October 12th, 2009

The cloud: no place for amateurs

Posted by Phil Wainewright @ 1:20 pm

Categories: Customer experience, Microsoft, Service level management, Workday

Tags: Workday, Outage, Amateur, Data Centers, Manufacturing, Cloud Computing, Storage, Hardware, Data Management, Phil Wainewright

The boss of Air New Zealand has given us a convenient term for companies that can’t get to grips with the realities of delivering computing as a service: “Amateurs”. His reported comments were addressed to IBM, which failed to restore operations at a mainframe data center in a responsive enough fashion after a major outage on Sunday:

“In my 30-year working career,” he reportedly emailed the hapless vendor, “I am struggling to recall a time where I have seen a supplier so slow to react to a catastrophic system failure such as this and so unwilling to accept responsibility and apologise to its client and its client’s customers.”

T-Mobile is another reputable company left looking amateurish today after the catastrophic loss last week of all user data stored on its Sidekick service. But the real amateurs behind this story appear to be Microsoft and Hitachi, who are believed implicated in a server failure that took out both the production and backup databases on the storage network where Sidekick data is stored.

To read a contrasting story that shows how cloud outages get handled professionally, check out Michael Krigsman’s post last week about the recent 15-hour outage suffered by on-demand ERP provider Workday. Here, too, a network storage device caused a total meltdown, shutting itself down when it detected a corrupted node in a backup disk. Workday avoided Sidekick’s fate by invoking its disaster recovery plan. It avoided IBM’s fate by acting rapidly and going out of its way to keep its customers informed.

As I’ve often written in the past, big, established companies frequently over-estimate their competence at cloud computing and SaaS, simply because they fail to realize it’s far more than just a repackaging of what they already do. Unfortunately, their inability to grasp the emerging as-a-service business model and the demands of cloud-scale computing leave them performing like amateurs. The pity of it is, their arrogance and incompetence undermines trust in all cloud computing providers, even those that take their responsibilities seriously.

April 29th, 2009

How far will Workday go with its $75 million?

Posted by Phil Wainewright @ 11:58 pm

Categories: ERP, Venture capital, Workday

Tags: Workday, Software As A Service (SaaS), Enterprise Software, Emerging Technologies, Software, Phil Wainewright

For any business software start-up to raise a $75 million funding round would be good news in any economic environment. But in today’s challenging times — when people are even questioning the sustainability of the VC model itself — Workday’s latest funding round (Techmeme coverage) is especially remarkable. It’s certainly a boost to morale and credibility for anyone working in the SaaS sector, for which enterprise business systems vendor Workday is something of a poster child.

The new round, which has been dubbed a ‘Series E’, doubles Workday’s total funding to date to $150 million. It all leaves me wondering how exactly Workday will use the cash, and what the size of the investment tells us about the provider’s ambitions (of course founder Dave Duffield has always said the aim is to rival SAP and Oracle’s ERP hegemony, but market bluster is cheap — this is real money talking now).

The nature of the SaaS business, in which providers take on the upfront burden of building and operating the technology infrastructure, means that high-growth SaaS companies need big reserves of cash to fund their expansion. Josh James, CEO of Omniture, explained in a presentation to the SIIA OnDemand conference in San Jose last November how SaaS companies bleed cash with every new customer they acquire: “Every time we add an incremental customer, it costs us more money that quarter … When you multiply that by [n] customers in a quarter, that’s a lot of expense for no money.”

Workday’s management are well aware of this conundrum, as co-founder Aneel Bhusri explained in Read the rest of this entry »

May 20th, 2008

Breaking away from ERP as bookkeeping

Posted by Phil Wainewright @ 11:31 am

Categories: ERP, Workday

Tags: Asset, Payroll, ERP, Procurement, Workday, Operational Accounting, Purchasing & Procurement, Asset Management, Finance, Business Operations

Most traditional business software revolves around transactions — the movements recorded in purchase orders, stock movements, bills of materials, invoices, journals and every other document that has evolved to record business operations over the past several centuries. But this is a roundabout way of representing reality that has evolved through historical happenstance. Modern computing can track real objects and the events that happen to them as they move from make to ship, or from order to pay. As fellow Enterprise Irregulars blogger Sigurd Rinde pointed out recently, this vastly simplifies the computing task: “Most important result — one data-object only per real-object, simple as in reality. A reality-model.”

