?  What stories will dominate the large/global market, core HRMS/TM and related HR technology conversations in 2013? 

• Will Workday’s momentum continue to build as  industry observers and buyers appreciate more fully the considerable moat they’ve built with their architectural innovations, organizational culture, customer collaboration and expanding functional footprint?
• Will customers residing on aging ERP/HRMS platforms consider fully their true SaaS options, including Workday, when they realize that moving to their current vendor’s next generation platform will be just as much of a new implementation as moving to Workday or another vendor’s next gen HRMS/TM, especially if they plan to get any business value from these investments by revisiting their business rules, processes and data designs?
• Will Oracle commit themselves completely to a true SaaS future and to all the customer benefits beyond TCO savings that go with it?  With they bring all of their considerable resources to bear on driving a true SaaS future for their extensive and maturing Fusion product line?  Will they achieve the deep integration needed across their Taleo and Fusion assets? 
• Will SAP deliver a true SaaS HRMS/TM which includes an all-in SaaS payroll, going beyond hosting their on-premise payroll application?  Will Employee Central’s evolving design and broadening functionality be deeply integrated with SFSF’s talent management capabilities? 
• Will Infor’s investments in their own true SaaS HRMS/TM capabilities emerge as a major contender for larger/global organizations?  Will they achieve the architectural innovations, deep integration, customer collaboration, and pricing advantages needed to challenge the market leaders?
• Will ADP’s (with Vantage) and Ceridian’s (with DayForce) investments in their own next generation true SaaS HRMS/TM for larger/global organizations demonstrate strong enough TM and global capabilities, as well as deep enough integration and architectural innovation to compete head to head with their ERP/HRMS competitors? 
• Will it matter that some comprehensive HRMS/TM vendors don’t offer a complete ERP when the installed base of ERP/HRMS customers look around for their next generation move?  Will that move be limited to the next generation from ERP/HRMS vendors or will those buyers be willing to piece together their HRMS/TM of choice from one vendor and the rest of their ERP suite from another?
• And what about a range of other potential HRMS/TM market disruptions?  Will Microsoft get serious about HRMS/TM and buy one of the more capable middle-market providers?  Will a non-US-based HRMS/TM vendor land on our shores with real market impact?  Will Kronos go all-in with a true SaaS, full-scale, global HRMS/TM for larger organizations?  Will SilkRoad or SumTotal or Brand X deliver deep integration, scale up for larger/global organizations, advance their architectural and build-out commitments to include a global payroll engine or ???  Will any of these vendors — or others not mentioned here — achieve an architectural or product vision breakthrough that we won’t know about until we see it?

Of two things we can be certain.  2013 is not going to be dull in our neighborhood at the intersection of HRM and IT.  And InFullBloom appreciates your readership and will do our best to an eye on these developments and many more as 2013 unfolds.

[Full disclosure:  Workday is a current client, ADP and Ceridian are recent clients, as are various other US and non-US-based HRMS/TM vendors.  Oracle and SAP, from an HRM perspective, as well as several other mentioned firms, although not clients, are followed as closely as time permits and are led by highly respected and very capable colleagues.]