Towards the tail end of last year the release of the Gartner Magic Quadrant for Cloud HCM Suites for 1,000+ Employee Enterprises caused a lot of excitement. For a number of years Oracle had been positioned behind Workday by Gartner in their Magic Quadrant graph. In 2018 they were approximately level, and then in 2019 – for the first time – Gartner positioned Oracle HCM Cloud as ahead (in that it was the furthest up and to the right on the Quadrant).
This was obviously celebrated by much delighted posting on LinkedIn and Twitter with screenshots of the Magic Quadrant graph itself, and with good reason as it’s a positive message:
With all the delight at now being ‘ahead’ on the quadrant graph itself, I feel that some of the other messages in the narrative of Gartner’s report were missed (and – although there are naysayers about its rankings – it is a very comprehensive report).
The full report is well worth a read, however I’m going to pull out a few of Gartner’s comments that I think are the highlights:
Having closed all major gaps in product breadth, Oracle has more recently focused on innovation in UX, enhancing newer modules, as well as deepening support of hourly workforces. … The product is well suited to MNCs that want a global SOR for core HR and talent processes. During the past few years, Oracle has exhibited a sustained commitment to expanding and deepening its HCM applications.
Oracle HCM Cloud’s overall customer reference satisfaction with application functionality is well above average for this Magic Quadrant.
Oracle is one of only two vendors included in this research offering feature-rich platform as a service (PaaS) capabilities. Oracle scored well above average for mobile support, incorporation of emerging advanced technologies and integration of HCM suite with other applications.
Oracle has demonstrated vision and innovation by adding an Experience Design Studio, as well as expanding the use of digital assistants, mobile responsive design and alternative UX.
Here, Gartner commented on configuration limitations (and mentions that Experience Design Studio will aide here, but at the time was not fully rolled out). They also mentioned that reference customers are harder to locate outside of North America, UK, India and APAC.
In summary, it looks like Oracle was adjudged to be in a great position. There were plenty of strong positives and they weren’t called out for any cautions that are as glaring as the competition:
- SAP – “challenges associated with disparate acquired architectures, such as complex implementations, release absorption and reporting”
- Workday – “has application functionality gaps relative to its competitors” and “customer satisfaction with the value of the product for the money spent is well below average”
It feels a little like commenting on a school pupil’s report card, but Oracle HCM Cloud has made some large strides forward during the year and this progression is reflected in the results attained.
Oracle posted some storming Q4 results last week, beating both Safra Catz’s own guidance and analyst expectations. Total Quarterly Revenues were $11.1 billion, up 1% in USD and up 4% in constant currency compared to Q4 last year.
Oracle CEO, Safra Catz said “Our high-margin Fusion and NetSuite cloud applications businesses are growing rapidly, while we downsize our low-margin legacy hardware business. The net result of this shift .. to cloud applications was a Q4 non-GAAP operating margin of 47%, the highest we’ve seen in five years.”
That all sounds very healthy.
Oracle CEO, Mark Hurd continued with “Our Fusion ERP and HCM cloud applications suite revenues grew 32% in FY19.”
Again, this sounds positive. Others, such as Diginomica, highlight the mentions of recent wins from competitors, including Diebold Nixdorf (from SAP), Helmerich & Payne (from Epicor), Tiffany and Experian (from SAP/Microsoft).
This is also a very good sign. This is where most of the reported coverage finished however. There was a hidden gem at the bottom of Oracle’s press release that I haven’t seen highlighted in many reports. Mark Hurd also said:
These strong results extend Oracle’s already commanding lead in worldwide Cloud ERP. Our cloud applications businesses are growing faster than our competitors. That said, let me call your attention to the following approved statement from industry analyst IDC:
Per IDC’s latest annual market share results, Oracle gained the most market share globally out of all Enterprise Applications SaaS vendors three years running—in CY16, CY17 and CY18.
Very interesting indeed …
Last week I wrote a blog entry suggesting that the any perceived advantage Workday had over Oracle HCM Cloud in the past has now been eroded as Oracle has caught up (and possibly overtaken) in the areas where Workday previously held an advantage.
I then wrote a blog post talking about the momentum a vendor may have and demonstrated it on a merged version of the Magic Quadrant. It’s fallen foul of Gartner’s policies and they’ve asked me to remove certain pieces, as they’re well within their rights to do.
As a result:
- I cannot amend the Magic Quadrant to show historical comparisons
- I cannot link to the Gartner article
- I cannot use Gartner’s conclusions to make a point
The current and last couple of years HCM Magic Quadrants can be found online in many places, such as here.
If you had to place your company’s investment on which Cloud HCM vendor would have the lead in a few years’ time, where would your money be?
The ‘big 3’ of the Cloud HCM world are SAP/SuccessFactors, Workday and Oracle HCM Cloud. Each of the suites has its respective strengths and weaknesses, and situations in which it’s most likely to win in customer head-to-head battles. Being a keen watcher of the ecosystem I’m starting to wonder whether the status-quo might be changing however. Here’s why …
Ignoring SuccessFactors for a moment, let’s focus on Workday and Oracle HCM Cloud.
Historically, if it’s a Workday win it’ll often be down to:
- User Experience,
- Workday’s image in the marketplace (strong marketing, focus on customer happiness), or
- the way that they’ve demoed to the customer (a focus on convincing HR, and/or a superior pre-sales experience).
