Workday on lessons learned from Iowa and Maine project woes

Interview Workday CEO Carl Eschenbach insists more than 90 percent of the SaaS HR and finance application vendor's rollouts are a success, putting aside the company's high profile difficulties in Maine and Iowa state-level projects.

Speaking to The Register during the vendor's Workday Rising EMEA conference in Amsterdam in December, Eschenbach dismissed challenges implementing HR and finance systems in the two state governments.

Last year, Iowa decided to end its contract with Workday to provide finance software, but continues to use the vendor's HR system. It delayed introducing the Workday finance system after finding "implementation issues" that could impact a number of business processes. Instead the state opted to extend its existing contract with CGI to upgrade its legacy system, an official statement said.

The state government had awarded a $17 million contract to Workday to provide finance and HR software in a procurement process criticized for lack of competition.

In 2021, Maine accused Workday of showing "no accountability" for its part in a flawed process to replace the US state's HR system. It shared correspondence which alleged "significant gaps in configuration and testing, as well as best practices and methodology that had not been followed" after missing two go-live dates.

Following an official review of the $54.6 million project, the state government suspended the project and laid off contractors. Maine now runs an HR system called PRISM, "built using Workday and other software as needed to meet our complex requirements," according to its website.

The University of Washington's implementation has also hit challenges. In a separate project, back in 2021, Amazon and Workday entered an agreement to provide a company-wide HR system, which in the end "both parties decided many years ago to not pursue," Eschenbach told The Register. Amazon division and subsidiaries continued to use Workday, he says.

"You can always find a couple of stories like that but if you look at Workday, 95 or 90 percent of our implementations are on-time and on-budget. When you think about the size of these implementations, the scope of them and the transformation that's required, that statistic is unheard of in our industry. We're always looking to learn from implementations that maybe have had issues or challenges in the past.

"We also need to recognize that Workday does not do a lot of these implementations ourselves. They go through partners, so we're always looking to learn from our partners what we could have collectively done better," Eschenbach says.

Workday was founded in 2005 by David Duffield and Aneel Bhusri, who remained CEO until he was replaced by Eschenbach in January. Its most recent annual revenue was about $7.3 billion, and it says global employee headcount is 20,400 people.

Eschenbach — whose youthful exploits in college wrestling have earned him hall-of-fame status — says the way to avoid any challenges on implementation is through the time effort and energy invested scoping it at the beginning, before the implementation starts.

"Workday remains very active with our customers and partners in the scoping of the implementation prior to it actually beginning. The more you do upfront on the scoping side — for example, looking at the data and how you're going to do data migration — the more successful we are on our projects," he says.

Public sector users might welcome his confidence. In the US, Workday has boasted of recent government wins including with the City of Cleveland, Ohio; the City of Galveston, Texas; the County of Missoula, Montana; the City of Milwaukee, Wisconsin; and the City of North Las Vegas, Nevada. In the UK, Hull City Council has become its first local government customer. In UK central government, Workday won a £144.3 million ($182 million) deal to supply HR and finance software to a cluster of Whitehall departments and arm's length bodies including the Department of Health and Social Care, the Department of Education, and tax collector His Majesty's Customs and Revenue, beating off incumbent vendors Microsoft and Oracle.

With a flat-top buzzcut and a natty checked jacket, Eschenbach might not be out of place as a 1950s door to door salesman, but he has filled senior leadership roles at tech companies VMware, Inktomi, 3Com Corporation, Lucent Technologies and EMC.

In September, Workday announced its Illuminate platform, designed to accelerate common HR and finance tasks with AI and introduce AI "agents" which can operate with and on behalf of the user. Both were built using training sets of more than 800 billion business transactions processed by the Workday platform annually, the vendor said.

Like Salesforce, Workday expects to extend its margins with the introduction new generation of machine learning technology.

"The margin on our AI solutions will be very rich. We're a software company, we enjoy very good margins on delivering software to our customers, and that will be the same with AI as well. What's really important is the type of value we bring to our customers and the return on investment they get using Workday AI. Early indications from our customers are that the return on investment in Workday AI is quite strong," he says.

Eschenbach claims Workday's recruiter agent could improve productivity of human recruiters by 50 percent, while the time it takes to hire new talent could be cut by 30 percent. Another talent optimization AI could reduce workforce attrition by 40 percent, he claims.

But rather than reducing headcount, users were more likely to use expected productivity gains to redeploy staff to more "strategic" work, he says. Eschenbach says the Workday's AI models are built with data from around 80 percent of its customers which signed up to an "innovation agreement" that allows data to be shared with the vendor. However, identifiable data can only be seen by the customer, he says.

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While Workday uses customer data to build its AI products, those contributing do not get preferential commercial arrangements. Third-party partners can also build new tools and models on the platform using customer data by paying fees to Workday.

The Workday CEO says the hype around AI in the workplace is starting to die down and users are experimenting with AI "trying to figure out the true business value they get out of it."

He tells us: "What we're doing right now is we're overestimating in the short term the impact of AI and we're under underestimating the impact it has in the long term. That's why you'll see us this week... talking a lot about proof points, invalidation of the benefit our customers are getting through using our technology."

In the first and third quarters, Eschenbach told investors about the economic "headwinds" affecting sales, especially in EMEA. He will be hoping users see AI as a reason to buck that trend and support its "very rich" margins. ®