Ladies and gentlemen, please welcome Workday Vice President of Investor Relations, Michael Magaro.
Good afternoon everyone. Thank you for joining us here today. Welcome to Workday Rising. We have a, a great afternoon plan for you today. My name's Mike Negaro, vice president of Investor Relations.
Here at Workday. Excited to see so many familiar faces in the crowd. Many of you have been at these Workday risings for many years now. We have lots of new people here as well, appreciate all of your interest and continued support of Workday. And for those of you joining us on the live stream, welcome as well.
We have a great afternoon plan. In just a minute, Robin will kick things off with some opening remarks to get us started. Then we'll have Tom join us to share an update on adaptive insights. We'll move to Petros. He's going to discuss our long term technology journey, and after a short break, Emily is going to host a customer panel discussion, followed by Jim, who will focus on how we deliver a superior customer experience.
China will then discuss our go to market growth levers, and Robin, will finish our prepared section with the discussion on driving and during growth. We'll bring all the presenters, back to the stage at the end to answer any questions that you all may have. So as you can tell, it's a packed agenda, for some great discussion on our business and long term strategies. So let's get started. Before I turn it over to Robin, I'd like you to draw your attention to our safe harbor statement.
Much of the information we'll provide today is forward looking in nature. Involves risks and uncertainties, which may vary significantly, from our actual results. We also make use of non GAAP financial measures which we provided reconciliations for, in the appendix at the end of the presentation. With that, please join me in welcoming to the stage, co president CFO, Robin Sisco.
Thank you, Mike. Welcome. Thanks for being here. We really appreciate you taking the time to make the trip out here to Las Vegas and and join us today for our 2018 Financial Analyst Day. I hope that a lot of you were able to make the opening keynote this morning, But for those who were not able to make it, Dave shared that Anil is not here this week.
He's not attending rising this year due to a serious illness in his family. So unfortunately, he can't join us today, and our thoughts are with him during this very difficult time. For those of you who were able to make the keynote, there are a few things that we hope that you took away from this morning's session. First, a concept of plan, execute, and analyze all in one system, something we introduced last year, we're continuing down that path today and making great progress against it. This is how companies want to work today.
And Adaptive is a very, very critical piece to that picture for us and accelerates our roadmap to allow our customers to plan execute and analyze all in one system for the first time ever. And now we're actually also extending that through the Workday cloud platform. We hope you saw that data is most powerful with Workday. That the power of 1 really makes a liver on the data learning will make Workday predictive. Talked a lot about that this morning as well.
All of the great things that we're doing with all that amazing customer data and the ability to build predictive analytics to allow our customers to predict and get insights into their data that they've never had before. And lastly, the customer success remains a core differentiator for Workday. Jim talked about our customer satisfaction ratio of 98% again this year, which was really, really great to see. And you'll hear more about that from several of our speakers this morning. And with that, I'd like to turn the stage over to Tom Bogan, CEO of Adaptive Insights.
Thank you, Robin. Alright. Thanks very much. Nice to see everybody. As Robin, my first rise, and it's, it's really been incredible.
The, as you know, Adaptive, we completed the acquisition of Adaptive insights roughly though, and the early plans around, rumors are in, and happy to share that detail, you know, adverts. If that's if but I'd like to just give you a view on Adaptive. Some of you may have during our IPO. One of us may look, we have, now some customers. There's a broad, just to prove this, correctments and all Vernal.
And so horizontal servicing those costs for operating in a low sized, by our worried colleagues at 4 It's a significant opportunity to take advantage of organic. This is adaptive only subscription revenue growth for the 12 months ended the, the end of July, it was 36% for, for the preceding, 12 months. We've been recognized as a leader by all the industry analysts, we're in the leadest quadrant, for Gartner, have been recognized by our leader, by, Forrester as well. So when we look at the segmentation of our business, one of the one of the things that is how much of it comes from the, surprises that are, let me describe as well, organizations have a portion of their for a land and logistics ARR files, and you in that segment, you can see. You solve hitting a holistic most of our customers of our customers, even if they have an end, will be they're still when we all resonate the conflict with our risk is that I disconnected these spreadsheets.
So you end up with planning teams to and that just as opposed to, challenges that we have are simply active in such business planning cloud. And it's a rich abilities that at various corporation segment by far. These are finance forecasts, strategic plans, E and L, the operators, associates, as well as balance sheet and cash flow analysis as well. We've always done workforce in a very due Motherwise. And this is Tardins, as well as we see a great terrific workday for our workforce, announced a solicitations fascity, in various scenarios, receptivity in the we also have, because it allows you to create that you can model, like, excel, because if customers were inadaptive in would be other lines that route profitability analysis for all the routes they fly all over the loop using Adaptive to do that, do that analysis.
We also have a software manufacturing analysis to be adaptive. One of the things that's interesting to point out is if we would be, you know, the with the workday, probably no, we've that all our JAPO will be our scanning solution going that big, one of the big basins is that we've got a full engine, and that allows you to, again, create, you know, any model perspective of your business that makes that makes the investments that lead around performance free, we had architecture done historically, changes to a more complex dimensional models that ends up
being great compute specific.
Some of the changes in ability compute those models. We've also gone to a services based architected that some of the private cars are more contemporary resource technology. It's also important to that we have today doing very sophisticated use cases. 10 to 18th, I'm told, is a quintillion, you know, which is the number of cells our customers can model and adapt to today. So there's very robust, scalability capability already in Adaptive.
So Robin, if you had a chance to see the keynote, the innovation keynote this morning, we talked a lot about the power of 1. One of the things when we meet with Workday Planning customers, one of the things they tell us is really important to them is the rich integration of the entire workday experience in one canvas. And that's a single data model. It's a single security model, single user experience. It's a that's exceptionally important for those customers And it's very powerful.
It's very motivating because it allows them to do their work more effectively and more efficiently. So over the next 2 workday releases, so the next 12 months, we'll support the power of 1 with specific investments that we're making on the adaptive platform, including drill through integration so we can go from a if we're looking at a budget to actual comparison inside adaptive insights, we can look at those actions. We can go all the way back to those transactions. Inside the Workday Financial System, or the ability if we have an open rec in adaptive insights, the ability to automate creation of that rec we're ready to trigger that, when we're ready to action that inside Workday, inside Workday. Now we'll continue to support all platforms would be platform agnostic, which you have to do with the planning system, because our go to market motion will certainly be to sell with Workday customers, but also to sell into, finance organizations who aren't yet Workday customers.
And as we've thought about go to market, we're, you know, we're exceptionally encouraged by the early feedback from from Workday customers as we've met with existing planning customers and discussed with them the journey to migrate their solution to adaptive insights as well as new, potential workday customers. And I would say from an adaptive perspective, the ability to go into, look at my friend, Shadow, over here, the ability to go into some of these large enterprise customers There's a credibility. I think it's channel in the Spanish accent. I really do because the credibility to walk into those customers and be able to have conversations is really impressive. Now I will share with you, and when Petros comes up, you know, you can ask him afterwards.
One of one of the things that the Workday team really focused on during diligence was our ability to to drive scalability and high degrees of performance because that's, that's one of the things that we were working on, and it was an important diligence consideration as we went through the discussion. Now finally, we'll continue to sell Adaptive on a stand alone basis you know, in large enterprises that aren't existing Workday customers will sell it in middle market and SMB and we'll continue the momentum that we had around those go to market motions. So we're very excited about the early days And, with that, let me turn it over to, to Petros to go through, technology and products. Good afternoon.
Tom was going to try to pronounce my last name, but he gave up, I think, last minute. Name is Petros. I'm the individual who They're hiding the development, dungeons or work day. I'm the un presentable one. They never bring me out unless they've come to a point right now.
They want me to tell you a story. So I am one of the very first I'm at the first handful of employees of the company. So I know pretty much what we did, why we've done it, And, at the same time, down those development dungeons, this message comes down from all the marketing thud that comes from our competitors. Which are pretty much what they're trying to do is put us aside so everyone considers us as yet one more HR of finance vendor, thus producing more features and functions to sell more software and that is very far away from the truth. And that's the story I'd like to tell you today.
Refresh you of where we were born and where we were created and why we were created this way. So let's, let's start, let's start by touching initially. I can get this thing to work. This graph I have always used, and I think it's something that people understand. It's the basic of the S shaped curve where technology is introduced, companies, they grow over it.
And then at some point in time, another technology comes and the success of our companies, how do you jump from one curb to the other? That's probably true if you look out of who our perceived competition is because it started back in time. Workday though was not born at the that far back. We were born in 2000 and 5-two 1005-two 1006. And we were born at the time where it was a post Imran, time.
And we're born at the time when the consumer internet, it was a post consumer internet time as well. So from the very beginning of the creation of our DMA, we knew that we had to be, I think about auditable, everything around security, SaaS, the word SaaS and cloud didn't exist. I think Salesforce was the only one out there in a few best of breed vendors that we're actually delivering on what we call today the SaaS the cloud model. So we have the opportunity of to try and find exactly at what point, There's a conversions of what we described as even in the keynote of a business trend with a new technology that we need to acquire. We did select 1, and that particular one was around object orientation.
Now we'll talk to you a bit more about that later. In these asset curves, you'll find that every time there's a trend, normally companies are born, new companies are born. And in the real world, it's actually the creation of industries as well. So let me step back a bit. I go back in time all my life, I mean, in the enterprise world.
I started my life actually in mainframe systems, HR systems, payroll systems, financial systems I've implemented, I might build them. And it's a key one of the components about transactional systems review them what the way I think about them is like made out of concrete. They were made at a certain point in time, so we did the mold right? And when that was done, then transactions go right. And they made us vaults, the way the persistence layer, it's all about the sacred The ticket card is the actual transaction.
It's not about giving the data out. It's about putting the data in. Now if you go through time, I think the best thing that happened from flat file systems, what came along was relational technology. It was absolutely and then companies were born there as well. They were basically building their applications and relational technology and the power of relation was having sequel.
You had a language to actually interact with that piece of concrete to get the information out. And to this day and age, if you look around, most software vendors out there and enterprise vendors still, their architecture is based on that, on that RDBMS system, something that we did not want to do. So the thing about relational technology, if you think about it, we think of it as 2 dimensional. It's about rows and columns. And when you get that information out, what do you do?
Normally put it in the spreadsheet, which is yet again, rows and columns. So when it was an action of businesses, though, don't need the report, they want to engage, they want to interact with that They want this notion of dimensionality. So dimensionality wasn't coming out of relational systems out of a concrete. So a whole new industry was created, and that's the one of analytics. And the way to think about analytics that's the way I think about it.
It's a different material. I'll describe it as wood. You know the jenga game that you have pieces of wood that you put together. So extracting the data again, you're moving it through some other system over there with a different technology. And now you have even little tubes that you're alignment together, you're getting rid of the cube so you can have insights of information.
Great. So now you have done nationality. There's one key problem. You've stopped the clock. Now you're analyzing information that's over there and your transaction information is somewhere else, your execution is somewhere else.
It's like driving the car down a freeway looking at the rearview lip mirror all the time whilst you should be looking in front. Now, these companies are out there, and I can could start using names of companies that use you know exactly what I'm talking about, on the on the analytical side, now what are the cloud vendors have been created in that space? They're changing their databases from from, into columnar databases as well. So you can have capabilities of drilling very fast and large amounts of data. But this was when it started, it was the first move from the world of OLTP into OLAP.
Then comes along here's another business need. It's not just about transacting and having similarly needed emotional dimensionality. The next thing I want to get done is we want to model. So modeling engines, transaction of the company didn't work very well with that.
And now you
did the root. So another industry was created, and that's around modeling. And modeling is when you start doing this stiff dense scenario. The way I think about modeling I think of it like clay. Think of pottery.
You keep it moist. You can change it. You can spin it. And once you're keeping it you're keeping the motion on it, you can actually do things with it. Until you get the shape you want, I don't know, you bake it.
In that some point, you don't need to put it on the concrete. But it's a whole little world, yet again, you're taking data out of one system stopping the clock and moving it somewhere else. There's an efficient complexity about modeling though. Modeling means you're creating a miniature version of your company You have to whatever you've implemented in your general ledger system on your transactional, you have to redo it again. You have to create that miniature.
You have to create your hierarchy You have to bring your accounts. You have to say when your open and closed periods are. You have to create a whole the whole security model around it as well. We have to run a cyber capability of running balance sheets, income statements, just simulating things all the time. So really, if you think of those 2 components, even at the keynote today, we're always talking about the same thing.
We're talking about plan. Talking about execute and we're talking about analysis. These are the 3 pillars that customers do their business on. Now If you look at between these little spheres you see there, if there's a dark matter, that dark matter is full of spreadsheets floating around HR and financial, I call them elves in a very loving way, running around with these spreadsheets, consulting dollars are floating around there, ETL tools and moving technology moving around there. So this is pretty much the state of the art that we found when we create a work day.
So this was overtaking. In reality, what what we want to do is bring those 3 roles, the complete businesses of those 3 worlds together, is where you can plan, you can execute and can analyze. If you look at the previous way I talked about the dark matter, our trick, when we created back in 2000 and 5 and 2000 and 60s, How can you extract time from this? How can you close a pro- a close period shouldn't take a matter of months. It could it could be done instantly.
How do you extract time and how do you incorporate the notion of timely data, timely data, not stillness of the data, right? So basically, you're driving a car, you need to look at the rearview mirror, but you need to glance and look forward again. That's the only way you can speed that circle to go round and round and round and round. Proof of this where people know the industry in the world just accepts it, accepts looking at the rearview mirror. If you think about a balance sheet or an income statement or a profit and loss, It's as of a date, the period ending.
That's the way we run our businesses looking behind on what happened. Like we should be able to walk in in the morning, a CFO, and run a balance sheet at quarter end. Every morning, you're going to watch what's going to happen at quarter end. You use a big deal that will affect what you need to do. You will have time to take action.