Workday’s new release of its financials business management application, announced yesterday, illustrates this principle in action (along with a new graphic, right, to show how it all revolves around a global object core). Its Business Resource Management module, for example, tracks assets and inventory as objects rather than as bookkeeping entries. To the uninitiated, that may not sound like much of a difference, but in fact it’s a breakthrough because it allows the organization to track its property in a way that makes sense in business terms rather than merely accounting terms. A simple example is the treatment of a mobile phone. An accountant will usually treat this as an expense rather than a capital asset, but that decision means it never appears on the fixed asset register. If you want to track it, you have to invent some new zero-book-value asset category to store information about it.

In Workday’s object model, the accounting treatment is just a status flag (in software terms, a ‘property’) attached to the object. The bookkeeping happens without impacting how the system stores that information. The identity of the employee assigned the phone is just another property of the same object. If the employee leaves, then it’s a simple computing task to deactivite all the objects assigned to that employee — the mobile phone contract, a WebEx account, a security badge. Workday’s object-centric model means that its resource management module becomes just “a single system to manage all the stuff you’ve got,” as VP of applications strategy Mark Nittler put it in a briefing the other week.

The object-centric model is part of a service-oriented infrastructure that is allowing Workday to roll out incremental functionality as it builds out its underlying application infrastructure. The latest release introduces payroll, expense management and procurement, Read the rest of this entry »

May 14th, 2008

Putting Workday on SAP's radar

Posted by Phil Wainewright @ 1:05 pm

Categories: ERP, HRM, SAP, Workday

Tags: Software-as-a-service, SAP AG, Radar, Workday, Flextronics International Ltd., Software As A Service (SaaS), Human Capital, Emerging Technologies, Human Resources, Workforce Management

Now that SAP’s SaaS project Business ByDesign has gone on the back burner, I’ve been wondering how I’m going to pass the time next week at SAPPHIRE Berlin. One thing I’ll be asking the enterprise software giant is how it feels about losing out to SaaS startup Workday for a 200,000-seat deal at contract manufacturer Flextronics. Oracle was also reportedly a bidder for the deal.

Workday’s win has caused quite a stir after being billed by InformationWeek as the “Software Industry’s Biggest SaaS Deal”. It’s certainly up there with the largest, although privately-held SaaS HRM vendor Authoria claims to serve 340,000 employees at its largest customer, while employee services SaaS vendor Concur already had 180,000 employees online at a single financial institution more than a year ago (see My SaaS deployment is bigger than yours …).

SAP can probably retort that the deal is just for Workday’s human capital management software rather than the complete spectrum of financials-to-manufacturing-to-people functionality that is SAP’s hallmark. Although Workday last year released the first iteration of its financials software, it has just four customers signed up for it, VP of applications strategy Mark Nittler told me in a briefing last Friday, compared to more than forty for the HCM product.

But the size of the deal certainly brings Workday into the same market segment as SAP in terms of company size and should concentrate the minds of SAP management on how to combat the competitive threat from SaaS rivals. There’s plenty to mull over, too, because Read the rest of this entry »

February 6th, 2008

Another ERP vendor buys into middleware

Posted by Phil Wainewright @ 11:46 am

Categories: ERP, Integration, Oracle, Workday

Tags: Acquisition, Cape Clear Software, Oracle Corp., ERP, Workday, Integration, Mergers & Acquisitions, Corporate Law, Software As A Service (SaaS), Middleware

The scale may be different, but the same market forces that fueled Oracle’s acquisition of BEA have sealed another acquisition announced today: that of SOA middleware vendor Cape Clear Software by on-demand enterprise applications vendor Workday (also covered today here on ZDNet by Dan Farber and Dana Gardner). Increasingly, customers want their middleware bundled with the application stack. The less integration work they have to do themselves, the more they like it. Middleware is disappearing as a standalone software category.

Workday’s acquisition sends many other messages too, but the rest of them offer far less comfort to Oracle [disclosure: Cape Clear and Oracle are both recent clients]. I recently visited Workday and learned that most (though far from all) of the company’s account wins are PeopleSoft customers who have fallen behind with upgrades and can’t stomach the cost and upheaval of moving to the latest version to get the functionality they need. They turn to Workday because implementation is rapid, the upfront cost is low and the on-demand model takes them off the upgrade treadmill for ever. (Read previous coverage of Workday).

Packaging integration into the proposition can only make the appeal even stronger. It reinforces that get-off-the-treadmill message, transferring responsibility from the customer to the vendor for implementing and maintaining integration as well as the application itself. In fact this always was the case — Workday has worked with Cape Clear as its integration partner since launch, so merging the two companies is merely a cementing of that working arrangement. But consummating the arrangement in an acquisition removes any ambiguity.

