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        Ventana Research Analyst Perspectives

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        Workday Bolsters Human Capital Management

        In the past year Workday has been making efforts to improve its human capital management (HCM) suite focused directly on the core human resources management systems and talent management software. In my previous analyst perspective about Workday I looked at its mobile capabilities for HCM. These additions, in concert with the enhancements discussed here, offer useful improvements. I have also noticed changes in the HCM market that impact all large competitors in it, including Workday. Before discussing these changes, it might help to summarize the company’s past three major releases.

        vr_HCA_02_key_benefits_of_human_capital_analyticsWorkday Release 20, which came out in September 2013, added a Big Data product to Workday’s current HCM and financial suites. This advancement can help HR use range of analytic discovery capabilities on big data that can exploit value from HR and external data. Workday provides a set of prebuilt templates companies can use to quickly analyze questions most commonly asked of the human resources department by management, such as who might leave or who the best performers are. In addition, Workday Big Data Analytics, which was launched with Workday Release 20, offers basic tools to import and analyze structured and unstructured data, allowing users to go beyond the packaged templates. Taken together these two tools and templates allow companies to see value quickly and encourage them to invest in skills needed to work with the data in ways that answer questions specific to their business.

        The big data capabilities can benefit companies that invest in them. Organizations need to better understand the relationship between investments they are making in HCM software and business outcomes. In our research into big data analytics the most-often named benefit of big data analytics is better communication and knowledge sharing but if you look at our research in human capital analytics the top benefits are improve efficiency and productivity (61%) and engage and retain more of the workforce (52%) which indicate part of the opportunity and challenge for Workday to ensure it meets the HCM value of big data for HR. To be successful in human capital analytics will require more linkage from its big data analytics and its workforce planning and analytics and ensure these offerings are intuitive and provide guidance for HR professionals and not just present easier to read reports and charts.

        Workday Release 21 came out in January 2014 and made major improvements to the Web browser user interface. It simplifies navigation and makes the application more intuitive to use. As with other human capital management applications, Workday’s new user interface utilizes design principles of consumer applications such as Google+ or LinkedIn, providing cleaner screens and graphical elements to cue users on where to find information quickly. Technologically this release moved the Workday user interface base from Adobe Flex to HTML5. This followed other Web-based applications moving in this direction; HTML5 offers more responsive design capabilities.

        Workday Release 21 also improved application usability was primarily in its Performance Management application. It enables managers and employees to execute performance reviews on mobile devices. This will appeal to the increasing number of organizations that adopting mobile devices for HCM. According to our research on human capital analytics, one-third of organizations currently use mobile devices for talent management and roughly half (52%) are planning to adopt it in the future. As I have written in previous perspectives, product usability is a leading buying criterion for most HR applications, and mobile capabilities are increasingly part of that requirement. Workday is smart to continue to focus on usability within the suite and will need to demonstrate why they are simpler and faster than others in the market and their own previous releases.

        Finally, Workday Release 22, which debuted in May 2014, features a new recruiting application. Workday Recruiting focuses on delivering applicant tracking capabilities within the recruiting process. Other HCM vendors have added similar features in the past 12 months. (I wrote about this trend in an earlier analyst perspective.)

        vr_socialcollab_most_important_workforce_metrics_updatedWhile Workday Recruiting is fairly standard in terms of core functionality, the release includes a mobile capability as in Workday 21, which makes the application more usable for a significant percentage of people in talent management tasks. In addition, the recruiting application includes robust analytics including a dashboard to track important metrics. Templates in both Workday Big Data and Workday Recruiting can track metrics important to recruiters and the company overall. Two of our research projects, on social collaboration and human capital management and human capital analytics, find that employee retention and engagement are among the five most important recruiting metrics.

        As we look ahead Workday and others will need to invest is in functionality for sourcing and recruitment marketing. While Workday has several partnerships with vendors such as Jobvite and Broadbean, applicant tracking vendors should make it easy to use these partners’ tools so customers gain the information they are seeking without feeling like they are managing multiple applications. Workday will also need to invest further into video interviewing technology like that from its partner HireVue, as leading vendors which offer applicant tracking applications and candidates can personalize their resume and interactions with HR and hiring managers. The use of video is important to HCM across the spectrum of manager and employee needs from learning, performance reviews to work scheduling and collaboration.

        Looking at these releases in a larger context, I see Workday’s value proposition as twofold: first, a single complete HCM suite that provides market-leading functionality to drive more efficient processes and workforce productivity, and second, competitive total cost of ownership by offering it all through cloud computing. The three recent releases deliver on these value propositions, adding several pieces of competitive functionality on the HCM suite. Workday is missing a complete compensation management set of capabilities like that found in other HCM suites which is becoming increasingly important to integrate with payroll, performance management, recruiting, succession and overall employee retention efforts. But to fulfill on delivering the HCM suite Workday will have to make critical decisions in regards to the gaps it has and where it works with partners still makes sense. This becomes more important as going forward Workday will also be competing with their partner’s for both mindshare and products in the places they don’t partner. For example, Workday is partnering with Kronos for offering a complete workforce management offering as it only offers basic time and attendance tracking along with time-off capabilities but Kronos has its own HR, payroll and recruiting applications as part of its workforce management suite. In addition the partnership with Cornerstone OnDemand for learning management is another example where Workday is competing in its focus for providing its talent management applications in the cloud.

        But as I said at the beginning of this perspective, I believe the HCM market is beginning to resemble the consumer applications market. Large vendors such as Oracle and SAP, and mostly midmarket focused vendors including Ceridian and Ultimate are all investing in cloud HCM suites and seeing results from doing so. In addition, cloud-based partners like Cornerstone OnDemand offer competitive, and in some cases stronger, functionality in some aspects of talent management. In sum, strong functionality offered on a cloud platform is becoming table stakes. Differentiation will now is likely to come from ease of use, intuitive applications and customer relationships with clients. Workday appears to be aware of this evolution and is investing in it, but the company will need to rationalize the reality of its partnerships and its product suite to provide better clarity to its customers and the market.


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