So using the technology, you need to move in as a whole different world to solve this problem without using what you had at the time. So if we, what we sit down to do, so that the baby break people out there, but not the bravers as David O'Neil, I would say we had to build we had to come up with a material, and I call that material as silicon to win those 3 compartments in building the same material. From the ground up, from the ground up. So when Reagan and New York said they were starting work day, you knew people were saying, Who wants another payroll? Really?
They're gonna build another general ledger. How many more general ledger do we need around here? So the answer is yes, we do. Yes, we do. And that's what we set out to do.
So let me tell you a very cool concept here of how you make this work. If there's anything else I want you to look away with, I want you to understand this. The RAIN systems are built. The transactional systems are built, analytical system are built, you have the data in one area, and you've got the business logic somewhere above. And the developers or the ones that define how they control the data integrity that's underneath.
And what you do is, basically, we've got to predict every moment a user wants to have, and there's always traffic going up and down. Traffic is going up and down, and it's sunk. So if you if a developer hasn't decided what information you want to drill in, forget it. You're not going to get it. You have to go back to the world again.
So what we do at Workday, we use the notion of object orientation, which is not separating the business logic with the data. But the business logic and the data are in spheres. Imagine the data, and we wrap around the business logic in small little use we call objects. And there's multiple of them. One's around position, one's around jobs, one's around journals, and there is relationships think 3 and go to think in the 3rd dimension, there's relationships going between them.
That's why in Workday, you can run a balance sheet you can click on the salary line, and you can rate users to get lost all the way in, and they can come out and they can find someone's name and address or phone number. Why? It's the power of objects, it's the power of that relation of the non relational component. So next thing you could do at work there, which I think was one of the main reasons that we're around, even though report, right, reports normally are dead, right, you print them. You take me some notes.
You run a report. You see it on the screen. You can every compartment on it is light and hot. You can click it, you're backing the object model as well, the object graph, and you're running around, and you can actually take action you can take action in that particular use case from a report that you've run, very powerful notions. And then as Marce stated, we are working, you build it, You make it work and then you spend the rest of the effort about scaling it and making it performant.
So you've seen this slide since this morning. You've seen once you probably see it again before we're finished, right, the Power 1. The Power 1 is what we described in the development organization when we get lost and you call about the North Star. The Power 1 have got 4 components, key components. Visit it again, competition comes and says, oh, they're more adaptive.
It's no longer it's a power of 2, is it now? We can get all cynical about it. No, it's a power 1. And the Power 1 has got 4 key concepts. This morning, Dave stands up, and you can look around at 10,000 people and say you all have something in common.
You're on the same version of the software. Why? Because you're on the same code line. Every single customer at any point in time are moving at the same pace through everything, one more, one community, Our customers can talk to each other. They can share artifacts.
They be proactive about a marketplace. That's the whole idea. It's just one, so it's one community. The second thing is we talked about a security model, but we haven't really explained what that security model means. The security model is normally when you buy companies, And by the way, if you buy all these 3 solutions from the same vendor, it doesn't mean that they work with each other, right?
If you have a transactional system and analytical system, what and so I know it's transparent. They talk about single sign up. The user exists in more than one area. They sign them up. They sign them on.
But they use LDats, and they use active directors, and they use our friends like Octa to to give you the seamless, but will exist more than once. In Workday, one security model means you exist once. I know who you are, I know who you work for, I know what data access you have, if you get reeled, that completely changes 1. This is part of the journey that Tom mentioned that Adapt is going to go through right now. The same thing Platform went through when we got analytical tool 2 and a half years ago that we're going to create 1 all you have leads in it just wants in the system.
So that's what we talk about. We'll talk about one security. The next thing about one user experience: yes, user experience. This is beyond just playing everything with blue and orange. It's beyond saying I'm going to right click here and I see a menu here and I come over here and I right click and I see the same menu as well.
The user experience is not just the interface. The user experience is how the data works as well. The idea the way I described around the balance sheet right? You can run it into the future. You should be able to do a plan, not every quarter because it's very difficult to refresh the data.
It should be a 1st class citizen should be able to be writing their limit. So the third one, which is the key that holds it all together, is the data architecture. Everything is under non data architecture. An example is you talk about planning. Planning tools when you talk about workforce planning, they think of the cost of the employee, the equity, how much you pay them, expenses, custodian for boots, helmets, laptops, or what have you.
And that's what I want to know about allocation costs and then you meet over to a different system, right? That's not the way workforce planning an HR department thinks of the people, thinks of headcount, how are you going to organize them, how are you going to move them around? The bringing the data components together is where you have you're running a plan, you see that again a name or something or an organization and you can drill all the way back, back into the object graph and find that particular position of what you have. That's what we're talking about, the Power 1. It's a journey that we haven't adapted the same journey we have with platform.
So the key would be the holders together, the connective tissue is data and how we treat that data. And the motion here we use is timely data. Not all data has to be treated the same. If you're making an adjustment of a salary of an individual, you have to be a May second away. But if you close a period, You can actually move that data not from the expensive side of the graph somewhere else that actually do the analysis if you want.
You can close a payroll and you can dehydrate that information and dehydrate it if you need it as well. So it's all about the timeliness of that data. And not yet again, the building material we're using here is back to silicon. There's not 3 materials. We're trying to get 1, and I'll refer to it as a silicon blob.
The next thing is, enterprise system has to communicate with outside world, and this is beyond just bringing data rate. We did this a long time ago. In 2008, we bought a company called Cape Care. It was an ESB, and we realized that the only way that if you have an enterprise system and you pull an enterprise system out, got all these wires and roots hanging underneath. That's the complexity.
We when we our integration story, SOD APIs, Western API we took all that and we took the ownership on in the cloud. So you need data. Right now, prism analytics, you can bring in data from the outside world your operational data, and you can analyze it like any of a analytical tool that you're using. One thing we learned about this journey is you can't have enough restful APIs, and that's what we we've thought we were working on. Now there's another component as well when we talk about the outside world, and many people are talking about the outside world of data.
Well, the outside world of data, there's also users, users that interaction is not just within the Workday system, in the enterprise system. There's actually use cases outside as well. So users I'll give you an example. If you take 401, 401, a company says they support 401, So you put amount of money in, you can actually get a match in, that information is in the silicon wall. That's in the enterprise system.
But where do you manage your 401 K? Could be in Northern Stanley, it could be in fidelity, whatever else you use, you've got to sign off in here and then you have to go to another system and sign on and actually do your allocations by percent of all the investments you want to do. Well, the use case, you need to bring it in one place. So that's the bit. That's the area we're moving into right now.
We describe it as a people experience. So there's 2 words: one is work the Workday Cloud Platform, which is tools, and one of the deliverables of that is called the people experience. You will have heard the cloud platform used many times. Right now, we announced it last year. We've got 30 customers on it, and we embellishing it with more goodies.
More tools are going into the cloud platform to the point where the same platform that the customers will be using will be the application developers and developers are using within Workday. So when it comes to the that interactive layer, right now, we are not The people experience is in it's in the oven. It's being baked. So it's in the pret kitchen being chopping a little bit and getting it ready. It's We will fill out a space of bringing the external use case of users together on the one user experience.
This is the right space, by the way, that we've left. Because we're too busy doing other things, but we're going to venture into it. Another companies are actually there, actually using our restful APIs taking our data and using it back into our customer sites. So that's done with the people experience. Next, let me just think this next thing is let me stop there right now by the the silicon bulb and bring up a slide which curiously enough is the same slide that Tom was talking about that talks about the Babylon, talks about we spend so many hours, efforts, and money from the very beginning of securing our customer data.
The data of the customer belongs to them. We haven't got access to it. We don't see it. Data privacy, compliance, GDPR, so only we we know we spend more time with lawyers what we do with engineer, engineers actually have to work with lawyers at Workday. We spend so much time.
It's to say, data is absolutely sacred. Only for our customers to do what. They run a report, they click, back into a spreadsheet again, moving that data into PowerPoint and then you got Bedland again. So there was a company that was about 4 or 5 years ago. I remember driving in the morning, And my boss called me, and Neil called me and said, what's going on?
Is it us? So what are you talking about? What happened was there was 4, 5 years ago there was something with North Korea about some movie that was made. I don't know if you remember that. All right?
And some, the company got attacked and some data was taken, all right? And that company runs on Workday. So that's why I got the phone call. What went wrong. What went wrong is what happened, what the attack went after their emailing system.
And in the email, all over financial hours and managers, what do you think they've done? They'd want to report and put out a new Minnesota emailing it. That was compromised. It's actually, it's really annoying from a work day point. We spent all this time to protect data and what do customers do?
They will actually put it at risk. So we have to find a mechanism of bringing it back in again. They never do that in the first place. I'll give you another one. Customers get fished.
Right? We give them, we give them tools to do 2 factor authentications. Some of them don't do it. It's not different, like, going to the ATM machine. You put your card in, you take your money out, you go around the corner, you get mugged.
Who scolded it? The user or the bank? Doesn't really matter. The bank has to take the responsibility. So we have to find mechanisms that we do not, and it will not allow because we can't prevent them How do you stop that habit of taking information out?
That's a very evil temptation they go through. So we realized that we live in a world where spreadsheets rule, okay? We could fight it all we want. We are not going to win that battle. In fact, I would have thought that you sort of had even the dead accountant, if you let them in their hand, they'll have their white fist and we'll be opening their fingers and what they're having there, a spreadsheet.
They're never gonna let it go. So the same way a bank will say use credit cards, use a biometric mechanism to pay, don't use, don't use cash. That's the beauty of being losing the lift, right? They've got nothing that they've got value. I don't care when they've got value.
That's the way we need to move into. We accept that spreadsheets exist So we provide our customers something called a worksheet. It is fully blown spreadsheet, fully collaborative, and by the way, enterprises don't collaborate with chitchats and yammering around the place. They collaborate around data sets. Folks that work with me when we do a comp cycle, If we're doing equity adjustments, everything that we're doing, we create a spreadsheet, worksheet, and we collaborate and we can see everything we call, we can start, we can do what it is around that data set because I could do the doc.
So we provide that to prevent our customers to have this craziness of putting their data at risk. So another one, what's the other reason you would take data out? You want to do presentations, right? You've got a QBR, for example, according to your business review. How does that work out?
3 to 4 weeks' process? Finance comes along, create a templating PowerPoint, full slides, you've got to put up there your old chart and all your HR informations, Then I want some finance information, some expenses and what have you, then couple of slides, I want your goals, NBLs, what analysis, and how you're going to fix it, right? That process takes weeks because that email goes out with this template, manager will over it, filling it, HR will be financed with elves or doing this work again to get put together in their email. They can try to collaborate with emails, right? It takes Yet again, here's another one.
How do you extract time? We're producing some of your life pages, thin unit of spreadsheets together with PowerPoint. However, it's plugged in to the workday data. Same security model. Nothing changes.
So really what finance will do The link could use a template, but it's prepopulated with your old, your attrition, your headcount, and everything else that you need. Can put the net, then you can actually collaborate with a narrative. You've done it in 3 days, right? Because at the moment, the magnifold, your HR and financial lows, just putting hunting dented together again. So we need to prevent individuals might be the reason to go out there.
I'll pull there and let's see you in subject for a minute. S shaped curves. We said we quickly 2005, We didn't have the legacy of the past. We'd learn what relational could do. We decided we're going to go down the object graph.
We learned from the consumer's internet from the outside world. What next? Right? We're building a Silicon Blob. You can see that we're doing that.
We're trying to extract the time and actually add value. And now the people who make the sausages the turbines, the pastries, selling insurance, do what they do best and not spend at the time on back office operations and messing around with the manager's time either. So at what point in time do you jump to a different technology, or do you absorb a different technology? If not, you die, Here's a story that, I found interesting, send me, right? What they figured out back in the late 1800s is how to stop time on paper and the technology was used was chemicals.
That's what they used. The great Kodak, the great Kodak, right? They actually hired someone, and I think he's dealing with Sassan, twenty four year old kid that they brought in early 70s to see what's the next trend in Kodak, and he came up with a digital camera. He said instead of sorting it with chemicals, we will solve it with bits and bytes. He broke this thing as a big bulky thing, He iterated it 3 to 4 or 5 years.
Of course, it was in it was not quite perfect. And then you, he said, it'll take us 15, 20 years before we get the pixel perfect that we get on paper, that we can actually get it on the digital as well. It'll take a long time. Remember you've got Canon and Nicklin, right? And they had all these cameras and lit and in the mirrored cameras and what have you?
Well, Kodak decided that they're going to cannibalize the chemical and paper manufacturing, what have you, and they skipped something in the chasm, they found in the chasm. Surney, on the other side, decided, we're still wondering if they're reading in the space of photography, in any shape or form, What did they do? They actually put all the efforts on digital. To this date today, I think this week, they said, Sunny is the number one seller of digital cameras. So they went into a space that we didn't think existed.
Nikon, which were the number ones in cannons, they've fallen off. Yes, they do. They look at the professional world, but they lost the market share. Same thing is going to happen with Tesla. I'm a huge Tesla supporter, but June, Virginia, myself, I think we're the executive sponsors of Tesla because they're customers of ours.
Right? We're disturbing the market. And what are we going to wait to see? We're going to see the combustion engine, manufacturers respond to that. And what do those really respond with thud It's exactly the same thing that you respond with, so only Tesla burn, right?
One of them doesn't have accidents. It's absolute nonsense. So they have to change. They have to respond to that. If the direction is, you have a company that's taking risks, and it's going to weigh everyone has to follow.
And their answer is that, and they're going to come out with, hybrids of some kind. But eventually, you could watch the same thing is going to happen in other is as well. So the same way that we said object orientation was the watt that we, we used to generate the company what's going to happen right now? Everyone talks about machine learning and talking about artificial intelligence. Because I don't we don't like to use it.
I don't like to use the word intelligent. Machines aren't intelligent. They don't have emotions. They don't have judgments, but that's okay. Like you say, artificial intelligence is the peak of where we're going to get through and the terminators and what have you.
