Workday Battleground – Higher Education

The higher education industry can expect to continue to field many calls from Workday account executives.  Here’s why:

Financial Management Solution Adoption

Workday has taken more of a targeted approach with respect to gaining customer adoption of its Financial Management solution.  The first industry Workday focused on was the public sector which includes both government and education.

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Whenever a new solution is rolled out, it is crucial to establish a customer base to demonstrate product adoption and build out customer success stories.  A big challenge is where to focus sales efforts that are likely to provide the greatest success.  We believe Workday chose higher education for a few reasons.

First, financial solutions tend to require more industry-specific capabilities.  Oracle has been a dominant vendor in higher education, but it is not truly an application company since most of their applications have been acquired and not organically developed.  Oracle’s approach for the past two decades has been to buy market share, but in doing so, they have not been the best at continuing to develop industry-specific enhancements to their products.

Most of the product development talent tends to leave the acquired entity and Oracle’s focus tends to shift to supporting and maintaining the applications that already exist, cutting costs by eliminating overhead redundancies, and maximizing profits.  Oracle has done a very poor job at understanding their customers’ challenges and developing industry-specific enhancements to meet those needs.  Therefore, higher education presents a unique opportunity for a new player like Workday to develop an industry-specific financial management solution and displace incumbents like Oracle.

Second, public service sectors such as higher education prefer operating expenses as opposed to capital expenditures, so moving to a cloud solution that does not require maintaining the necessary infrastructure for hosting the solutions is very attractive.  This eliminates hardware capital expenditures as well as employee costs of maintaining these environments, but it allows a company to get the latest and greatest functionality which the cloud provider rolls out to everyone continuously.

All organizations require operational services that are not core to their business.  But compared to other industries, higher education is organizationally built more for their core business than they are for maintaining ERP solutions, with goals like improving student education and advancing academic research.  It is challenging to convince a Board of Trustees to invest capital in IT infrastructure as a business differentiator that will enhance the school’s mission and drive greater profitability.  Cloud solutions not only provide enhanced capabilities and performance, but also reduce capital expenditures.

Student Information System Solution

Student information systems are an extremely challenging and highly complex area to address, which is why there has not been a one-stop all encompassing solution.  Schools have had to cobble together multiple applications to address different requirements, making this a ripe opportunity for a vendor who can solve this problem.

Over six years ago, Workday embarked on such an initiative and developed a design partner program that enabled chosen universities the ability to participate and provide input into the Workday Student System solution.  Workday knew that solving this challenge for higher education with a cloud solution would provide them with a competitive advantage which could also be leveraged to drive adoption of their financial and human capital management solutions, analytics solution, etc.

Workday has already rolled out what is now called Workday Student which has received a tremendous amount of interest throughout higher education.  In fact, last year Workday had to start turning down sales opportunities to large universities because they did not have the infrastructure to support the implementation volume.  I must give Workday credit here, as the reason for turning away customers is because they are concerned about successfully meeting customer expectations.  It is still a new solution and Workday needs time to implement it at a limited number of large universities and make any necessary solution modifications as more is learned and the product matures.

Additionally, the company is very hands-on with implementations of new solutions, and currently Workday Student implementations are primarily done by Workday.  Although Workday’s focus is on being a cloud solution company and not a system implementation provider, they realize they need to do implementations initially and then move more towards an implementation support role.  However, it will take time to ramp up system implementation partners to make sure they are fully capable of successfully implementing the Workday Student solution.

Additional Opportunities

Workday Student enhances their sales opportunities in other areas.  Financial aid is a core component which is provided by federal and state governments.  There are many complex rules and regulations that must be followed, and Workday must work with those governmental organizations to stay abreast of changes and make modifications to Workday Student.  This level of interaction allows for further establishling relationships and can provide a gateway for Workday to sell its solutions within the government side of the public sector industry.  Not so coincidentally, Oracle has been a dominant vendor there as well.  Workday’s ability to displace Oracle in higher education would give them a leg up on replicating this in governmental departments.

Additionally, all of the students would be using Workday Student at any university that adopts this solution, thereby familiarizing tomorrow’s leaders with Workday.  This is part of a longer play.  But as these students graduate and move into their chosen fields and advance into leadership roles, they will have the ability to influence cloud application decisions at their respective organizations.  Establishing a positive user experience at the beginning of their professional life can play an important role in not only the application decision-making process, but at the very beginning of an initiative to identify which vendors to evaluate.

The Strategy of Higher Ed

Higher education is a highly strategic industry for Workday.  Their primary competitor is Oracle who has not treated their customers very well over the years with annual support fee increases, audits, and poor relationship development.  Workday sees a tremendous opportunity to not only win the student information systems business, but to displace legacy on-premise ERP systems with their cloud financial management, human capital management, and analytics solutions, as well as with future offerings.  This will be a very exciting competition to watch unfold over the next five years.

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