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    During Oracle’s fiscal q4 earnings call on 16th June Larry Ellison ratcheted up the rhetoric a notch between Oracle and Workday by predicting that Oracle’s scale and dominance in ERP, which he claims to be around 95% of the Cloud ERP market, will see them overtake Workday as the global leader in the Cloud HR market in the coming years. Ellison’s logic is based on an apparent growing inclination among customers to view HCM as just a part of a wider suite of applications and select a single cloud vendor right across the enterprise. Whilst Oracle’s power and scale in the ERP space is not up for debate, what was a more interesting claim is that this predicted shift in the market would be helped along by Oracle’s better performance over Workday in recent customer satisfaction ratings.

    Ellison stated, “Workday has a cloud ERP system, but most of their success has come in HCM. And more and more customers these days are purchasing HCM as a part of an overall ERP decision”. Ellison continued, “We’ve seen our HCM Fusion growth rates surpass Workday’s HCM growth rates. We are already by far the biggest cloud ERP player and it looks like we’re going to be able to leverage our advantage in ERP and our scale in ERP to also become the biggest cloud HCM player.”

    This kind of rhetoric has been part of a regular exchange between Ellison and Workday’s Aneel Bhusri in recent earnings calls. Back in August ’19 during Workday’s Q2 call Bhusri took aim at Oracle and SAP noting their lack of perceived HCM success within Fortune 500 clients. “If you look at the Fortune 500, candidly neither of our large competitors have real proof-points over 100,000 employees or even over 50,000 employees that are in production”.

    Additionally Oracle CEO Mark Hurd injected some vitriol into the debate recently when responding to a question about competition with Workday, “My sense of Workday is they do a decent job in upmarket HCM where they can divorce the HCM buyer from the ERP buyer. When the ERP buyer and the HCM buyer are aligned and combined, they’re really in a position with no chance because they don’t have much of a financials product,”

    Workday’s growth strategy beyond HCM within the large enterprise sector is based on their impressive success with HCM within Fortune 500 clients, where 50% of the Fortune 100 have bought Workday HCM. Those existing relationships give them the beachhead to strategically build out their growing offering which now includes Prism Analytics, Adaptive Insights, Scout RFP alongside HCM and Financials. In the growing mid market Workday’s ambitions are based around the combined HCM and Financial offering, deployed via the Launch methodology. However, it’s the growing influence of a ‘Financials First’ approach where Workday are out to prove Ellison, Hurd and the team at Oracle guilty of underestimating their Financials solution as a competitive force in a standalone, best of breed selection process. This approach has some notable recent wins including Fannie Mae, which was their first Fortune 50 success of the Financials First approach. In fact in Workday’s FQ4 call Bhusri announced a record of 90 new Financials customers and revenue growth in that segment in excess of 40% fuelled somewhat by the success of several Financials First wins. Bhusri is on record stating that their Financials solution will be a larger earner for the business than HCM within 5 years, and if their year-on-year growth of 40%-50% continues then Oracle may have to quickly re-evaluate their current view of Workday Fins as a competitor in the Cloud Financials space.

    It’s clear that both Workday and Oracle see the future of their Cloud HCM suites as being heavily reliant upon the success of their strategy to caplitalise on the high growth Cloud Financials market. Time will tell whose approach ultimately returns the best results there, but what about Ellison’s claims about Oracle’s better customer satisfaction ratings being another driver for their HCM growth?

    Rewind to Workday’s 2019 Q2 earnings call where Aneel Bhusri discussed customer satisfaction, “A huge part of our success has been not just winning the customer, but more importantly getting them into production and having them be happy….Our continued success on a global basis is a direct reflection of the value we place on live, happy, and referenceable customers….Our customer-satisfaction rate remains among the highest in the enterprise-cloud software industry. And the success of our customers continues to be an incredibly important part of our enduring business long-term.”

    So, Ellison’s comments about Workday’s customer reviews seem to, unsurprisingly, contradict Workday’s own view. During Oracle’s Q4 earnings call Ellison quoted both Gartner and Forrester Research as evidence to back up his claim. “Look at the Gartner report, look at the Forrester report….Our customer-sat rating is 5.0, right at the top. Workday is right in the middle with 3.0, far behind us.”’s Bob Evans summarises Forrester’s customer satisfaction findings nicely:

    1. Per Ellison’s claim, does Forrester rate Oracle HCM “much higher” than Workday HCM?
    Well, yes and no. Forrester rated the two companies on 8 distinct attributes spread across 3 different categories. For those 3 categories, Oracle came out on top in Current Offering. Workday came out on top in Strategy. And the two companies tied for Market Presence.

    2. Per Ellison’s claims about the “customer-satisfaction” scores, did Oracle get a 5.0 and Workday a 3.0?
    Again, it’s kinda/sorta yes and no, although I believe the essence of Ellison’s point is right on the mark. And that’s a major win for Oracle.
    Forrester did not measure “customer satisfaction” but rather “customer experience.” It’s a close call, and Ellison should have been more precise by using the term “customer experience” instead of “customer satisfaction.” But without question, the numbers cited by Ellison are right on the mark: for “customer experience,” Oracle received a 5.0, and Workday a 3.0.

    What I find particularly interesting about in those numbers is that SAP’s HCM offering, SuccessFactors, also scored a 5.0 for customer experience, tied with Oracle and well ahead of Workday. In fact, in the Current Offering category that includes “customer experience,” SAP scored better than Workday.

    3. Workday tops Oracle in Strategy category
    In the category of Strategy, Workday topped Oracle with an overall score of 4.71 to Oracle’s 3.90. Within the Strategy category, in the attribute called Product Strategy and Roadmap, Workday scored a 5.0 while both Oracle and SAP got 3.67.

    4. In Market Presence, sheer perfection from all 3 vendors
    This one had me scratching my head a bit—I don’t believe in coincidences, yet this one was overflowing with what appear to be coincidences. The Market Presence category includes 3 attributes: revenue, number of customers, and number of licenses. Forrester awarded perfect 5’s to Oracle, SAP and Workday for every one of those attributes, and so for Market Presence overall. That’s more than a little weird, but that’s what the numbers show.“

    Bob Evans’ full article can be found here

    Back again to Aneel Bhusri in 2019’s Workday Q2 earnings call, “And when people have a failed project, they wanted to get the sure thing and make sure that it works. And that’s where we hopefully come into play.”
    To drive home his point about customer satisfaction, Ellison was careful to point out that even Workday are not immune to failed implementations, citing Goldman Sachs’ replacement of Workday with Oracle HCM Cloud following, what Ellison called, a failed implementation from Bhusri and the team. “Maybe the most interesting one is Goldman Sachs. Goldman Sachs initially purchased Workday HCM, but their implementation was not successful. Thereafter, Goldman Sachs acquired Oracle Cloud HCM and they went live a little over a month ago.”

    As the global economy tentatively emerges from the COVID-19 pandemic will the cloud vendors see a busy H2 of 2020, happily dealing new enquires from potential customers only recently converted to the cloud model? This additional inertia from new customers who have witnessed the weaknesses of their on-premise solutions during lockdown, added to the much projected growth in the Cloud Financials sector, already well underway prior to COVID-19, could well see the SaaS applications market bounce back quickly. Paradoxically, it may well be whoever is better positioned to capture and benefit from that the upcoming demand for in the Cloud Financials and ERP space who finds themselves as the global leader in the HCM space in years to come.

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    Will tendency to bundle HCM with ERP really see Oracle usurp Workday as the Cloud HR leader?

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