Machine learning at the mechanism of getting there, and then you've got deep learning when it comes into that. So we have an object graph, right? You will hear the machine learning that user turn graph a lot, not as graph. We announced skills graph. We've been working on machine learning for the past 2 to 3 years, two and a half years.
We've built 4 or 5 companies with awkward high individuals, and we're bringing them into the ranks. And now that's exactly what we're working on. We're applying that to our object graph. So when you're talking about machine learning, here's a little data point for you. This morning, I think someone mentioned but right now, we have a multi tenant system.
We're sitting on more than 31,000,000 lives. I think we clock on about 2 to 3000000 a quarter or something that, whatever the number is, right? That's a go mine. And by the way, those lives are active. These are people that have work, active employment in companies.
I've also been told that the competition can claim we've got more than 40,000,000 lives. Yes, but that's a data lake. You kill that data, you've taken it somewhere else. Someone's got to sync it, copy it, obfuscate it, scrub it, maintain it, And we know people have left one company, they haven't updated that. Workday is active.
It's real life. It's really active information. So this it's a goal in mind that we can surface information from that. But in the meantime, this data, and it's going to be a journey, We've got to realize this personal data in our Workday system. There's 15, 20 attributes, which don't belong to the company, belong to us as humans, And because that data, the company protects you protects that data, what we do is we can't we are not allowed to analyze that information.
Because that information is in there. Now last year, we announced benchmarks. And this is where we take, we ask customers to obtain had at that time, I think there was 180 last year that opt in, and we're clocking into 3 70 this year. The trend is slower, but they allow us to look at neighborhoods of their data and give you comparisons with other companies as well. That is the future.
In the meantime though, we are focusing our guns In looking at our applications and making them smarter, we are automating business processes, ideally, via closed process, right? You want to report, you're looking for abnormalities, you go back, you make your offsets, you make your adjustments, you run the report again, and then you all the financials running around, trying to fix them, and they take days, sometimes weeks to do a close. Well, detecting abnormalities over and over again, machines do pretty well. So our first task, the first time here next year, will be a large percent of our workflow, Our business processes, events will be fully automated. And our notion is, at some point, we can talk about lights out back office.
That's a crazy thing out there, but that should be all in going as well. So when things get more mature, we will be able to open up and go cross tenant, cross tenant, and then we can start surfacing some very interesting information back to our customers from that information. In reality, Our competition will change. At that point in time, we're competing with the AC Nielsons, the denim vaccines and the ratchets of the world. The world will change.
So with that, as a summary of what we do at Workday, the way I would say the way you think of transactional systems or enterprise systems, I think of them as the beast, really, And everything the customers do, they're trying to feed the beast, and the beast sometimes will give them information. This has to turn around. Pete Lam talked about the mental analytics The time should come when the beast serves the business and not the other way around. And that's why the most staff the power bomb is so, so, so important to keep together. So we can hold so we can actually extract the time on our silicone glove and get that plan execute and analyze as quickly and continuous as possible.
So that's the end goal. So it's really real objectively from a SAS company to a DAS company, and we have a platform as well, a PAS component to it as well. And I think we've arrived when Workday, is no longer a noun but becomes a verb. So whilst other companies are calling their machine learning, unique names, Leonardo, Einstein, that's what we're gonna run off and call Isaac Newton, call my man, Isaac, will will give you all the art? My business answer's no.
It's workday. It'll become a verb. You will workday it. You will Google it. So for me, it's immensely exciting, and that's why I love our tagline.
The future is ours, and we are built for the future. So with that, I think you need to take a break. So thank you.
Thank you, Tetra. Real real quick, we're actually gonna gonna stay stay with me. We're gonna allow, 5 or 10 minutes for Q and A for Petros and Tom. So I'm gonna ask Tom to come back up. We do have mics on the side.
So just raise your hand. So before we go to break, we're just going to do 5 or 10 quick minutes of Q and A.
Thanks very much. Hey, Pedro over here. Brad Zelnick with Credit Suisse. That was very helpful. You you you talked about a lights out back office as something that we can envision down the path and the advantages of an object database and and the object graph Where do you see technologies like robotic process automation fitting in with your vision?
Is that something you end up doing? And and how do you see that maybe complementing the vision?
It's a blurred line. It's actually a blurred line. It's interesting how it's the the better information has come to life was talking to someone the other day, and I said, do you remember the word bepple? And they said, what are you talking about? I said, Bepple, EFP, they had Bepple.
Right? Here's the language. You used to orchestrate your integrations, but you could fire them on and you went off. What happened to it? Young developers that even what I'm talking about.
We tried it then, right? And that wasn't because it didn't have a feedback mechanism. There was no feedback mechanism. Like, run a payroll I don't know if it's ever come back. Then there was another one that we're talking about composite applications.
You remember that? Right? The idea that on the top then when they will orchestrate these things together and you can create the app, the meta app, the app or the app, what happened to that? Too complex to build way too complex to build. So here we are right now, and we have the technology.
Now it's got a different term. There's a different acronym, but it's no different than what we're talking about here as well. You have the capability of instrumenting a sequence of events or or, or business processes, but you have the intelligence right now to know what they're doing. So as far as I as far as work is concerned, that's a blurred line.
Hi. It's Keith Fauchner on the other side. I wanted to ask a question about adaptive you you mentioned it's certainly a compelling product, a lot of interest. But the feedback we've gotten is a little bit different than you've characterized it in that there's a journey to get the data models same. It will be one data model.
And my question is, is there a risk of, stalling out a bit? What I mean by that is we've talked to some including BMO that don't really want to implement the planning, adaptive planning until the common until the data models are in fact common, not going to be common, because it'll create a re architecting situation when there is commonality. So I'm just wondering, do you see a risk for those workday customers that are interested in Adaptive to to stalling out, if you will, until the common data model exists?
Yeah. I I think the, I think the experience we have, talking to customers, those early customers, is actually, that a lot of them are, are going to come over and do conversions, you know, 2 adaptive insights. We're actively working with multiple customers on that. I, I think it's less about, I think it's probably less about the data model, because we'll we'll make that as seamless as possible for customers. I think at the to go from workload planning to Adaptive, there's a there's a re implementation So some of meant on the gap that we're working with customers to make that as seamless as possible.
And so I think our guidance to customers has been if if you have a solution that's working well for you and Workday planning is is working effectively, then, you know, stay with that. And and you should assess, you know, the benefits of converting potentially to the Adaptive platform And as I said, we have many, many customers doing that.
I would actually say, beauty of the run code line, I think about, we change the system all the time and people don't even realize we're doing it. So Other than, yes. If people ask me, yes, in human adaptive, what about the account and the users? Don't worry about it. One day they're going to wake up and it's going to be working a different way.
Run your business. So that's the because remember, this is this is like you think of Google and Amazon, right? You don't get an email that says someone's going to change. You're changing it under covers all the time. That's the part of the technology or work day.
That's the way we think about things. And in fact when we hear the due diligence, right? The conversation we had was whiteboarding, whiteboarding architectures and how they're going to and how compatible they were to actually work together.
Hi, over here. Hey, Tom. Catcherous, it's John DiFucci from Jefferies. It's a related question, Vicky's question, it does sound like even though it's a lot of work to change data model, and, and, and, and, Anil has said, even on the conference call when You announced the acquisition that the data miles were actually very similar, and that was an advantage. But the one thing you just said, Tetris, about the power of the 1 code line, it's different.
Workday is written in a different language. It's your own proprietary language than than what adapted is written in. And it's never really been addressed publicly, but I would assume, and especially because you went through what Platform went through, but I think Platforma in an analytics company and not nearly as complex, I think, as as what adaptive insights is, it meaning adaptive insights probably has a lot more business logic in the application. Are you are your plans to actually rerate Adaptive, not change the business logic, rewrite it using workday code. And if you don't do that, where's the power of 1?
So that's a very good question. It is this it is 1 code line. If you look at the adaptive is the way they have 1 code line, they modify They're not speaking codes and have version a's and version b's or versus c's. It's not about having one technology. When we use a they're still with technologies, But if you read holistically for the customer, it's just one thing the way we're moving it along.
And over time, the way we describe them, you use plethora, for example, This is a this is an analytical engine. That's what it is. And analytical engines by nature do what they just do reads. That's what you're really doing. For Clafira right now, does we do reads and writes.
The accounting have been announced today, but it will be generating transactions. So it's not to think about a code line. Right? I mean, this is this has got a different accent than this one. This one is Java and this is Python.
It doesn't really matter. The drumbeat, right, of moving the customer along on the same version, that is the whole idea, right? People get caught up, I had someone totally about how do you think of the deployment of the software and other covers? I said, well, we use some mobile stack. We VMware, we've got containers.
Oh, that's not the power of one. See, what are you talking about? It's got nothing to do with it. Green result is the way we experience the customers have, they don't know what's going on behind the scenes, right? And then at all, you don't want to go in the kitchen.
Right, not even in the kitchen or about you running your food, right? It's the same thing. There's a lot of stuff moving around the place, but it's one thing. And the drumbeat for the customer is the drumbeat by the way, every 6 months, an update, we do an update every weekend. The way that we put them in 6 months is because you to consume it.
Customers can consume it that way. They can't consume like a machine number of features coming your way, right? So they can get their project. So don't think about Python versus Java. Yeah.
And, and,
yeah, and I think, John, the other thing is it's really about the user experience. So you wanna be able, if you're inside the Workday Canvas, you want to be able to plan and adapt them. And the example I used earlier about coming from, actual data in Adaptive, for example, all the way back to that source record, And that's and that's really what's important to the customers is having that experience. I think it's a little bit different than other situations. Which may have, you know, calls for replatforming.
And this is, it, this is about the commonality of the security model, the data model, and the user variance.
So just to be clear, there's no need to rewrite the code. No. That's correct.
Thank you. You only rewrite my code. My
Melisha from Barclays I'm trying to put my German accent back out. Quick question. You, when you talk about the architecture, there's another company out there, German, that says, oh, we do it in, in, in memory database. And, and so we have the analytics and the transaction in one system, I don't need to have the object based model that you have. And I'm also looking in a kind of CRM, a Salesforce, which is kind of down like a different because
they started earlier, and I
see servers now differently. The big question I was, like, like, does it matter in the entry declined? And the advantage that you kind of preaching us today. Will that come through at some point or, you know, in 5, 10 years' time, as you said, don't look into the kitchen, it's not gonna matter. Can you just help me understand that a little bit better?
Duke, our Northern European friends, with a Germanic accent, I think, gave me credit years ago, when they when they created an analytical data store, a column database, right? But it's still made of wood. You still have to take a data from here and move it over there, right? Okay. If you want to know a lot more about these companies, ask Ben, right?
We are aiming to give each other and we know a lot more about each other during laundry, right? So I can tell you a lot more the the notion of what they're trying to do is absolutely the right one. Now, will they do it in eventually? I hope they do. This isn't about being in the unit.
I hope the rule will actually up in more ways than one. It's just a matter of time. I was reading over a couple of weekends ago about another legacy company that started using this notion of objects. And how it was fantastic. They could use it a couple of ogs.
They could move someone could have a position over here and belong there and report to someone else, and it was kind of an eye opener I thought, Hallelujah. For for, you know, we've been talking about this for 13 years. Now someone sees a light, light about it, right? So we didn't see it as a threat in any shape or form, right? I'm just rather going to conferences with him and tell us, how can we do it better?
But that's not what the threat is. I believe that is solving the business problem is the key thing that we really need to solve. How do you extract time like, so an implementation of enterprise system does not delay you and doesn't cost you a fortune. That's what we should be working on.
Love all the questions. We could probably go all day. We do have a session at the end for questions. So we're just going to take one more which I think up here at the front, and then we're going to go to a quick break.
Thanks. Ross MacMillan from RBC.
Hey, Tom.
I actually had
a question just on scalability. Because you've gone through at part day a process of making the object oriented model more scalable as you've gone into a transactional system. With financials,
kind of
high velocity transactional system. So when you did your diligence on Adaptive, I'm just curious What did you see there that got you're very confident on the scalability? Thanks.
It was absolutely exciting. I would have said in the second meeting in a few hours, We had our chief technology architect look at together with other chief technology architecture. It was exciting. It was JBM, same parallelization, the same technology. We would have solved the problem exactly the same way.
Yeah.
But we are on doing that with Workday. We just run out of time. We review the maturity. We use how to build it, make it work, make it scale and perform. Those last two components that was taking us way too long.
You know, we take a company that's successful. Kindly takes 10, 14 years, and we know, we feel we're going to build it what 18 months or 2 years, but it's the same. They used exactly the same notion. That's the the most exciting component that we have.
Yeah. And I think
that was that was a key part, I think, on both sides in terms of, you know, the, the synergy, because after, after those sessions, there was very high degree of alignment confidence, you know, by the Workday team in terms of the work that we were doing, and I, I think that was an important consideration,
right? Okay. Thank you.
Ladies and gentlemen, please welcome Workday Senior Vice President Services, Emily McEveley.
Good afternoon.
So at Workday, we really feel like one of the keys to our success has been our partnership with our customers. And as you can tell, this conference 10,000 attendees is, is evidence of that. But a little secret that you don't know is that every Workday internal event we also really look to bring in the voice of the customer. So that's our sales kickoff, our conference with our partner ecosystem and Workday services employees, in in other internal events, company meetings, we always feature customers typically through a customer panel. And it's great because we get to hear their voice.
We use that feedback to improve, both our execution and our partners. So we thought for the first time, it would be nice to bring you guys a little bit of that magic. So we're gonna have a customer panel. So please join me in welcoming 2 customers to the stage. The first is Krista Davies, who's
a Workday board member, and EVP
and CFO of AAON and Chandra Pepping, who is the VP of Finance Technology at Unum. Thank you, ladies so much for joining us. The inaugural panel at, Analyst Day. So I thought we'd just start out with some basics, giving these guys a little bit of background, your personal background, and then back background of both your patients. So, Chandra, if you'd like to kick it off?
