Oracle and Workday Battle for Healthcare Market Share

Considering healthcare is one of the largest industries in the world, it’s no surprise that both Oracle and Workday have made healthcare one of their top target industries.  Both firms have dedicated marketing and sales teams whose sole focus is selling to healthcare companies and winning market share.

In earnings calls over the past year, Oracle’s Larry Ellison has spent considerable time outlining the opportunities within healthcare; while Workday’s Aneel Bhusri and Chano Fernandez have also highlighted their healthcare-specific go-to-market focus.

Healthcare Opportunity – Workforce Management

There are many opportunities within healthcare and related industries, such as pharmaceutical companies, medical device companies, and insurance companies, but the most immediate opportunity is within HCM and workforce management.  As Mr. Ellison recently illustrated, the people that provide healthcare services – doctors, nurses, etc. – often have multiple places of employment.  They may work in different clinics, hospitals, and even private practice, much like a gig economy.  These medical healthcare professionals may be employees or independent contractors, may be entitled to different types of benefits, and may have varying and inconsistent hours that they work at any one hospital or clinic each week.

For healthcare organizations, recruiting and retaining medical professionals is an on-going challenge.  Scheduling, time tracking, and paying the workforce presents yet another layer of complexity with the varying degrees of employment status (employees/contractor; full-time/part-time) and benefit entitlements for each position/role and seniority level.  Tracking staff engagement levels and work eligibility has even been made more complicated due to ever changing Covid rules and policies during the past two years.  Factor the great resignation on top of all this and you can see that the administrative side of the healthcare business is extremely challenging in today’s market.

Outdated Systems

Different than other types of services industries, professionally licensed service industries such as healthcare are focused on patient outcomes and tend to be operated by healthcare professionals.  This is not to say that they do not employ business professionals who are not healthcare practitioners, but the administration and operations side of the business takes a backseat to the healthcare services in treating patients, as it should.  This has an impact as to where resources are allocated, which has led to many outdated systems in healthcare, especially within core business functions such as HCM and FI.

With all of the current workforce challenges and outdated systems, it is no surprise that healthcare providers require HCM solutions that provide them with the functionality, technical capabilities, speed, automation, and flexibility to meet their dynamic business requirements.

This is why both Oracle and Workday see this as a golden opportunity and have developed dedicated teams that are specifically targeting the healthcare industry.

What Does This Mean for Healthcare Providers?

It means two things.  First, you can expect very assertive and even aggressive sales teams to be contacting you.  The sales teams will try to contact as many different stakeholders as possible to generate an opportunity to present their capabilities to your organization.  Do not expect them to just contact your IT or procurement teams.  They are specifically targeting CFOs, CHROs, and their teams, and even CEOs and Board members where possible.  They want to get in front of decision makers who understand the big picture and have the power to create budgets for these types of investment initiatives.

If you are responsible for IT vendor management or procurement and have not been contacted by Oracle or Workday or are unaware of any contact from these vendors, you may want to ask around, as there is a strong likelihood that others have been contacted and may even be engaged in discussions with one or both vendors.

Second, you have negotiation leverage.  It will never be as strong as your first negotiation, so you have to maximize this opportunity to negotiate the right deal the first time.  This means understanding what a highly competitive commercial deal looks like based on market intelligence and not simply guessing what is competitive or thinking that you have a good deal because Oracle or Workday pushed back at the end of multiple rounds of negotiations.

Unfortunately, there are no websites that publish this type of deal data, like a real estate website for ERP where you can see pricing on comparable deals.  The cost of negotiating a below market competitive deal will only compound itself over the next ten plus years, as many of these types of technology investments are generational and last for decades.

While both vendors will tell you that the risk is on them that you might not renew after the initial term, the reality is far different.  Consider all of the time and cost of evaluating, selecting, implementing, and training everyone on a new HCM system.  If you’re not happy with the solution performance or subscription fees or other commercial terms after your initial three- or five-year term, the alternative of switching to another vendor is rarely feasible, either from a cost, time, or level of effort perspective.  So getting the right deal in place the first time is critical.

Besides knowing what a highly competitive commercial construct looks like, you need to understand the vendors’ decision making process to be able to develop a negotiation strategy and communication approach to achieve such a deal.

Healthcare Provider Action Plan

If you do not negotiate with these vendors on a regular basis and have benchmarks from dozens of deals, you are unable to negotiate from a position of strength which will significantly decrease your likelihood of achieving a market competitive deal, let alone a highly competitive or best-in-class deal.  UpperEdge’s core service is advising clients on these types of negotiations, whether it’s beginning with RFP development or negotiating after proposals have been received. We welcome the opportunity to speak with you to confidentially discuss your unique situation and provide you with our insights.

Post a comment below, follow me on Twitter @jeffrey_lazarto, find my other UpperEdge blogs, and follow UpperEdge on Twitter and LinkedIn.  Learn more about our Oracle Commercial Advisory Services and our Workday Commercial Advisory Services.