Just like a SaaS deployment, this private transaction will be complete in around a month’s time. The contrast with Oracle’s mega-bid for BEA couldn’t be more stark. Read the rest of this entry »

August 20th, 2007

Workday: Forget ERP, start over

Posted by Phil Wainewright @ 3:39 am

Categories: ERP, Workday

Tags: Application, Database, Business, ERP, Workday, Phil Wainewright

Ever since businesses first started using computers to automate their operations, they’ve had to compromise within the limitations of the technology. Each fresh generation of technology has brought some new freedoms, but never as much as its proponents originally hoped. And so every decade or two, the old generation is pushed aside to make way for a promising new contender. Is it now time to for ERP to cede to a new generation?

Workday, which today launches its on-demand Financials suite, believes it’s time for ERP to ride off into the sunset. Its case has found encouragement in recent weeks from Cynthia Rettig’s MIT Sloan Management Review article, Trouble with Enterprise Software, which fellow-ZDNet bloggers Dennis Howlett (The ERP mess we’re in) and Joe McKendrick (Another view: Don’t expect SOA to fix ERP quagmire) have both commented on.

Workday’s argument is that ERP is flawed because its core design is centered around the needs of beancounters. ERP provides all the metrics required to report financials for a business, but it misses out Read the rest of this entry »

May 18th, 2007

Software as a concrete block

Posted by Phil Wainewright @ 11:01 am

Categories: ERP, Workday

Tags: Software, ERP, Workday, Phil Wainewright

One slide that I really enjoyed at last month’s SaaScon conference came early in a presentation by Aneel Bhusri of Workday, the SaaS startup that aims to challenge SAP and Oracle’s dominance in ERP software.

It casts conventional packaged ERP software in the guise of a concrete block (see picture, below), to which various additional requirements have been grafted on over the years. These add-ons, including security, business intelligence, SOX compliance and compensation management, are all shown bolted or strapped on to the original, highly inflexible, ERP block. The whole assembly looks rather fragile and extremely complex to dismantle — which is exactly the point Bhusri aims to convey.

Knowing what we know now about how enterprise needs change and evolve over time, you certainly wouldn’t set out to build ERP the way it was designed back in the 1990s. The incumbent vendors, including SAP and Oracle, are implicitly recognising this by developing new, service-oriented versions of their software. But that represents such a shift from what customers currently have installed that many of them may well decide to look what else is out there in the market. That’s what Workday is banking on. “Second half of 2008 is the tipping point,” says Bhusri, when he believes the pressure to upgrade will become irresistible.

Workday’s challenge is to be ready with a full enough set of features to offer a viable alternative. Read the rest of this entry »

April 18th, 2007

Workday: 'parity' with SAP in 18 months

Posted by Phil Wainewright @ 7:13 pm

Categories: ERP, Workday

Tags: SAP AG, ERP, Workday, Phil Wainewright

Peoplesoft founder and former CEO Dave Duffield wowed attendees at SaaScon today with his endorsement of the software-as-a-service model, which his new venture Workday has espoused to deliver ERP to medium-sized and large enterprises.

“Why didn’t we call it Peoplesoft On Demand? If the name hadn’t been taken, perhaps we should have done,” he said in response to an audience question.

He explained that the decision to adopt the software-as-a-service model had been inspired by the success of pioneers such as RightNow and Salesforce.com. “We thought, well, it works, why not make it work in an ERP application?”

Workday, which went into production with its first release in November last year, already has five customers on the system, including RightNow, which along with Salesforce.com has signed up as an early adopter. Initially, the company is targeting companies with 1000 to 5000 employees but has recently signed a 17000 employee account, Life Time Fitness.

Duffield revealed that Google had almost become another win, “but they wanted to take us in a different technology direction than we wanted to go.”

The company’s next release, due in June, will add core financials, and there’s an aggressive roadmap to fill out ERP capabilities to serve the needs of typical service companies (manufacturing and supply chain isn’t yet on the roadmap). Once that happens, and the company has proved itself with smaller companies, then Workday aims to target larger enterprises, aiming squarely at SAP and Oracle’s heartlands.

“Within eighteen months we’ll be easily on [feature] parity with SAP in our target industries,” said Duffield in answer to another question, citing Citigroup and Federal Express as examples of the type of company Workday will target.

“We’re looking to replace all the Oracle and SAP installations,” he went on, to cheers from the auditorium. “Our target is the system of record.”