Sure. Well, hello, everyone. Chandra Pepping, I'm vice president of the next technology at Unum. I've been with the company for 22 years and currently had up our finance initiative plan, which we have about 70 initiatives going on at any given time. Then my project management team, as well as our technicians, we have adjusted some implementations for finance, upgrades in, just overall application support.
We also support our data, automation, as well as process improvement. I'm the finance business owner, for work day. And, I have other roles, as a CPA within the company of our county COE, financial services, internal controls, reinsurance, as well as in, stand out in the operations. So, so that's a little bit about me. So let me tell you a little bit about UNEM.
So here we are. We provide benefits, through the employer at the worksite. We're located in the U. S. And in the U.
K. It's our primary market. We're a Fortune 267 company, which, we protect or serve 189,000 businesses. As well as 36,000,000 people that we protect. So $11,000,000 in revenue and, metrics I'm most proud of is, the benefits that we provide to those policyholders at a time of need or loss through our products.
And last year, that was $7,000,000,000. So very, very exciting. So as a one hundred and seventy year old company, we're constantly looking to innovate and change and deliver on our, customer needs.
Right. Thanks.
Sure. Hi. I'm Krista Davies, and I'm the CFO at AAON. I've been the CFO at AAON now for almost 11 years. I'm also a very proud website board member.
Prior to AAON, I was the CFO of the Platform And Services Division at Microsoft, who was the largest division at Microsoft, and I was at Microsoft for 10 years. So let me then just tell a little bit about AAON. We're a leading professional services firm focused on risk retirement and health, underpinned by data analytics. It's a global firm. We operate in over 100 countries, and we're built up through acquisition almost 500 different acquisitions over a 20 year period of time, and we're really innovating and accelerating growth through the investments we're making in data analytics going forward.
Great. Thank you, Bill. So I thought kind of as we talked to the panel, it'd be really interesting for the audience to hear about your journey, from Workday. And so I think we start at the basics And, would be great to hear from both of you about, what was the business case for change? Like, why did you initially kind of embark down the path of partnering with the Workday team?
Mean, Christy, you want
to start on this?
Sure. So we started with HR, several years ago, and really the the impetus moving to the Workday HR was really total cost of ownership. We had several different HR systems in place. It was terribly expensive. It was terribly inefficient.
And we didn't have, you know, multiple versions of the systems. We really had different versions by country. And so, we implemented those AHR in a 12 month period of time, across 100 countries. And that was a seamless implementation, And for us,
I think it was a really successful implementation
and gave us much more insight into our people globally, 50,000 employees globally, and, enables our HR leaders to really do on their devices, mobile or ipad or OPC, a lot of things that really the IT department had to do with the reporting and analysis previously, so it enabled people to make much faster decisions and get things done, whether your employer or an HR leader across our organization. So that's where it started. And then for finance, we really thought about the Workday Finance decision. So we went live on Workday Finance 112017, the 7 countries, We're now live with over 34 countries and 60% of our global revenue and, and we'll be we'll have 90% of our revenue live on Workday or over 90 percent of our revenue live on Workday 11, 2019. And really the decision to go live on Workday Finance was really based on having workplace and actually be on the link, HR on finance together, because we really run the company based on return on capital, our biggest expense people and being able to have those 2 things in one system and be able to do the analytics around it and really manage the business actively a return on capital, it was a very big driver for us in making that decision.
That's great. Thanks. How about China, you want to talk a little bit when you made the decision?
Sure. So when we looked across our corporate application, we, we had approximately 200, which created a lot of risk for us. And, it also created a lot of silos as far as the way we operated between HR, finance, procurement, and IT. So, collectively, we decided to go out and look at a product in the market to see if we could collaborate in one platform to meet our business needs. We have 4 key objectives, with the RFP that we did, with multiple different the company's large competitors out there.
And the value we were expecting to realize is to reduce our application portfolio, reduce our cost and, provide better insight to data and analytics as well as meet our customer needs. And, you know, in Earth's Workday, and, we're a full platform customer right out of the gate. We purchased HR and financials 5 years ago. And, I'm sure we'll get into a little bit of the deployment and we continue to invest and buy all the products. At the load out.
That's great. So really similar stories, right, where you had some siloed data and you were looking for a way to bring things together. And before you guys were in the room, We spent quite a bit of time talking about the power of 1, the benefits, kind of clarifying some of what we mean by the power of 1. And so I think
we would, we would love to
hear your opinion because I would say, competitors will come in and say, Listen, you can create the power of 1 by integrating multiple legacy systems because it's really an integration that makes systems talk, right?
So I would love,
since we've heard a lot of the work day opinion on know, what the power of one means today or what will will it mean for you? I would love to get your guys' opinions on that.
You know,
Jamie, you wanna
start with that one? Sure. So, so one worked out was the only, product that truly had one platform. That eliminated all of the integrations and those integrations are multiple. When you think about payroll integrating with the ledger, you think about HR data integrating with payroll when you think about AP integrating with the ledger, all that's eliminated within the one platform.
They also give us the inside the capability to be able to analyze our financial, our HR, our spend data, all, through one common tool So from the power of 1, you know, as we did the RFP and looked at the products, they got very savvy and actually the analysis of what was going on in the demo when they linked out to another tool through a URL to be able to ask regarding that security was a big, proponent for us as far as, is it truly one security model? And, you get that answered yes, yes, and yes from the competitors, but you have to answer the or ask the question in the right way to get the right answer, as far as, yes, it's one if you use the tool that truly combines everything together, which there again, there's another application that has to do that really at the end of day, they all have different security models. And the other road base was very, very, peaked our interests and provided a lot of value. So that one platform, from the integration and just the holistic utilization of it. And so we really will get versatility within our, eliminate the silos in that platform, of 1, but the versatility of our employees definitely grew exponentially beyond what we had expected initially.
Great. Well, we we had dinner last night, and you were you were sharing a lot of stories from the from your demos, and I would say that you could probably have a consultancy. You were so nailed into knowing exactly where people are tracing through the applications and when they were linking out. So it sounds like you guys were.
Yeah. I will say one unique thing, in in the demos, the first day that I met our self, representative for for work day. It's like, oh, hey, you want to download the app on your phone. We'll put you in a test in it. I didn't get that from anybody else.
So you, you know, I was able actually replicate within their test tenant, as they showed the demo, as we went through all our scenarios in that, which was definitely unique, that would have taken quite a came for the amount of time to be able to get, an infrastructure set up with one of the competitors and, and it was their day 1, which was, which was fantastic.
That's great.
Kristen, do you want
to comment a little bit
on that? Yeah.
So I think for us having HR and finance for the same platform is really important because as Chandra said, it's not just that they're sort of linked or integrated. It's that they are actually connected in exactly the same platform. And I think having HR consistent for us in our 100 countries globally and having finance consistent in our 100 countries globally, buy it felt is a massive innovation. So we've never been able to actually have that kind of insight, but then to be able to connect them together over time, to be able to actually analyze HR expense deeply across all of our different businesses live. So and empowering our finance leaders in our business leaders to be able to do that.
So we do manage the business on free cash flow. We're actively managing the portfolio We've bought 500 companies over the last 20 years. We've divested 300 companies in the last 3 years. And so actually having our business and finance leads be able to actively manage the portfolio and do that analysis every month or every quarter opposed to what we've historically been doing, which is sort of almost a offline batch process at the end of each year, which takes month to month actually like pull all the data together off different systems and make it apples to apples. It just takes a really long time to drive that insight by which time sort of the business is your job.
And so to be able to do it live is really exciting for us.
That's great.
And plus it kind of manages the risk, right? So I know both of you and the business and managing risk, but the risk of the applications of not having, like, bailing wire and string kind of tying everything together, right?
An errors, right? Yes.
Yes. That's great. Okay. So let's move on,
like, through your journey and talk a little bit about your deployments. I know that
you both deployed in multiple phases
and still actively deploying, but
I'd love to hear about, you
know, your takeaways from your workday appointments maybe versus some legacy and lessons learned, that you know, if you could do something different about deploying our applications, what would it be?
Sure. So, so I'll just tell you to actually upgrade one of our applications that we had in house would take a year and with a massive, amount of resource us to be able to do that because of heavy customization, we got no benefits. It was really just to stay current on the model or the current release that was being supported And, so looking at Workday, so when we purchased it, we went into a phase 3 approach. We planned on rolling out HR, payroll, and then financials. So, immediately as we entered into the HR rollout, because of the cost benefit analysis on the expense saving side of the house, as well as on the procurement side, we needed process improvement badly.
So there we brought that up into phase 1. And so in 9 short months, we delivered HR, procurement, and expenses. So technically, for a large portion of financials, we've been live since 2014. And again, we did it in less time than it would have taken just to upgrade one of our applications with no value at the end of the day. As as far as the deployment, we, we, we met our C Yay, it's BBB in some areas.
It was a very, very successful deployment. Did we run into bumps? Yes. I think you're doing all, any kind of implementation, but at the end of the day, workday was always there. And we solve all our problems when we move forward.
And, it's, it's definitely relevant across our organization is, is, is a success as well, not only the CBA, but from the functionality and then the implementation itself, from a lessons learned perspective, you know, things that would have done differently. We wrote out the term that we wrote out policy changes. And, and by doing that, we said, you know, no pay, if you have a PO. So that created some contention with the tool. Folks thought the tool was causing them to do the adversities and mandate by, management And so we wanted to segregate that and definitely handle the change management aspect of it better, prior to Workday.
We had, 93% of our invoices, all, all of our stimulus through invoices afterward day, 83% when PO, which definitely give us more management oversight of our spend before it moved through the process, which was pretty phenomenal think there's a, a placement out on the Workday website about the value of procurement and the expenses itself as far as all the benefits that we got, which is pretty impressive. That's great. It's great. Krista, how are you?
So in terms of our deployments, they were sort of separate. So the HR deployment was 12 month, It actually went seamlessly, and we certainly met the business plan in terms of the cost savings. It was quite significant, well over 30%. And I guess the big lessons learned for us on that HR deployment, we're really about changed management because as I mentioned, we didn't have one HR on premises system, we really had these different versions in the 100 plus countries in which we operated. And so we really had in each of the 100 plus countries a change management person in the country who is responsible for managing the change across business leaders, HR and finance leaders.
And then one person on the project team was responsible for taking those country requirements and feeding them into the global requirements. And that change management process was really, really important for us, the HR front, and we replicated that when we rolled out finance. On the finance side, I think the deployment is taking 3 years. So We went live 11, 2017, with 7 countries. We went live 11, 2018, with 34 countries, and we'll go live on 119 with over 90% of our global revenue.
So, 3 years is sort of the rollout on finance. I'd say the big lessons learned for us on finance was similar in terms of change management. It was definitely, this, you know, one person per country thing, because that actually really helps us actually drives the change management of the countries because, again, on finance, we have different versions of the platform in each country. And so it was really lots of change management. And then the big insight for us on financials, which was made the go live just so much more seamless my finance organization was We have live data in a workday production environment from February 2016, well before we went live, 11, 20 17.
So my finance team got to play with live Aon data, multiple years of Aon data, in a, you know, production environment for more than 10 months And that meant that the cynics who had really didn't like workday and didn't want to do the change, got play with it and actually really understood it and got pretty excited about it. And there was no sort of surprise on one one of, oh, This is how it integrates with, you know, the HR system or oh, this is how the reports work, because they'd actually done it up for months. And so It was definitely a very seamless go live for us and financials, so much fun I was telling Emily earlier. We almost didn't update our order committee because it was just so not an issue, and there are far more important things to talk about. And so it was the most seamless ERP go live over the same.
Great.
And, Shane, you told me last night at dinner, a really interesting comparison that your team made so the Workday Financials go out. So I think another roll out that you were doing internally.
Yeah. So August 1st, we, this year, we celebrated all our companies being on Workday Finance tools for a year and I saw business part in the hallway. I'm like, can you believe it's been a year and it's just been quiet? You know, huge success. And this was a person that definitely the onboarding process, took a little bit more than average effort.
And, they said, yeah. Workday implementation was a non event. We'd rolled out Office 365 on August 1st, at the company and had a few hiccups. And he was like, who would've thought Office 365 would've, overshadowed and easily workday implementation. And it was just, the comparison was, quite surprising.
And, you know, I contribute change management communication and the product itself,
which is great.
We pride ourselves on on having very non eventful go lives. In fact, we just had a, we had a, a really successful go live with probably an extremely large retailer, that our competition has has put a lot of fun in the market around. They just went live, on Workday, a week and a half ago, and the their sponsor that drove the program is so comfortable that he's here at rising, networking and and sharing a story with other customers. So thank you for those stories. Okay.
So the other thing that we had talked a little bit about is one of the things, if you reflect, that you wish you would have maybe done a little bit differently is kind of pulling dashboards and analytics into a phase 1 deployment. And, you know, I think, like, the years of implementing legacy systems were, you know, Petros kind of showing how, you know, you have to kind of really work on the transactional data and it's such the effort to get the transactional data correct and that you can never really do dashboards and analytics. In the past, you could never do them in a phase 1, right, because you'd have to get the transactions, then you build your data stores and your analytics. But with Workday, it can really change change that dynamic. And, and I think, you know, since then, you've deployed dashboards analytics, so it would be great to share with the audience here, you know, some of the ones that you've deployed and and they've really driven some value for your organizations.
Yeah. So, for us, our procurement organization, has done a phenomenal job of, you know, all kinds of spend analysis that just pulls up automatically there, deep drill diamonds are available to go down to their individual level of any kind of transaction, which is phenomenal, and it's different. And, from any tool that we've been been provided. And I'm obviously a user as well as an implementation, a little of the product, but, I wish we'd have rolled it out on the front end. We're still on the general ledger side because it would have drove our transformation more.
We, we definitely had extensive information, but there's also areas where we did some lifting and shifting, where we had some resources that was heads down on, on doing other projects, but we made that business decision. And, now we're circling back around and showing them all the great things. In addition to products like prism, analytics, and, building out some cooler financial reporting there from a, a reinsurance perspective now that we've got financial data at the level that we need to do within Workday. You know, our journey is just endless there. So great opportunities ahead that do wish we'd have started there, and instead of just you know, managing the regular processes that we had through reports versus those dashboards.
