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    Workday CEO Aneel Bhusri made waves at Deutsche Bank’s recent 2020 Global Technology Conference by openly discussing his interest and the firm’s intentions for further pushes into the procurement software market.

    Hot on the heels of their $540M acquisition of cloud-based Scout RFP in 2019, the company reported a profitable 19.6% year-on-year increase in their second financial quarter’s revenue.

    This apparent success appears to have emboldened Mr. Bhusri’s aspirations to further expand Workday into this difficult yet lucrative market.

    “Scout was a quick win on the procurement side,” he stated. “Our first insight was to recognise that procurement had become its own system of record… and that was really the driver of the Scout acquisition. We want to be best in class, best in breed, in procurement. We’re not there, yet.”

    However, one of Deutsche Bank’s Wall Street equity research analysts, Taylor McGinnis, criticised Workday’s apparent lack of a procure-to-pay suite, and he made probed the firm’s overall procurement strategy.

    Mr. Bhusri admitted that selling procurement software as an individual suite alongside their Financial and HR Management solutions was not an immediate prospect, and that such an anticipated move still would still a few years away.

    He followed with, “In the meantime, a stronger procurement story makes our financial story that much better. In most cases, procurement reports up to the CFO. The CFO does not want to piece together multiple products from multiple vendors.”

    While this may very well be true and acknowledges the growing importance of the CFO as a key customer for Workday, particularly in light of their growing ‘Financials First’ sales strategy, it may overlook the fact that the needs of procurement teams are separate, complex and vast.

    The Procurement Software market is highly evolved and the larger players with whom Workday may aspire to compete, such as Coupa, SAP Ariba and Basware, are not sat resting on their laurels either. Earlier this year, SAP, almost eight years after its acquisition of Ariba, have announced that its business applications and procurement software will have integrated user interfaces, data management options, and compiled analytics. SAP, an example of one of the juggernauts in the procurement market, already have a massive and eager customer base already invested into using their core ERP lineup.

    Such established procurement software vendors each have globe-spanning networks of contracted and subcontracted suppliers, all ready and eager to conduct business – thereby reducing much of the tedious legwork done by procurement teams.

    Additionally, there are other specialists out there that focus purely on supply chain analytics and risk and performance: a prominent example is GT Nexus, now rebranded to Infor Nexus after its acquirer purchased it in 2015.

    Workday’s existing functionality in the procurement space does not offer a replacement for such a range of specialist existing applications and tools currently utilised by the profession. Questions about their procurement strategy, similar to those raised at the Deutsche Bank Global Technology Conference, also relate to their acquisition of Scout RFP and how the use of RFP’s fit into procurement within the modern or future Enterprise.

    New potential suppliers to businesses that use innovative techniques and creative thinking are highly sought after by businesses. Procurement professionals will always be prepared to proactively seek out new innovative suppliers that can bring value to their business rather than rely on suppliers already offering services via procurement software. However for more standard, run-of-the mill purchasing the automated and aggregated supply tools available within the existing player’s software are highly effective and save significant time and energy for the more transactional procurement tasks. Additionally, businesses seeking to improve the existing performance of their supply chains will need to know more about their current suppliers in order to be better informed about future procurement decisions.

    Unfortunately for Workday, these common but complex challenges faced by procurement are not addressed by RFPs, which are about as useful in these critical aspects of business as a bottle of chili sauce in the Sahara.

    Aneel Bhusri commented that a separate standalone procurement suite may be several years away and perhaps this timing could be to Workday’s advantage. The absence of an obvious strategy at this point from Bhusri and the team may reflect the shifting sands on which procurement teams operate. The impact of COVID-19 has drastically changed the landscape for business and consumers alike and as national and international supply chains are rebuilt and rerouted then perhaps Workday, effectively starting with a blank sheet of paper, once fully committed to procurement maybe better placed to reflect whatever global business landscape emerges from the COVID-19 pandemic than the established juggernauts attempting to change direction with large customer bases in tow.


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