Workday fleshes out more of its hosted ERP suites

Workday, the start-up headed by Dave Duffield, the co-founder of PeopleSoft, put more meat on the bones of its ERP software Monday with the beta release of its financials on-demand service.

Workday, the start-up headed by Dave Duffield, the co-founder of PeopleSoft, put more meat on the bones of its ERP software Monday with the beta release of its financials on-demand service.

Established in March 2005, Workday brought out Human Capital Management, the first of its planned four on-demand ERP suites, in November 2006. Monday's announcement highlights elements of the three other suites -- Financial Management, Resource Management and Revenue Management. The suites are known under the collective banner of Enterprise Business Services.

Workday positions itself as an alternative to traditional ERP software, which runs on a relational database and is built around recording a company's financial data, according to Mark Nittler, vice president of applications strategy at Workday. Instead, the startup relies on an object management system and captures and stores all of an organization's business events.

Users can define their entire company's structure in terms of its business events and can also analyze that information without recourse to third-party business intelligence software, Nittler said. The start-up uses the Web 2.0 world's concept of tagging as a way for users to search and link their ERP data. The idea is to make ERP processes easier to use and to integrate with other types of software as well as to enable users to alter their processes as their business changes.

While Workday's human capital management services are more or less complete, the company is only making some parts of the other three suites available now, with more functionality to come. So, Workday's resource management services currently focus on supplier accounts, with procurement and expenses to be tackled later. The startup's financial management suite offers financial accounting and reporting along with cash management. Still to come are planning and budgeting as well as management accounting. Finally, Workday's revenue management suite delivers customer accounts, with orders, billing and revenue recognition on the road map.

At first, Workday sees its approach appealing to upper midmarket companies employing between 1,000 and 5,000 staff and with annual revenue of $200 million to $1 billion. The company has initially targeted North America and has about 15 customers including on-demand CRM (customer relationship management) player Workday intends to move quickly to internationalize its offerings.

As for pricing, Workday won't commit to a single figure this early in its operations. "We're not going to have a list price," Nittler said, but instead the company will let customers' size determine the cost of the subscriptions for its ERP suites. Roughly speaking, he expects Workday to derive $100,000 in annual revenue subscription from each customer.

Down the road, the start-up may look to directly target the big guns in on-premise ERP -- SAP AG and Oracle. While Oracle's plans for hosted ERP are unclear, SAP is busy preparing A1S, a suite of on-demand ERP, CRM and supply chain management software for general availability in the first quarter of 2008.

Duffield and the other Workday executives were involved at some point in a bitter 18-month struggle to try and stave off a hostile takeover bid for ERP and CRM company PeopleSoft by Oracle. They were ultimately unsuccessful, but Duffield maintains that Oracle's win caused him to think anew about ERP and ultimately led to the creation of Workday.

Workday is using two hosting facilities to support its software-as-a-service offerings, according to Stan Swete, the company's chief technology officer. The primary data center is owned by Equinix and is in Virginia, while the other one is a Sonix facility on the West Coast, which functions as both a backup and implementation site. Workday owns all the computers it uses in both facilities and manages them itself, he said.

Privately owned Workday, with headquarters in Walnut Creek, California, employs about 120 staff, all of whom are in the U.S. The start-up has been bankrolled by Duffield and venture capital firm Greylock Partners to the tune of $35 million.

Copyright © 2007 IDG Communications, Inc.

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