Yeah. That's great.
I mean, we said the same thing. We focused on getting the transaction right. And I think our team would say if we did it again, we wish we'd done the dashboards at the beginning because they've been so valuable. So we have these closed dashboards and it who goes through every single account in the company, where the account's up to, who's approved it, etcetera. And it's really helped us diagnose issues that are driving delays, the closed process, issues where we have constant errors or, you know, it's just some sort of issue.
And it's sped up the closed process enormously. We've really been able to make it a much more efficient, process. This is all
run out of our crack off
are, finance and excellence. And so, yeah, we wish we'd roll those
out at the beginning
because we're now rolling them out you know, now that we're sort of several years into this, and I think it's made such a difference. We also have them on expenses so similar to you, and I think it's helped us manage expense, compliance issues much more rigorously. The analytics around it is just seamless. And
so, yeah, I would
say across the dash board. The ones we've done have worked really well, and we just wish we've done them earlier.
Yeah. Yeah. That's
great. So before we
move on, I wanna move on a little bit to
kind of market and get your feedback from that. But anything else that you would add, just in terms of since you've gone live on Workday, different ways that the business is operating, versus kind of pre workday deployments?
So I'd say our biggest advantage, so for workday, it's more than just a a financial management system for us, even though we continue to deploy all the, the capabilities that they deliver for us, we've extended that out to our operation. And from a growth perspective, it's changed the way we deliver value,
to our
business or our customers end of the day. We have a little over 100 large case customers with, with Workday, and we're able to integrate with the product from a billing and other type of automation efforts. So it's easy our ability, to deliver value external to finance, which is just phenomenal cloud platform is another big example of where we're looking to retire user develop applications you know, throughout the organization, we just went live with our first use case as when the U. K. With cloud platforms.
So again, kind of endless there. And we're really excited about the opportunities as far as what we can build in and integrate and know that it'll work seamlessly within the releases occurred? Same. Okay.
I would say for us, we're really acquisitive. We do a lot of acquisitions, and it's really helped us integrate the acquisitions much faster So bringing the employees on board and integrating them into the payroll system, integrating them into the workforce management system, it's just been much faster to do that much more seamless. I'd say the same in the financials, bringing them into the financial system is just much easier
to do.
I'd say the next big benefit for us is it's a much more secure platform than what we had before on premises because we had all these different on premises instances. So there was so many ways in which she could get into our network secure security wise. And so having it all in one instance in the cloud is just far more secure. And the last thing I'd say is it's hesitant to make our external audit with the, much more efficient, because we have what we underlying transaction document in the system. So when they're going in and doing their audit, it's a much more efficient audit.
They're going into our crack off center of exports, and they're doing it across all the record to report transactions, with the underlying document there, they're not going and deep diving and doing different analysis in the system, a different analysis in the system, then digging around for paperwork. It's just it's all there. So it's it's had a number of other benefits that we frankly didn't expect.
Mhmm. Mhmm.
We hear that a lot from customers, actually, but, first, there's, like, an effort to retrain their auditors to look at work say differently, right, than than they do kind of legacy systems just because, just from an architecture perspective and in data management perspective, it's so much different, right? Agree. Okay. So let's move on to, some market perceptions, and I'm going to start with you, Krista, because this is a very CFO centric question. So there's a general perception that, that CFOs are not motivated to move to the cloud, right?
Typically, a little bit risk adverse, And, you know, they have a they have a GL that works for them. And, you know, so why rip and replace their GL? So I'm do you have any advice for them, or what would you say to them, I guess?
I guess the first thing I'd say is I'm not sure it's just about the GL. I think it's much broader than that. I think the conversation we've been having is it's it's finance, plus procurement, plus expenses, plus HR. And I think for us, the way we're thinking about is really return on capital and trying to manage the business more actively, and manage it consistently globally in a way that we've never been able to before because we've never had transparency into the underlying transaction data. And so for us, it's driving much more insight into our business than we had ever thought possible.
So I think it's a much broader decision than just a GL decision has put a ride fast. And the second thing I'd say is I do think the security model is just much more secure than not having it in the cloud. And I think that's actually a very important thing CFOs as you think about cyber attacks, which is a very big risk today, and it's very sensitive financial data. And so having that high security model is important. Mhmm.
Great. Thank you. Okay. So we're going to move on to another one. That a lot of times, we will hear, you know, a perception that Workday Financial Management is not ready for the Fortune 500 since you both are I'm interested to see what made you take the leap, right, and bet on Workday as some of the initial large customers to adopt financials.
Yeah. So from our perspective, when a cloud application was one of our our critical decision as we had just turned to, being a cloud first company. And, as much as I would love to say that, we didn't still have to prove it out. We did and I think Workday's at the leader, board from that aspect is from an evaluation perspective. But keep in mind, neither of our relation 6 years ago, we started our journey 5 years ago, January of 14, and we went all in and tools and HR, we did a very robust RFP with, top competitors.
And we went through all the capabilities that was required and, and went through the exact same demos with each of those.
At the
end of the day, work, they had all the capabilities. We asked for 3 enhancements to the product, that we set out a timeline that they would deliver on, which they committed to. And, so really when we were looking at the product trust, because there was other ask within give you an example, UK payroll, which they have now, subsequently delivered not too long, to refine, but initially when we're asking about it, it was like, no, it's not on the road map, and they're the only partner or, vendor that was actually I heard no from. And, we actually developed a huge trust in that and looking at their roadmap and how they delivered the understanding that would come in time. And, that, that was a huge value.
But again, through the request from a financial perspective, again, we started that deployment and, go live in, October of 14. We put our first company on full financials in November of 'fifteen and, and just continue to deploy from there. So it's it's been naughty and we've been very, very pleased.
Great. And I would say from our perspective, I think we did the business case just like you described Chandra, and I think It was just it was a much better business proposition for us. We saved substantial amounts of money I think the functionality was much better because we did get this consistency. And I think actually having it in the cloud means every single country at least for us didn't get to say I'm different, and therefore I get to add on these extra features or do some customization. Of course, they can customize their own reports, which is fabulous.
And they get, you know, we get all these customer ports for France versus Germany versus Italy versus Spain, but the underlying system is exactly the same, which means I can use apples to apples. And that was a really important, I think, part of the decision process for us. And, you know, and then I would say, you know, there's a bunch of other sort of benefits of being in the cloud. I think the security platform's really important. But I think the business case was really, really compelling.
That's great. So let's move on now to kind of life with Workday, and I'd like to kind of focus on innovation and and and really, how your organizations take advantage of, you know, work day updating on a, on a, every 6 months, right, releasing new features and functions. And I think that, it's hard sometimes for customers to get into that mode, right, of, of being an Right? You you mentioned earlier, you came from a legacy application where you're you're basically kind of forced into stagnant stagnancy because really hard to apply new features. And, when you have to kind of look at customizations and rationalize all that, so you basically are stagnant until you're forced to do a major up Right?
So with Workday, you're having to kind of learn a new skill and, you know, and develop that within your organizations. And so I'd love to hear, you know, what you're doing. I'll start with you, Krista. Like, how are you priming your organization to get ready, you know, to, to kind of adopt additional features and functions, and and how do you feel like that helps you
better serve your your customers and
and manage your
risk? Well,
I would say it's actually been a partnership between Aon and Workday in actually what we would like in the platform going forward and actually Workday delivering that. And we actually at the finance platform outlined 250 features right at the beginning, and they've been delivered in
each subsequent update. And
so For us, I think it's very much about, as our business evolves, we continue to have a partnership model with Workday where they're continuing to deliver new innovation for us. And I think unlike on premises applications where you put it in, and then you kind of never see the partner again, it's very much an ongoing partnership, which has worked really seamlessly. And so I think it's really about the innovation matching the logo and as a business is virtually well for us.
Mhmm. That's great.
And Shana, you you guys are, I think, Unum's the poster child for her for innovation because you, I think, you've adopted, I think, nearly every application. That we have. And so I'd love to hear, you know, how you how your team is embracing that and how you're kind of driving that mentality.
Yes. So we have a functional wage group that is very, very active with all of the features that come out
in the
every release that Workday provides. And I'll tell you, going to the software as a service, having 2 releases a year, I added a little bit of at the beginning as first signing because it was new to us. How would we feel about it? How would it go? What surprises were we going to encounter and, I'm very pleased to say I've been through 9 releases, since our initial go live and, they've all been seamless and we continue to roll out function reality, you know, when when it's delivered and it goes to production as well as firmly migrating over time.
So when we pick our path from that perspective, then we communicate it appropriately across our organizations where we need to, but it's a seamless the testing is very seamless. So when the alarm is updated, you only have 6 weeks to do all your testing. I'm proud to say even though we're not automated, Sunny can complete all their testing in one day. And we have automation on the procurement side and we have automation within our IT organization for the integrations that we tested and run through, but we're getting a room and we're hammering it out all the partners together from a financial perspective. And, that that's just it's amazing.
And so that just makes the adoption rate and the rollout rate continue to increase as those features come through. And, any estimates across all the functionality, the cloud platform, the PRISM, the general ledger, the HR And, you know, so it's it's proud that we're on one platform and, and and doing it continuously.
That's great. So we've talked about products. We've talked about innovation and, and, you know, your, your stories around your, your business and how it uses Workday. Kinda like to end, our session just talking about something that's near and dear to my heart. And I I, when I opened, I talked about that one of the keys to our enduring success, we really believe is our partnership with customers, and you guys are great examples of that.
And but I would love to hear from your standpoint of, you know, your your viewpoint on the customer experience with Workday and, and and really, you know, how you feel about that. So you're not so the team is still not just hearing from us on that one.
So for us, it's very, very easy, over the last few years. Workday has become integral to our strategic business strategy. And, so when we look at a capability or a need, I mean, the first thing we do is say there's work, they have that capability. We still do our assessment but it, but again, it's a unique partnership with a vendor, to be able to continue to roll out functionality and provide it through one platform and one tool. You know, the, the various ways that you can influence the product as, as you move forward is very vast.
And, and Workday listens, and it's through the product team, it's through brainstorm, it's through design partners, early adopts which we did do them all. And, and we appreciate being at the table to be able to influence the products but also where Workday is going with their business strategy and the value they're going to continue to provide. So at least accounting, I'll give you an example of it. So with, the regulation changes that were upon us, so you got two pieces you have to do. You have to go and collect your information and determine what you have from a contractual perspective and record on it, then you need a tool that actually is going to handle that process.
From the beginning all the way through to the financial, recognition of it. And, for us, we, we had 2 paths to take we're good with building something. And, because we've built that trust in them, we thought, okay, if Workday's going to build it, we're just going to go out and do our data gathering component of it. We didn't have to worry about the functionality and come along in March. They delivered the functionality and they delivered it within the tool at no cost, just pure value.
For us. And, we're wrapping up our testing, ready for deployment. It's, it's just unique. So that partnership is, is very, very rare, and we appreciate it.
I think for us, it's been a really good partnership from the beginning, and it's been a great collaboration between the product team and our either HR or finance and IT teams. And we see that continuing today. So we're a very complicated company. We, in finance, operate in 100 plus countries, and we have 3 sets of books in every country. We have a local guy for us and a book we've got a U.
S. Gap set of bits and we've got tax set of books and actually providing all that functionality is really hard. And so I getting that all in
the product for us has been, you
know, a journey and it's been delivered exactly as I said it would, which has been, you know, really reassuring. I think we feel exactly the same way about planning And we feel the same about analytics because for us, that's really kind of the value add for our business leaders and finances and really the reason why we want HR
and finance and 1 form.
So you were very excited about the sort of functionalities that comes down the pipe.
Thank you. Well, I want to thank you both for your time, and your partnership with Workday. So please join me in thanking these guys. Okay. We're gonna train we're gonna kind of stay on the path, that I ended with with the Workday customer experience and, to speak to you all about customer experience, please join me in welcoming Jim Visini.
Thanks, Chandra, and, and, and, and, Chris, and thanks, Emily. So You heard from, from our customers about their perspective of the customer experience. What I want to do is take a few minutes and, and just talk to you about the strategies that we developed early on to develop the customer experience, which we think is a differentiator for Workday. So, first from the very beginning, when when Workday was founded, we knew customer satisfaction would be a key tenant. It would be a a strategy that, that, that we would, would drive, throughout our, our company life cycle.
About 10 years ago, we set an objective 95% or better in customer satisfaction. We developed a survey of executive sponsors. That's how we, we, measure at the, at the top level I announced, earlier this morning, that we achieved 98% customer stat this year. We were 98 last year, and we've been on a track record over the 10 year period of being 95% or better. The, of course, in the services world, we respect our business objectives of driving revenue.
This year, we'll drive in the neighborhood of $420,000,000 in revenue But as, as we, we often say on earnings calls that, that we absolutely prioritize customer satisfaction, over maximizing and driving our revenue. It's really all about keeping customers happy so that you hear from customers like Chandan and Krishna and all of the other customers that help us to, to represent Workday, essentially tell our story for us and and drive more software business. So when we we think about the differentiated customer experience, for me, I think about about 2 different parts. 1 is proven deployments, and the second is accountability to customer results. So we'll divide this, this presentation up into those two parts, and we'll we'll start by talking about proven deployments.
So some of the key, key components of, of workday deployments We, first of all, we think it's so important to get off to a great start. And, and so that initial appointment, that, ability to to, get organized and get live in production, out of the gate is, is so important because of course, on an ongoing basis, customers are able to capitalize on the, the features that we continue to put in the system. So, we, we do get pretty about how we we, create that deployment experience and, track record, at a high level, about about 6 months to deploy, for that additional deployment, for medium enterprise customers and about 12 months for large enterprise customers. And of course, for the last couple of years, we've we've been at 70 plus percent of our customers live on Workday. So in order to maintain high quality, we're diligent about picking, only selected parts We work very closely with those partners to ensure that, that, they are ready to take, the real prime contractor so before they're avail, they will subcontract with us and work side by side with us.
