As I wrote about yesterday, Workday is positioning itself as an alternative to ERP -- not just a new twist on an old story. Initially, I recall that when Workday started talking publicly about their solution development efforts, they had planned to develop applications focusing solidly on the needs of the middle market. But now, with their Financials module, it appears they target is primarily the upper middle market (I must say "upper middle market" is a bit of a nebulous term, but that's the point, I suppose). And if all goes as planned, they suspect that just as with their Human Capital Management module, they'll get pulled even further up-market as well.
I suppose if you buy Workday's argument that the traditional ERP model is broken -- which I'll leave up for you to decide -- they might just find success inside larger shops. After all, as they put, there's no "agility module" for ERP, nor is extending its life forever with bolt-on approaches and forklift upgrades necessarily the right move for the business. But Workday's rationale for slamming ERP does make some sense. Based on what I said in my previous post on Workday earlier in the week, I do agree that traditional ERP packages were built around a basic accounting model, not necessarily the needs of the business outside of tracking debits and credits. Indeed, when Workday argues that "accounting happens after the fact" and the "business comes first" it begins to become clear why their approach is based on what happens in the real-world -- not around the systems processing limitations of yesterday's ERP architecture that put accounting solidly in the driver's seat.
At this point, even though Workday is talking a good game around putting the business first, they have have yet to take a vertical approach to customizing and positioning their modules. However, I would expect them to head down this path in the future. But this says nothing of their interest in Spend Management, which is the core reason for my interest in what they're doing from a Spend Matters perspective.
When I spoke to Workday's Mark Nittler, who serves as Vice President of Applications Strategy, he suggested that Spend Management would be a critical area which Workday would soon turn its attention to. Incidentally, they describe this whole area as "Resource Management" even though "Spend Management" is probably a better term in my book. For Workday, Resource Management includes "services that manage all non-human resources used by an organization through the acquire-to-consume process." This includes: "sourcing, procurement, employee expenses, settlement and payment, and supplier management."
In upcoming releases, we can expect to initially see core capability that: models core procurement events (i.e., the procure-to-pay process and associated workflow) and enables requisition requests, ordering, and receiving. Payment will also be an area that Workday offers from a Spend Management perspective as well, even though they already have some of this core capability built into their Financials module. I suspect that Workday's initial focus in procurement will be more heavily weighting to services and indirect spend, rather than direct materials sourcing and manufacturing / supply chain operations.
If you think about Workday's architecture along with their tagging approach to navigation and visibility that I wrote about previously, then you'll begin to see how theoretically powerful their roadmap could be from a procurement technology perspective. Because they'll capture procurement activities in multiple ways in the tagging process, you could see how from not only a workflow and approval angle, but also an automated event perspective, how revolutionary it could become.
For example, a certain number of requisition activities for cell-phone purchases within a set period of time might trigger an automated request for a rebate payment from a vendor once a certain volume threshold is met (my example, not there's), alerting users based on a "rebate" or "volume threshold" tag. In my view, this type of active management capability could be invaluable in tough categories like office supplies by giving companies an opportunity to seize front-lines control of purchasing and payment whereas in the past, suppliers were prone to take advantage of an organization anyway they could even after a contract was in place. Fascinating stuff. For the sake of driving the market forward -- and for creating a much needed dose of innovation in transactional procurement -- let's hope Workday's execution is as good as their vision.