Is There a Crack in the Rock that is Workday?

Andrea Alterman
Dec. 28,2022 | HCM Workday

Workday has become ‘the rock’ of the HCM market and has been for some time.  Like so many others, Workday started out as the small innovator and market disruptor and has become the standard by which HCM software is measured.  They deservedly earned this moniker as they continued (for the most part) their spirit of rapid innovation coupled with operating stability that their customers could rely on.  IF Workday said they were going to deliver, they usually did. You might say they have gained in certain circles the same moniker that IBM once held (but no longer) in their heyday which was ‘No one ever got fired for hiring IBM’.  But we have to ask ourselves, is Workday reaching an inflection point similar to IBM’s where they enter a stage of being the dinosaur company that relies on past achievements to solidify revenue and lock up customers rather than win them over with new and innovative software?  Will their sales teams become more like Oracle’s wherein it’s a game of ‘gotcha’ with policing of license usage and strong-arm tactics?  We must ask these questions given the latest news coming out of Workday that is giving its customers – and more importantly – potential customers, pause.  So, as we cast an eye toward Workday’s fiscal year end coming up at the end of January, we ask the final question – is there a crack in the rock that is Workday? 

Current State 

Financially, it would appear that Workday is doing very well.  Their earnings and stock price has been reflective of this, and last quarter was no exception (from their press release): 

  • Fiscal Third Quarter Total Revenues of $1.60 Billion, Up 20.5% Year Over Year 
  • Subscription Revenues of $1.43 Billion, Up 22.3% Year Over Year 
  • 24-Month Subscription Revenue Backlog of $8.62 Billion, Up 21.1% Year Over Year 
  • Total Subscription Revenue Backlog of $14.10 Billion, Up 28.5% Year Over Year 

Their product roadmap has been more consistent, and it would appear they may be in the mode of focusing on stabilizing previously acquired products and services to further integrate features and functionality.  All good for existing customers.  But what does that tell us about their direction?   

In all of 2022, they have made approximately zero acquisitions, from a company that just one year ago made three (VNDLY, Zimit, and Peakon).  The only other year since 2014 there were no acquisitions was 2020, the year of Covid.  They’ve made 16 acquisitions since 2014.  In and of itself, this may not be all that telling, and they could resume M&A activity in 2023, but it could also signal a turn that Workday has turned the corner from market disruptor to market dominator, with eye toward leveraging market position to strong arm customers like many others in the industry attempt to (Oracle, SAP, etc.) by entangling them deeper and deeper into the HCM ‘Suite’ of solutions. 


If I were to sum up all the recent leadership announcements this month at Workday, it would be to say…”what?”  December 20th Workday announced that their current Co-CEO, Chano Fernandez, will be stepping down effective immediately.  There is a new Co-CEO stepping in, Carl Eschenbach, who is a current board member.  The remaining Co-CEO and Workday founder, Aneel Bhusri, is staying on board but it was stated that Aneel will relinquish the Co-CEO title and remain on the Board as the Executive Chair at the end of their fiscal year, January 2023.  Did you get all that?  To summarize: 

  • Current Co-CEO and Co-Founder, Aneel Bhusri, will stay as Co-CEO until January 2023.  He will stay on as Executive Chair of the Board. 
  • Carl Eschenbach is now the new Co-CEO. 
  • Chano Fernandez is out as Co-CEO and no longer a board member. 

It's normal for companies to make leadership changes, but what is NOT normal is the lack of warning on this and the dearth of information associated with it.  It would seem that, overnight, they lost confidence in Chano for some unknown reason (at least to outsiders) and made this rapid change.  Succession planning for well-established and stable companies is, typically, a well thought out roadmap with plenty of runway given to investors and customers alike, but that certainly was not the case here.  The timing is suspect at best. 

"We have an incredible opportunity in front of us and I'm confident that Carl, with his leadership skills and his proven experience in helping technology companies scale, as well as his commitment to culture and values, will help lead Workday through its next phase of growth," said Aneel Bhusri, co-CEO, co-founder, and chair, Workday. 

But what is that next phase of growth?  So far – not a clue given.  All we and Workday customers (and potential customers) are left with are questions.  Could it be that the new Co-CEOs background from Sequoia Capital is a ‘tell’ of things to come?  Are they about to ramp up M&A and or target a mega-merger?  Can we learn anything from Carl’s time at VMware as a bellwether for things to come?   

Perhaps it's because there were no acquisitions this past year and the impressions left have been that of a company internalizing products and consolidating market share over innovation – that Carl is now at the helm.  From a Podcast called Corporate Competitor, Carl lays out his Four Cs: 

  1. Cockiness – remain humble and grounded, no matter how great things are now, you will hit tough times. 
  2. Complacency – complacency kills, you stop pushing, you stop getting better. 
  3. Competition – we don’t talk about the competition, but always be aware and respect them. 
  4. Compliance – enter into agreements, partnerships and deals as if they are going to be on the front page of the New York Times.

It just may be, that with a Workday roadmap that could be interpreted as a bit complacent (at least based on previous history), and smaller competitors rolling out new and innovative products, that the Workday Board felt they needed some of Carl’s 4 C’s. 

In summary, we just don’t know what the near-term future holds for Workday given their current state and the rapid change of leadership.  It could be that they recognized some indifference in their old leadership and or just need the expertise of someone to take them to an even higher level.  In any event, customers and potential customers would like to know more.  Was this some kind of panic move?  Did Chano do something egregious that we’ll never know about?  Do they have big M&A plans?  Or do they just want to light a new fire with Carl’s 4 C’s?  Is this just an evolution, or a real crack in the rock that is Workday? 

Stay tuned.

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