At the point that that they are, ready, we are very, careful to ensure that their resources are certified, not only, when they're onboarded, but, but recertified every 6 months as we do new feature updates. And, and we test them. We want to make sure that it's it's not just about taking training classes, but in fact, it's, it's passing tests. We, we have a service called delivery assurance that is essentially a peer review process. And so Workday is involved in every deployment.
We whether a partner is the prime contract or, or, or Workday, we're doing a peer review on, on, on the process to make sure that that the customer's ready to go live And, of course, we, we also invest in methodologies and tooling to continue to, to, drive and streamline the process. So, just a, a, a, a quick point on the, on deployment tooling, we've been, and for the last several years, we've, we've sort of had increased our investment in, deployment tooling. The idea of course, reduce hours, increase predictability, improve quality. The, I would say that that, the key to the tooling, not just for initial deployments, but also for the ongoing, ongoing updates and, and the ability to uptake features. So when we think about building deployment tooling and building methodologies, we do think beyond just the initial deployment, we do think about, about how to uptake functionality over time.
And, and the methodologies and tools are, are targeted at both the the large enterprise and the medium enterprise companies. But I want to highlight something that that's been very interesting for us, recently, in the medium enterprise space. We we've seen significant momentum recently and and and we attribute it in part to the tooling and to a an approach of methodology that we announced last year called Workday Launch. It is a methodology that, that leverages pre configurations and a, a tighter scope control. And what we found is that the level of effort on deployments has decreased by 30%, a little bit more in some cases.
And and I think, of note, both Workday and our partners have adopted Workday Launch. And, it's important to note that they that when we develop tools and methodologies, we make them available to our partners. We essentially open source them. We want all of our partners to take advantage of all of the, the, the best ideas and the best tools so that they can pass those along to the Workday customers. I want to take a minute and talk about the ecosystem.
The, we, we like to give you an update periodically on where we are growing the ecosystem currently we're in the neighborhood of 9500 certified consultants. And, and by the end of the year, we'll be, getting pretty close to, to ten to 10,000. The Workday consultants represent about 13% of the ecosystem. And I've I've got some of the highlighted partners on this slide but there are about 30 partners worldwide, that are today that are capable of, of priming Workday deployments. Now some customers, choose to be a little more self sufficient than others.
And so one of the things that we, that we introduced a couple of years ago is the ability for customers to take advantage of the same type of training that we provide to our consulting partners and that program is not a certification but it's, we call it an accreditation, and it's, it's called Workday Pro. And, after just a couple of years now, there are 1300 accredited Workday Pros in our customer population. I think that's interesting because it really gives customers more and more of that training that consultants get. It gives them the opportunity to do more on their own. With the knowledge that their, their employees are getting the same level of training.
So let's, let's flip over to, right, talk a little bit about accountability for customer results. The, I'll say, for starters that, very important workday that we dedicate resources, as, as, all, in all phases of the customer life cycle, as customers are learning about Workday in through initial deployment, and then, of course, in all of the years that they will be in production looking at, more and more of the functionality that we put into updates as well as new add on modules that, that we develop. We track all deployments, all initial deployments, and we track the majority of of the subsequent product deployments. And that gives us an idea of of where customers are, how we can help them, how we can stay close to them, and, and the resources that they're using from, from the ecosystem. And and part of our objective is to, look for more and more ways of measuring how we're doing during that journey.
So, throughout that life cycle, and particularly as their, their live, ensuring that they're meeting their business case and, and staying very close to them through that process, And of course, part part of, of what they're looking for is, is to uplevel. So, we, we, connect with them, learn more about how we're doing through our learning interactions, periodic business reviews, planning sessions, various surveys, including the executive sponsor survey and others, and, and of course, we work with them to help them prioritize their workday agenda, because we want them to continuously drive value and increase the value that they're getting from their workday products. So one example of of how we're helping customers take advantage of the rapid innovation, and the features that we're putting into, into the product We build some new tooling so that they can understand their usage patterns and, and help them focus on how to create that roadmap, that feat to, to continue to adopt the features that we've put into the product. One of the additional benefits that we get from working with those customers on their feature adoption roadmap in core products is that we get some early visibility to, where they may be interested in, buying additional workday products, the SKUs that, that that are, available for them to, to, to buy as opposed to the features that go into the core products, we partner with the sales organization, in, that the, that China will talk about in a few minutes, to highlight those opportunities and make sure that we're doing everything we can to to bring the right people to, help customers learn about those features that are available to them.
And I want to, I want to comment that that the subsequent deployments, so beyond initial deployment makes up a large body of the implementation work for working and for our implementation partners. And there are some modules that are that are just, more commonly deployed as subsequent deployments. I'll just sort of wrap it up, by telling you that while the field organization, the sales and services teams are on the front line, the folks on the customer run through, through all employees. If if you, caught a comment that I made in the, the initial keynote today, every workday employee is very and and seeing those customer satisfaction results because that's the the executive sponsor survey is the one that we use to, gauge our overall satisfaction with customer and we incentivize every single employee at Workday on that score. And so, there, there, and I would say that while all the teams in the field, the partners, everybody does such a great job in serving the customer, that, one of the absolute key differentiators for us is that we have developed a customer centric culture where everybody in the company is focused on serving the company, serving the customer.
And so, I'd say that that's a key difference. 95% or better is the goal and our track record has been great. With that, I, turn it over to, to China Fernandez, co president of Workday. To this, sir.
Thank you.
Thanks for being here. Thank you for making the time to all of you, Anne. I couldn't emphasize how relevance is the the job that Gene and the Services organization does, for us, in the field, being successful, particularly into new customer acquisition. I mean, what is happening out there in terms of those customers networking with some prospective customers, but even between them, into adoption of other different solutions and suites that we might be offering is just a tremendous value on I'm proud to say that because of the work they do, potentially, I would say that our best sellers are no doubt. I always say that our customers.
So you know, that's, that's really powerful.
So, I want to talk about
a couple of primary goal labor growth levers that we do have, and that is clearly 2 very simple motions. 1 is acquiring new customers. And the other one is basically upselling into existing customer base. So let's start with acquiring new customer. So when we think in our addressable total market from a customer perspective, we have around 33,000 customers identify that are really suitable and feasible to to work day on a global basis.
And currently, we are less than 10% penetrated into into that customer base. So, you know, we see it as a as a great opportunity, an ample opportunity to grow within our base. Over our short history, if you look at kind of the trend during the last 5 years, that customer's base has grown from from 500 to over 2300 customers today, and we expect that this type of customer growth is going to continue.
Menu customer
growth. Is really fueling the new ACV. So in fact, 80% of our menu ACV is driven by basically net new logos or net new customers. And we feel that this is important to emphasize because this is very different. That many of our peers that are already mining onto the customer base when we still have a few years ahead of us where we're gonna be growing and we believe that growing healthy in terms of net new customer acquisition.
As we add also new products, We're also increasing the number of products onto our initial sale to those new logos, to those new customers. Indeed, if you look at, basically, the trend during the last 6 years that has doubled from 3 SKUs or product into a municipal sale to around 6 that we are running, basically, as our last fiscal on an average. We also continue to see an increased, trend that we definitely like of more customers buying onto the form, meaning taking financials and HCM, basically, at the beginning of the initial sale, If you look at kind of the trend in North America during each 1 of the first half of this fiscal year, the finish end of q 2, 30% of the customers, basically, were acquiring HCM and financials at the beginning. You can see where it's coming from. A year ago.
And clearly, this is one of our differentiators in terms of offerings in the medium enterprise space. But I think it's also fair to say and recognize that we are seeing similar trends into the large enterprise space Indeed, if I think about some of our Fortune 500 customers, they exactly became platform customers. The cloud financial management market in financials continues to mature and move up market. And we're growing significantly faster than the market. And you can see our continuous progress and track record out there.
And that or those 530 plus customers today, they represent around 25% of our base of the 2300. That we commented before. If you look at during the last three quarters, we doubled the fortune 500 days from 4 to 8. And indeed, I can say, and you're reading there that today, we are 9 fortune 500 customers. The last one being H And R Block, which also happens to be basically a platform customer who just became a customer earlier this quarter.
When we look at the pace of the adoption and this is the what happened in HR from customer 100 to basic customer 500. And when you compare to what's been kind of the financial strength there, you know, fun in Afghanistan is a very similar curve of adoption, just basically, a delay basically in the time frame on how customer have been adopting first CRM moving to the cloud, being HR and no more financial customers moving on to the cloud. And clearly, we always talk about this when we talk into our earnings calls and we share with you We still feel and recognize that the opportunity is significant in the US, but clearly a significant growth lever of our market is the needed internationally. And hence, we are investing to capturing that one, and we realize that those emerging markets has a tremendous ensure for us, and we have a great solution for them. Let me focus now on to the upsell opportunity.
And I think it's it's important to you know, emphasize that our focus is gonna remain on new customers and new customer growth. But, obviously, as our customer base is increasing, think it's important that we put efforts as well into nurturing the relationships and the trust we have with those customers and begin to focus into that upselling opportunity. So this year, basically, beginning of February, we made a go to market change where we had all our go to market focus enhancement where we put much more focus into dynamic and basically movement into having go to market teams focused as well into nurturing and working onto that customer, customer base. What I can tell and what I can share with you is when I look at what it has happened during the first half of the year, we really like what we've seen. We know, again, it's early.
It's kind of those couple of quarters, but it's paying off both on the retentions, renewals, but as well into the addition of the upselling of, additional SKUs. We continue a very good track record terms of the product attach rate opportunity, being a significant growth driver for us, and we believe that we are best in classing the market here. So if you look at, what's happened in the last year, there's been significant progress in areas like recruitment, but as we're learning planning, prison analytics, many others, but, you know, the the attach ratio is is very significant. I'll give you a minute too so you can take the pictures. I will move on.
The the absent opportunities as we say is quite significant, again, focusing on new customer logos, but realizing that we had a tremendous asset, which is that customers have instruction that we enjoy. So we should definitely be aware that, you know, satisfy customers who buy more from us if we're doing a good job for us. For them. Right? So if you consider a a typical journey where a customer in in Israel is become just core ACA, by becoming financial customers, that initial dollar will be $2 or with double, and it will be able to deploy all the additional or the available SKUs.
And you saw before basically the attach ratios, you know, that would be 5x. Kind of the initial the initial sale. Right? So that's the that's the potential. That's I think a good reason why would you understand that as we're as our customer growth base is increasing, it makes sense for us to put more focus in turn.
So how we're going to be handling that and managing that opportunity from from a go to market perspective and deploying sales. So to give you an example, and this would be a technology customer, real example, that has not yet become a financials customer, that became a customer of us initially in 2011 that later on move into solutions like recruiting or like one of the cloud platform or pressing and how that customer has become from a 1,300,000 ACV customer to a 3,100,000 ACV customer purely could make the markets, they become a financial customer or if they acquire another SKUs compared to West initially, basically the ACM customer. So we're really excited about the opportunity. It came on many new customers and how we're gonna keep driving that very hard. And with that less than 10% penetration today that we have, but as well into the upselling opportunity we have.
With that, I wanna hand over to our next speaker. Who's that one? Crowing. Great. Come on stage.
Thank you, Donna. There you go. Alright. I'm gonna bring it home here for us. So, what I'm gonna talk about is three things, primarily.
How we can sustain high levels of enduring growth through our large market opportunity our multiple growth levers and our compelling long term business model and investment framework. So I'm gonna start with market opportunity, because of the alternative touch on this, I think it's really, really important for you to understand how we think about the long term work to opportunity. So our current TAM is $80,000,000,000 today. A huge number, and it's only getting bigger. And it's projected to actually be 115,000,000,000 in 2022.
So our opportunity is massive, and this is giving us a really long runway to continue to grow the company. And while early success and reputation have been built on the HCM market, it's important to keep in mind that that is only about 20% of the addressable market that we're actually going after. So we have just really scratched the surface of our potential in the long run.
And as all of you know,
the cloud adoption is still in its really, really early days, right?
So we have a
long runway ahead of us. And more opportunity ahead of us than we have behind us. So now let's talk about how we're growing within those addressable markets. So Jim talked about our customer support goal, customer satisfaction goal of 95% or higher. We have very similarly high bars for ourselves on retention rates.
So one of the critical foundations for enduring growth is to keep your existing customers. Because if you start losing your existing customers, the first thing you have to do is go out and replace that revenue before you can even grow on top of that. So this is really critical for us. Our high customer satisfaction, combined with the fact that our products, our mission critical to our customers, really drives best in class retention rates for us, which is a great foundation for us to continue to grow into the future. And much like our customer satisfaction goals, we have a goal of 95% or more gross retention rate, and we can consistently beat that sometimes by a lot.
We've got a great track record on gross retention, and we've talked a lot in our earnings calls in elsewhere about our net retention rate, goal is a 100% or more, and we consistently over perform on that as well. And we have always been, and we'll always be laser focused on our customer success, and that will help us continue to drive these retention rates will, which will be the foundation for our growth going forward. So if you look at our leadership position in HCM, right, the markets that I just talked about, our addressable markets, are growing at 13% in HCM. And we're growing two and a half times that. Which tells you that we are continuing to take share and extend our leadership in HCM, and really have become the de facto gold standard in this area.
Now if you look at
financials, That market is growing at 7%, and our revenue for financials is growing at a staggering 7.5 times the market. Right? So we are really, really excited about our opportunity and financials. It's still early days. But we're really encouraged, at the market share that we're taking right now and the signs that the pace of adoption and migrations to the cloud has not only picked up, but has started to move up into the large enterprise.
And we've seen a tremendous amount of success also in building larger relationships with our customers. Now when we first started showing you this data a year ago, rising, we were seeing an acceleration at that time in the number of large contracts versus previous years, And we weren't sure when we presented that data to you, whether that was an anomaly or whether that was a shift that we were saying And I'm really pleased to say that it looks like that acceleration is hearsay. So we continue to see very, very strong growth and our customer relationships, as measured by $3,000,000 in annual ACV, or higher 34% growth over what we showed you last year. And I think there's really 2 things that are driving that, right? First of all, the growing number of products that we have and Shanno touched on this, we're able to sell more out of the gate, and so the initial sales are getting larger.
