Protocol | Enterprise
Your guide to the future of enterprise computing, every Monday and Thursday.
August 2, 2021
Welcome to Protocol | Enterprise, your comprehensive roundup of everything you need to know about the week in cloud and enterprise software. This Monday: Workday's Amazon fiasco, gaming goes subscription, and AWS continues to dominate.
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The Big Story
Workday's Amazon fiasco
In 2017, Workday hit the jackpot. Amazon, one of the world's most valuable and prominent companies, was going to become a customer. And not just in a single division — across the whole enterprise. It was the kind of announcement IT vendors drool over.
But Amazon ultimately abandoned the project after what appeared to be a difficult, and ultimately failed, implementation effort.
- The deal seemed simple at a 30,000-foot level: Replace Oracle's PeopleSoft with Workday. It was a migration that should have been a layup for the enterprise-management software company..
- But now, years later, PeopleSoft still remains the predominant HR software supplier for Amazon. There are some pockets, however, that still use Workday, an Amazon spokesperson told Business Insider.
- The episode highlights the obvious: enterprise-wide migration projects are tricky and vary dramatically company to company. And Amazon is a particularly hard company to work with, according to analysts and other industry insiders, given that its IT staff likes to build its own products and that it runs a complex tech environment.
- "You're going to have customers all the time that … are sold a bill of goods that's different from what the system may do," Needham & Company senior research analyst Scott Berg told Protocol. But "Amazon and Apple have been the two biggest pain in the asses to sell to."
The news came as a bit of a shock, given Workday's prominence in the business software industry, as well as the fact that the project came to a halt over a year and a half ago and didn't become public knowledge until this week.
- The company says its products are used by 45% of the top 500 global companies. And it recently signed up corporate heavyweights like Walmart and Accenture.
- Workday co-founder Dave Duffield also knows a thing or two about PeopleSoft and how to replace it; he co-founded that company before it was purchased by Oracle in 2005.
Still, the rumored reasoning behind Amazon's decision — that Workday's database couldn't scale fast enough to support the pace of hiring, according to an anonymous source who spoke to Business Insider — is a devastating blow for a vendor that labels itself as cloud-native.
- It's hard to imagine scaling was the only factor. Workday also denied that was the issue behind the collapse of the Amazon deal.
- But the company's refusal to provide any additional details brings about more questions than answers at a time when industry experts are raising concerns that Workday's marketing claims aren't backed up in the real world.
- "Fundamentally, things that were built and architectured in the early days that were so old-school that, absent an entire re-engineering of product and delivery strategy, they are going to continue to do what they are doing as they carry on the coattails of Duffield's relationships," said Valoir analyst Rebecca Wettemann.
- Workday said its "system is built on the latest proven technology -- service-oriented, in-memory architecture, object data model," a spokesperson wrote in an emailed statement. The company declined an on-record interview request.
The whole rationale behind the cloud is that the services can be scaled up rapidly and easily. And for a vendor that specializes in HR tech, accommodating a dramatic rise in a customer's workforce seems table stakes by this point.
- "You have to be able to scale with the biggest, most complex organizations in the world. And you have to do that at record time. You have to be able to get customers live very fast," said ServiceNow CEO Bill McDermott.
It's the kind of criticism that, a decade ago, one may expect to be leveled at Oracle or SAP. That's why it's so surprising to see.
- Workday has often marketed itself as the anti-Oracle — or anti-PeopleSoft, at least. But the failed Amazon rollout harkens back to the years of disastrous Oracle and SAP on-premises deployments, efforts that new, cloud-based products were supposed to help solve.
And the damaging announcement comes as Workday's list of competitors grows longer and more prominent. The company is dominant in human resource management systems, or HRIS, but is weaker in other areas.
- "Their core HRIS is really good. Their other applications are baked half-ass at the end of the day," said Berg. "The biggest challenge is not turning into the next Oracle or SAP, where they don't have enough depth or expertise in the other product areas."
- When it comes to rivals, there are the perennial ones: Oracle, Ceridian, Paycor and UKG. Then there are newer rivals emerging. ServiceNow has also been making a big push into HR — though largely just in the case-management space.
- And Salesforce clearly has ambitions in the employee experience sector with its launch of Work.com, though it has a ways to go to establish itself.
- "Salesforce's functionality there is super lightweight," Berg said. "It's not the full-fledged portal that we see from other HR vendors."
The reality is that organizations need a ton of different programs to work together to support HR, like payroll and talent management, for example. And it's going to be very difficult for a vendor like ServiceNow or Salesforce to offer the full suite of services that Workday can.
- Ultimately, the Amazon deal probably represented a small fraction of Workday's overall revenue. But these customer stories matter; it's why so many enterprises tout the successes but like to ignore the failures.
Now, we get the rare chance to see just how impactful a very public, negative user experience will have on one of the largest enterprise tech vendors.
— Joe Williams
A MESSAGE FROM SINGAPORE EDB
Singapore is fast becoming a global hotbed of tech innovation. It's easy to see why. Nearly 80 of the world's top 100 tech firms have set up outposts there, including Google, Facebook, Stripe, Salesforce and homegrown unicorns like the super-app Grab.
Join Protocol's Biz Carson for a conversation with Atomic's Swathy Prithivi, Accel's Rich Wong and Asana's Oliver Jay during our upcoming event: Going Global: How Tech Companies Expand Internationally August 10 at 9 a.m. PT / 12 p.m. ET Learn More
This Week On Protocol
Gaming goes subscription: Protocol's Nick Statt has a fantastic deep dive into how the gaming industry is responding to the increasingly cloud-first paradigm and the challenges ahead in making subscription a reality.
Finding purpose: In 2021, Cisco added a new responsibility for Chief People Officer Francine Katsoudas. As chief people, policy & purpose officer, she would be tasked with holding Cisco accountable for adhering to its stated mission. If you're confused about what that really means, this Q&A from Protocol's Amber Burton will help.
Around the Enterprise
- No surprise: Business at AWS is (still) booming. Revenue grew 37% last quarter.
- Qualtrics is acquiring Clarabridge, a provider of conversational analytics tools, for $1.13 billion.
- The software market also continues to be red-hot. Last quarter, Atlassian posted a 30% revenue gain to $559.5 million.
- Meanwhile, Twilio posted a 67% jump in revenue to $669 million.
A MESSAGE FROM SINGAPORE EDB
Business leaders say they choose Singapore for its modern tech infrastructure, strong government support, robust pipeline of talent and pro-business regulations (the World Bank ranks it No. 2 in the world for ease of doing business). Plus, its location in the heart of Southeast Asia serves as a launchpad into the bustling Asian-Pacific market.
Thanks for reading — see you Thursday!