If it’s an Oracle win, it’ll often be down to:
- Breadth of suite (a wider choice of modules covering more of what the business needs)
- Depth of functionality (sheer number of localisations, and many Oracle modules are more ‘complete’, e.g. benefits, recruiting, learning)
- the way that they’ve demoed to the customer (they’ve sold to the business as a whole, not just HR so other factors come in to play – such as integration, extensibility or the strength of ERP Cloud)
As someone who pays the bills consulting on Oracle HCM Cloud I’m clearly not impartial however I am starting to see signs that the scenarios listed above where Workday has the edge are starting to be reduced. Let’s take them one at a time …
Oracle HCM Cloud’s User Experience has taken a huge leap forward in the last 12 months. The new responsive/newsfeed UI is a big step forwards on both desktop and mobile.
Let’s compare the two’s most recent versions:
Oracle HCM Cloud (as of Aug 2018)
Workday ‘Canvas’ UI (as of WD31 later this year)
I’m not saying any one of the above is better than the other – in fact, both are great looking systems compared to what we had not so long ago – but I don’t think Workday has the UX advantage that it once had.
Workday’s Image in the Marketplace
Everyone loves Dave Duffield (although I doubt he’s on Larry’s Christmas card list) and Workday as a company has certainly managed to garner a very positive image in the marketplace. There are starting to be signs that this is changing however.
We’ve heard of the recent lawsuit where Workday is being sued (together with the SI) by Sacramento City Unified which says it didn’t deliver on a $5.2 million implementation, claiming “for approximately two years the project flailed, then ultimately failed. While Workday and Sierra-Cedar got paid, in the end, they put the district right back where it started with nothing to show after over two years. “
Industry thought leaders
Some high-profile HR luminaries are starting to question whether the accolades are justified:
Matt Charney (Editor-in-chief for Recruiting Daily, named a “Top Recruiting Influencer” by Huffington Post, Glassdoor, LinkedIn and Forbes, plus frequent HR public speaker)
‘When is Workday going to admit (in public) that their “ATS” product is vaporware? Someone really should file a class action against $WDAY.’
William Tincup (HR Technology writer, speaker, advisor, consultant, investor, storyteller & teacher. He’s a contributor to Fistful of Talent, Human Capital Institute, Human Capitalist, HRTechEurope, LinkedIn Talent Blog, and HRExaminer and also co-hosts a daily HR podcast called DriveThruHR.)
“Workday’s tagline “Built For the Future” is a wonderful twist on dramatic foreshadowing. Future, as in, you might actually receive usable software at some point in the future. For all the Workday apologists, I’m not attacking the brand nor the people that happen to work for Workday but if you are the darling of our industry you might want to consider releasing best of breed products rather than what you’ve released in recruiting, onboarding, compensation, and learning. ‘
Source (the comments thread on this article is also pretty enlightening)
Here is a selection of complaints on Twitter:
It’s clear that while the decision-makers higher up in the companies themselves might be pro-Workday, those who use the product on a daily basis sometimes have a different opinion.
So, is the tide turning yet? Are the advantages that Workday had (the UI and the positive reputation) starting to be eroded? Time will tell, but this could be the start of a change.
In the World of Software as a Service (SaaS) solutions the hosting of the application is taken care of for you. You don’t need to worry where your data is hosted, or which company the hosting is outsourced to, right? That’s probably not the case. You’ll want to take careful notice of what happens to your data.
In many cases the company you pay for the service isn’t the one that hosts the servers. An example of this is SAP, who’ve signed a deal to host the SuccessFactors suite on Microsoft’s Azure.
It also appears that Workday might be running DEV and TEST in the IBM Cloud with PROD running in Amazon Web Services.
Finally, Salesforce has been moving their internal infrastructure towards AWS for a while.
SaaS vendors have the choice of either running it on their own Infrastructure as a Service (IaaS) offering, or outsourcing it to someone else. However, the alternatives are shrinking with another cloud provider announcing that they are closing only last month when Cisco decided to shutter their $1bn Cloud.
Of course, any time the responsibility for the success of the service that you’re buying is split over multiple companies – each with their own priorities – it introduces risk. Everything becomes harder for the SaaS vendor to manage, not just in terms of manpower and automation, but security necessarily becomes more complicated. Also, when the SaaS vendor’s deal with one hosting partner ends and they choose to move to another vendor, your servers and data will need to be transitioned over. These are activities that the SaaS vendor DevOps teams will be involved in that don’t enhance your service at all and that you don’t have any choice over.
The SaaS vendor I’ve not mentioned so far is – of course – Oracle. Oracle makes much of owning the complete stack for running a SaaS application. It has its own IaaS business and manages the hosting of all of its SaaS offerings itself rather than outsourcing it to another company. This is clearly a simpler arrangement with no between-company conflicts, leading to a more efficient and more secure solution.
I think it’s clear why this is important and which vendor has chosen the best approach.
Bill Kutik’s regular handicapping of the ‘big 3’ SaaS vendors is an interesting read. The most recent entry can be found here.
Bill goes through each of SAP/SuccessFactors, Oracle and Workday in turn and gives an update on customer numbers however, I think it’s easier to view in a graph:
Here we can see that SuccessFactors has 1,250 HCM customers (on Employee Central) and 1,900 on their Financials solution (S/4 HANA ERP).
Oracle is slightly ahead with HCM Cloud Core HR customer numbers, and far ahead with ERP Cloud.
Workday is another 50 customers ahead with their HCM offering, but at a fraction of the customer count on the Financials side.
Also worth noting is that Oracle’s figures are from May 2016, SAP’s from Jun 16 and Workday’s from Sept 16, so this direct comparison is probably unfair to SAP and particularly Oracle as they are likely to have gained new customers in the interim.