We're also doing good add on business, which Shauna talked about as well. So our customer relationships are growing over time. And on top of all of that, we're continuing to see the pace of large deals coming into market being sustained from the levels that we saw year. So this is a really, really great result for us. And what all this means is that we continue to grow revenue at a very, very high rate, even as the numbers get larger.
And we've been delivering consistently very, very strong growth, even as we, really attack our goal of being, you know, one of the largest software companies in the world. So when we look at backlog, backlog really gives us strong visibility into our future revenue. Now there are dynamics that move it around, things like duration, timing of renewals, but we think that this is really a great metric, and you're starting to see our our peers, as they've adopted, the 606 revenue standard start to talk about backlog as well. And we've been pleased to deliver very strong growth, even as these numbers are getting really, really large. And we're running into the law of large numbers here.
Now you've been asking us to give you a shorter term metric on backlog that takes out the impact of duration. In fact, some of you asked me that over break as well. So here you go. This is for you guys. We're not giving a current what we're giving is 24 month backlog.
Because our contracts are longer than most of our peers. So we think that this is the right shorter term metric. Our contracts are 3 years or higher, so giving you a 2 year view completely eliminates the duration factor. And so we're really pleased to give these numbers to you guys. And as you can see, the growth on the 24 month backlog is actually 2 percentage points higher than total.
So that takes up the duration impact that, that, that we saw last quarter. We think that with this, we're really well positioned to continue to grow in a very robust manner into the foreseeable future. So we've talked, a lot, actually, and and Petris had a slide that was a little similar to this graphically about multiple drivers for growth, right, and multiple S curves. And as I mentioned earlier, we're still in the really, really early days of our long term opportunity. So while we've shown great success so far, as you all know, our historical success is largely an HCM story.
But given
the large markets that we're going after, we have so many growth drivers ahead of us, really far more than we have behind us. So financial management, again, it's early days, but as Chano showed, it's tracking just like that HCM curve day. Did at this time, right? And that gives us a high degree of confidence in where we're going with the financials product in this market. Other products such as analytics and planning are really in the early days and are just starting to take off we're really excited about having Adaptive as part of the family and what that will create for us in terms of a growth driver out of the planning business.
Trying to touch on international. So our international expansion is really continuing to pay off and we've got growth overseas outside of the U S, of over 45%. And we're working on growth levers beyond So we're investing today so that we can continue to drive growth years and years out into the future we're investing in a lot of things that we're not even ready to talk about yet, but we're really excited about. So let's talk about our business model and investment framework and how that connects to our market and our growth strategy. So as all of you know, when you look at R&D as a percent of revenue, we invest twice as much as our SaaS peers.
And we do that very, very intentionally and for very, very good reasons. The tam we're chasing is very, very large. And as I just said, we're making investments today to ensure that we have multiple growth levers to continue to deliver enduring growth into the foreseeable future. So here's how we think about our investment strategy, right? Our success in HCM is the foundation from which we can continue CM non GAAP operating margins are already over our 25% long term margin goal.
So we are already delivering to our long term margin targets with just the HCM business alone. And what that's allowing us to do is to deliver profits today while continuing to invest for the future So we're investing in financials, as you know. You've heard a lot about financials today. We're investing in delivering industry specific features. We're investing in making sure that our products ready to enter into new markets, right, and all of that investment is funded by HCM.
We're investing in prison analytics, and it's early stages, but we're, we're super, super excited about where that product's going to go. And the early interest in the marketplace and our customers is extremely high. And we'll continue to invest in Adaptive right? Tom talked about the roadmap to get us to the power of 1 with Adaptive, super, super important where they're going with operational planning, headcount planning, financial planning, sales planning, right? And so we'll continue to invest in, in the planning product and that whole suite.
And, you know, we continue to invest in other product areas as well. Yeah. Pinterest talked a lot about technology we continue to invest in technologies that our customers can take advantage of across our product suite, things like Workday Cloud Platform, machine learning, if you're at the keynote this morning, we we talked a lot about machine learning and other things that will benefit all of our customers and all of our products.
And if you look
at the allocation of our development team in terms of headcount and resources, it largely reflects our long term market opportunity, with 20% being dedicated to HCM, 35% being dedicated to financial, and the rest spread across other product areas.
So you could see there's a
method here to our madness, right, where we're really putting our investments and our resource allocations to, to go after those long term markets that I showed you. So where does operating leverage come from then? You should not expect it to come from R&D. We're not gonna take our foot off the investment pedal anytime soon when it comes to investing in our products. You should continue to see R and D run at that high level of revenue into the foreseeable future, but we will get operating leverage in other areas of the business.
Like gross margins. So we continue to expect that gross margins will benefit from the continued mix shift to subscription services. And that benefit will be delivered to the bottom line in terms of non GAAP operating profits. We also expect to continue to get efficiency gains in sales and marketing, and we already have best in class customer acquisition ratios in sales. So we'll continue to deliver that best in class ratio as well.
And even though G And A is a smaller member, do expect that as we scale, we'll continue to get efficiencies in G And A as well. And in fact, we're already at unrivaled G and A ratios when you look at us against our peers. So all that means, right, we will continue to deliver non GAAP operating margin improvements through those efficiencies I just talked about. And this year, we're well positioned and on track to deliver an incremental 200 basis points, and then we bought Adaptive. So as you all know, we've taken our margin guidance down for the year by 300 basis points because of the Adaptive acquisition, but it's really, really important to note that $40,000,000 or almost half of this margin adjustment is solely attributable to one time transaction and integration costs.
And this acquisition is incredibly strategic as you keep hearing from us. And so we will continue to invest into Adaptive, and we feel super, super excited about our ability to deliver on our vision to our customers of plan transaction analyzed all in one system with Adaptive. And our long term target mart target margins haven't changed, right?
So these are the
same targets that we showed you last year. We do expect that we will start to get incremental margin improvement again next year, from this year. When you take up those one time costs and we will continue to deliver incremental improvement over time. And given where we are, we'll just the HCM business, we're very, very confident that we can deliver on these longer term targets. And I want to end by talking a little bit about cash flow.
Right? So we have very, very strong operating cash flow. We've been pleased with our progress. We were on track this year to deliver 605 1,000,000 of operating cash flow. We've taken that down with the Adaptive acquisition, again, 40,000,000 of the of the, $55,000,000 drop is one time costs.
And we expect that next year, we will, again, just like margins get back to, you know, steady improvement in operating cash, flow over time. So I just want to wrap this all up because we've talked about a lot this afternoon. Alright? We talked about Adaptive and how excited we are. Adaptive really accelerates our planning opportunity by 2 to 3 years our customer base is so excited for it.
You heard from Tom about our plan to bring them into the power of 1 so that it's up the experience that our customers have come to expect from us at Workday. And if you're at the keynote this morning, You also heard Tom announced that Workday is now fully live on Adaptive as of yesterday, 10 week deployment, And so great proof point that it's ready for companies of our size and our global complexity. On the same day yesterday, we actually brought Adaptive completely live on Workday across our platform suite, HCM, financials, expenses, recruiting, procurement, everything, 10 week deployments, both directions, right? So really great great way for us to showcase both of our products, in such, such fast go lives. So very excited about Adaptive.
Peters talks a lot about innovation, right, or platform, what makes it different, right, and data. You heard a lot about data in the keynote this morning and from Petros, how that's going to drive a lot of our future opportunity and going to be something that's very unique in what we can deliver to our customers that nobody else can.
You heard a lot about
the customer experience, how important our customer relationships are to us, how important retaining them is. You heard from 2 customers that talked about how financials and our full platform was ready for Fortune 500 type deployments. Right? This will continue to be something that we're laser focused on. And we're very, very proud of our 98% customer satisfaction again this year.
We talked about driving and doing growth, right? Shauna talked about making sure that we're getting new customers, new logos, upselling into our customer base. Right. Our business model is supporting all of our investments today that will pay off in the future for us to continue to drive high levels of growth, even as our numbers are getting bigger. To wrap it all up, you know, we'll continue to deliver on our long term vision.
We plan, execute, analyze and extend framework. And we could be more confident and more thrilled about where we're going and what we're gonna do in the future. So thanks again for joining us today. I will have a Q and A session now, and I would like to ask the speakers to come up to the stage and join me.
Oh, hi. I guess I'll kick it off. Thanks, everybody. Carl, curious to the Deutsche Bank. Maybe, for Robin, Robin, I was just checking my notes from this event, last year.
And when you were on stage, you addressed a little bit, some of the, unusual invoicing, billing terms, the billings growth, visioning, that, you're lapping. Some would give us an update, today, like, you're largely through that, effort still fighting?
I think, all that, you said, you know, on tracks. We've started new to deals. That are in our to talk about take, Orgutte and his, you know,
Thanks very much for ISI partners, you're both tech either more into the mid month and you're and you
guys show up. And can you just talk about it?
And then I show up for Robin. Robin business gets to be fixed with, you know, large size enterprises impact on sort of the year of your thoughts around here,
you have a little bit more mid market in it?
No, we're very pleased, I think that in terms of the go to Macomba perspective, kind of, the launch, investing into the same or more tempo implement and the sales team, how to position on that. You saw we commented into customers that you're seeing us worldwide 19% to 30% initially getting this thing going. That is not just North America, our market already in the U. K. From Germany and their
A major market. Revenue and our billing, I don't see any big will be new to us overall. So I don't
where, I guess, and, is there anything out there that change? And since we're going through this kind of early days at the cloud cycle, what do you think that day is whenever we hit that sort of bump in the road? Thanks.
I'll take a shot, and you can add very feature, right? It's up to exec, you know, customers are things going south, where that, you know, deployment or even trans signings that are and so I think there's a lot of them. If something does, one of the things that I've seen through through my career. And I think this was true of Workday in 2009, which was, you know, I wasn't here. I was actually the at a perpetualized company at the time.
We're not gonna see that if buying Saab, you know, strong, you heard from that Right? They saved a ton of money with work. Yeah. That's actually duty for us as reductions that might Nothing
to that?
Guys. Over here in the night, Alex Zukin with Piper Jaffray. Thanks again for all the great info. So you guys need a point to describe the HCM market as being kind of 20% or thereabouts of your total TAM today. And but you're driving 80 percent still of your new ACV from new logos in that market.
And then you're also seeing really strong growth in $3,000,000 deals above kind of where the rest of the company growth rate is. So I guess the question is, how long do you anticipate that activity to continue? Where are we in kind of that cycle and how much longer or at what point do you need for the enduring growth? At what point do you need a lot more of that growth to start coming from financials?
Yeah. That's that's a great question, Alex. If I had a crystal ball, we've we're still seeing a ton of opportunities in HCM, right? Now the growth of HCM revenue is slowing because we're our numbers are getting so big. But we are not seeing any shortage of new opportunities, in the large enterprise and in the medium enterprise come to market for HCM So it feels like, you know, we're, we're, we've got continued pace there of things coming to market.
And, you know, China, you should, you pipe in on that in a minute. And so I don't feel like it's, it's the opportunities are slowing down, yet. Right, I do think that as you look at some of the gross levers that are coming, it will be important at some point. And it's really hard to tell is that next year or the year after or the year after, it will be important at some point that they start to kick in, which is why we're so encouraged by the data that China shared you on the financials curve and how, amazingly that maps incredibly well to the HCM curve. And so it feels like that is starting to become a growth driver.
The numbers are just smaller at this point, and then we have so many other things that could kick in, but it's really not easy to tell exactly what that timing looks like. But you want to comment on what you're seeing in pipeline freight I'm talking about?
Yes, Alex, I think it's a great question. I mean, clearly, we come from a very strong year last year in terms of tremendous numbers, many dollars. Particularly Fortune 50, Fortune 500. When you look at kind of the first half of this year, I mean, in Q2, we set 8 Fortune 500 as well as the new logos, I look at kind of the pipeline in 2nd half, I mean, clearly, you know, I I I commented on one because it was financials here, right, H And R Block Wealth Financials and HR. But basically remains kind of pretty strong and kind of similar dynamics.
As we're becoming a larger company, more dynamics towards back end of the year, more heavy weighted Q4, right, but, but the pipeline seemed very strong and kind of similar similar kind of perspective that we had had before. So that is pretty encouraging. When you look at them from my first slide, which I think is pretty telling that 33,000 compared to what the 23100 accounts today, less than 10% penetration. I think that's also pretty significant, right, I guess someone may ask me, you know, what that penetration can be? Can that penetration become 10,000 customers 33%?
What I can tell you, we have 33% already. Some industries in North American National Enterprise like Financial Services of Technology. So I potentially would answer you quite bullish why not, right? You ask me, well, how long that is going to take? That's a different answer, right?
The other thing is, is we see kind of more global 2000s as well now coming as some of those emerging geographies of international markets are becoming more mature.
Thank you. It's Herb And Bracen with KeyBanc. Wanted to drill down into the large customers, specifically hesitant to call an acceleration a trend last year. Now you're saying, Hey, it feels like a trend. What's changed in the last year?
What's giving you confidence that there this acceleration you saw is sustainable? Is that a comment relative to the pipeline? Just what's changed given you confidence in that, a trend line, change in trend line? Thanks.
Yeah. You know, that's that's a
great question because when we saw when we showed the data last year and we saw the huge jump in large accounts. We weren't quite sure what was driving that. And I really do think it's a combination of We have seen a lot more large deals come to market, right, with HCM, the pace at which they're coming really accelerated last year and that's sustaining. And then we are able to have larger relationships with customers than could say 5 years ago because we have so many more products to sell. So I really do think it's a combination of those things.
Now whether it will continue, you know, is kind of anybody's guess. One of the things that we've said all along and continues to be true is that the the really large deals are going to be lumpy, right? And they're hard to predict in terms of when they're going to come to market, when they're gonna sign, and, you know, we've we've seen stuff, you know, in our pipeline that may be slipped, you know, but, so the pace of those is really difficult to predict. And so we're, we're more focused on making sure that we can continue to have really, really strong win rates, which we do today, particularly in the Fortune 500, the Global 2000 if we can keep winning the vast majority of those as they come to market, then that's a great result for us, but it will, they will ebb and flow. So kind of hard to predict, when they come, China, you have anything to add?
Hi. This is John DiFucci from Jefferies over here, hon, you're right. The questions for Chano, and Robin just mentioned that curve you put up there. The first, 500 customers for HCM, and then financials kind of look like they, you know, they overlay really nicely. But I, I would think the composition might be different.
In other words, you know, when HCM, I know you have some early smaller customers, but really early you were really going after the large enterprise whereas financials earlier, you said, okay, you know what? They're not ready yet. Let's go after the, the sort of mid mark. So I would assume the buildings or revenue curve might look a little bit different. There you go.
Beautiful. But still that still begs the question of after five 100, what happened to HCM? Was it still kind of like the slopes still coming down because of the law of large numbers that, that Robin spoke about, or was there any kind of inflection in, in, up or down. I'm just curious, what that looks like after 500 to whatever your number is now four times that more?
Well, it's a great question, John, to be honest. I don't know after the I don't even know when they were reached at and within the ACM, maybe it was when I was not even here close to like 4 years ago,
when you came there and
selected up, so
I I am I don't know exactly that's flattening out clearly financing being accelerated. Yeah. You are right. We're pretty transparent on saying that, you know, when you look at, the first 500 ACA give or take, you have, around 40, it would be a good number in terms of fortune 500 out of those. We've been telling you or sharing with you that is 9 within the financial composition.
Think there are very good reasons for that in terms of, you know, the solutions for finances are more complex, and we are getting more mature for that Cloud Corp Financials and potentially some of the things that Krista and Chandra were commenting now some of those CFOs realizing some of those benefits, but maybe taking a little bit longer still I believe is a great comparison, but we'll look into what happened after the 500 going forward. But but the the pace of of net new logos, and particularly because the medium enterprise has been accelerating with our go to market offering, has been very strong. So I wouldn't be surprised if the curve has continued basically came on similar track record because, clearly when I look at it in the last 3 years and I quarter on quarter and we're getting more logos, you know, I can tell you that just the growth or the health of the new global growth is very nice. I don't know, Jim, do you have any views on that one in terms of being here much longer than me or Petro?
Not specifically without looking, looking at the the numbers. But, you know, the one thing I guess I would say is that when you're implementing financials, it's comprehensive. It's, it it's and it's quite different than maybe some of the early HCM customers where it was a very small sliver of, of the very large HCM customer but we were implementing very small slivers of, of HR functionality in the very early days.
Sounds like a quick job for prism analytics Yeah. Get the answer.
Hey, guys. Cash, we're going to be at America. Congratulations on, on the wonderful successes over the last several years of rising, particularly to this one. Very impressive. Question for you, Shauna, you talked about how you're going to segment the Salesforce into it and installed base Salesforce and new customer acquisition Salesforce.
Could you talk about when that is going to be implemented and what are the likely benefits that you expect out of that segmentation because that's clearly a big, big step for you guys. And also more looking out longer term as the company really becomes a multiproduct company to Robin Slice on the TAM being really multifaceted how does the go to market model change? And clearly, you could be growing faster. What stops you from hiring at a faster pace given that you're very small relative to your total available market? Thank you.
No, it's a it's a it's a very question, Kash. I would say, you know, what what changed on that go to market segmentation is the, I mean, we always had rate retention ratios and the renewance, but now we have teams that are more focused into planning those according to milestones even kind of 12 months earlier. And we're very prescriptive. What needs to happen 12 months earlier, 6 months earlier, 3 months earlier, and we can have a conversation offline if you're interested in all the details. Happy to share.
Right? You know, jointly with that, I think we allocated good talent team to manage that customer base and not that we have, basically a suite of products that is much broader and try to accelerate the adoption into happy customer of the new SKUs. And I think we attach ratios and probing that to work. So what we've seen during the first half is even though we already have good retention ratios and think we share in Q2 that we have kind of best renewal rates, comparing $1 initial towards what they are renewing today, not adding So just mix of more or less employees or mix of CPIs or renovation indices or whatsoever. I'm not adding or taking products there.
So kind of comparing apples to apples. So we like what we're seeing into both, right? Kind of the planning plus the add on space clearly of the SKU. So it's early days, right? It's early days, but I think it's the right thing to do presents a great opportunity as the customer base is increasing.
Thank you. Over here, Burns Sports from Oppenheimer. Question for China, maybe Tom wants to share some thoughts too. Just on building upon, cloud financial's adoption in the market, Can you maybe share maybe on a more granular level in terms of the deal activity? What do you think today as kind of the biggest hurdle to overcome And how has that changed from, say, 2 years ago in the deals for larger financial enterprise?
Thanks.
Yeah. It's I think the biggest change from 2 years ago is that we have more proof points and that the solution has mature as well in terms of the 2 components that are quite critical. 1 is the industry functionality for the core industries we want to serve. And the other one is basically the scalability and what we can deliver to those customers. So so I think that is a that is a huge change from 2 years ago that again, you know, we wouldn't want to get this wrong again, but that give us a little bit more confident on too clearly when you look at the pipeline there, know, financials pipeline as a percentage of the total has grown significantly faster than HCA.
Of course, when you put it in the whole total of the pipeline as HCAN is be significantly big. It's only a few points larger, like 2 to 3, 3 to 4 percentage point largest that it was a year ago, right? And that composition is, is clearly driven by, yes, meat enterprise market. That's clearly as well large enterprise market that are being part of those discussions. With Adaptive, if anything, is even a much bigger change, but I will let Tom to comment on what I believe is providing us a much better opportunity into engaging on those conversations.
But Tom?
Yes. And if I think about it, Brian, compared to a couple of years ago, I think for us, probably the biggest difference is, there's more activity around enterprise. And I think that was true before the, acquisition by Workday, and it certainly true today, 2 months, 60 days into, the acquisition. I think that's, that's probably the biggest, change we've seen. The other thing I would comment for the planning space, you know, is a highly competitive market.
And we've seen pretty consistently over the last couple of years' improvements in the win rates. And I think that's, we're starting to see what may be the beginning of some separation of vendors, you know, in, in that space. So, but I'd say, isolate the enterprise change is the biggest, the biggest difference
And and
I would just add one thing, Brian, because I talked to a lot of prospects, and I'm involved in a good portion of the financial sales cycles, particularly in the large enterprise. And one of the things that I've noticed this change over the last 2 years is the conversations I was having 2 years ago were with CFOs who were saying, you know, I'm not I'm not sure if I want to put financials in cloud. Now I'm I'm I'm interested in this. I want to learn more, but I'm just not convinced, right? And those conversations are over now.
Now when I talk to CFOs, it's, we're definitely going to the cloud. We're definitely putting financials there. It's just a matter of who we're going to choose as our strategic supplier and what our timing is going to be. You know, is it going to be a year out, is it 2 years out, is it 3 years out. And so that's the biggest difference that I've seen is the whole debate about financials going to the cloud seems to be over.
And and maybe I'd add that that I think CIOs are now phone this too.
Yeah.
So in addition to CFOs, I think we're getting the IT side that that has come around and and, you know, they're it's a different mentality now than it was 2 years ago. Yeah. And I think for planning, I, Robin, I completely agree. And I think we started implanting a little bit earlier. So I'd say around the time I started to adapt it about 4 years ago, we were just starting to see the transmission.
There was still some resistance, and that's completely gone. I expect financials will, we'll follow that pattern as well.
Hi. Thanks guys. Everyone's with Wells Fargo. A question on a adaptive. Obviously planning has been a focus at re rising for a couple of conferences now, but there's a change obviously with you guys owning Adaptive here.
Two questions really. When you think about the go to market, when I think of the original planning product as sort of part of the whole stack, so to speak, with HCM or with HCM and financials, I think about how Adaptive is going to market now sort of either integrated with in sort of a stack or standalone. So the question is how do you think about that potentially serving as a, I guess, a landing area for Workday to sell into kind of non Workday customers using Adaptive kind of planning as a as a route in. And then similarly on the opposite side that is selling and adaptive into Workday not necessarily for finance or HCM, but you also have adaptive insights for sales, etcetera. And I'm sure there'd be future product there.
I'll start then, Chano. Maybe you can jump in. So so I think I think you you did a nice job of capturing, the various, you know, sales motion opportunities. I think the sell with is principally a work that work they've led sales motion. And I think the we have a stronger offering with Adaptive as the planning solution, today.
And I think the, you know, it's early days, but I think we're very encouraged by the reaction we've seen from customers and very encouraged by those opportunities. The cell adaptive first for customers who may not be ready, I think we'd all stipulate that companies are more likely to make a planning change at a higher cadence or frequency than they would do a financial change. And so there will be, I would expect, there will be opportunities within, you know, those 30 plus 1000 companies that will be ready to do a change on the, on the planning side before they're ready to consider something on, on financials. And then there's, there will continue to be, you know, an adaptive sales motion which were, which, which is opportunities, you know, that may not be, at least in the short term, you know, Workday, you know, financials or HCM opportunities. So, so, so I think it's all those.
And the strategy that we've taken, is try to, you know, keep the, as much of the adaptive go to market motion, which, you know, you know, outside Workday, keep some of that intact and continue to do the same things that we're doing. And then leverage, really, the, you know, the, on net new opportunities for Workday, you know, planning as an,
you
know, enhancement of that and selling into the work they
installed base.
I think you capture it perfectly. I, you know, things that a tremendous opportunity. I mean, we've been looking just into this last year on some customers that we've been trying to talk to, if it is the right time to engage and move on the GL. And in some cases, they said we don't have that discussion, but not now, but we're gonna be we're engaged in a Hyperion potential replacement. Can we have that conversation?
And we know being ERP agnostic at that point, you know, having that active is kind of, we can't talk about that, right? When you're ready to replace the year, we talk So that opens tremendous opportunity, and we need to make sure that we basically go after that standalone market right now. Believe we have put, reasonable and good kind of, rules in place and compensations plan in place, but we will gotta learn to see. We think we deploy pretty fast on communication, engaging the teams, setting the rules of the games, and people are excited about, and ready to go for it. We have to learn what needs to be tweaked for, for next year.
Yeah. I think this was an, current conversation earlier, breakout sessions. They had adapted for North America. We had enterprise sellers. And, you know, if you compare it to the enterprise Salesforce and Workday, I mean, it's just, orders of magnitude
Hi, everyone. Oops, sorry, Scott Berg with Needham. Thanks for joining us today. Kind of a 2 part, multi part financials question. I don't know who wants to handle the first, but it's on the implementation resources within financial.
In those time frames.
Have they improved materially, over
the last couple of 3 years? And then are you having any challenges hiring resources? Because there's not a lot of cloud financials implementation people out there to hire.
And then the second part of
the question is for Robin is, as you look at some of these platform deals upfront, maybe H And R Block is not the right example, but I'll use the an example from earlier if I'm pronouncing the company's name correctly. That was a serial implementation where HR was first for the 1st couple of years and then financials followed. How does invoicing on that contract work? Because my guess is they're not paying for financials a contract like that that doesn't even begin its implementation for 2 years.
So I'll go ahead and start, Robert. Go ahead
and start that one. So it's it's very contract specific, as you would imagine. We we do have customers who buy full platform and they pay us, you know, annually in advance the whole for the whole contract amount, right? That happens quite a bit. In fact, that's, that's generally how those work There can be specific situations where if a customer says I want to buy both, but I don't, I'm not going to start my deployment for 2 years that we will structure lower payments upfront, and then they'll step up as they begin their deployment.
We never tie payments 2 deployment timelines. We time the dates, right? But if they think they're not going to start for 2 years, we may give them a 2 year lower payment, But unlike some of our competitors, we don't say you can pay us on go live, or you can pay us, you know, on some other project milestone So they're always day through them, but there can be, some flexible payment terms if they've got, you know, a but that's generally not the case. Generally, you're paying for it out of the gate. And if you think about a platform deployment There's a lot of things that they have to do in common, and Jim can extend on this, right, across HCM and financials to make decisions about both at the same time.
So even though you're focused on HCM, you're making decisions about how you're going to deploy financials through your data mining. In particular,
in the best cases there, whole or set of customers that are deploying financials as a next phase and they're basically, that those are the customers that are going live, you know, stabilizing, waiting a year and and taking it as a complete subsequent phase. So a couple of different models.
You may want to come out. Oh, yeah.
Let me let me comment on the financial resources. So, so the short answer to the questions, we're very pleased with the with with the financial resources that we've added to the ecosystem, the of and as you would imagine, the the partners are intelligent there. They're smart about the way that they they build their business. And and so they stay in in sync with us, keeping an eye on the pipeline and, staying ahead of the curve. And I think that, that there occasionally is noise out there that, that there's a shortage of financial resources.
And we don't agree with that point of view. And in fact, we monitored the, the supply and demand essentially in the ecosystem all the time. That where, you know, you'll, you'll hear customers or other partners, talking about, about, where they were, in the, you know, immense getting the, the first go lives for individuals so that they can be lead consultants in the next one. And that's just a process that, that has to happen. We work with the, with the partners as much as we can to subcontract to them to provide them experienced resources to the extent that we can help them to build their practices.
You asked a question about the, about where we're finding resources. Because there are a whole lot of cloud financial resources out there. And, it's it's from, you know, most of the time from legacy vendors and they're not cloud financials resource per se, they're, financials knowledgeable resources, long, to ecosystem around.
You need more more feedback, in time And I've noticed that Oracle's claims from time to time about, competitive things in the HR when we introduce some, But as I mentioned, replacements, not wins, but replacements, and it was on Workday Financials It just sounded a little odd. I'm curious what you think we'll find. They mentioned Airbnb and V in Legg Mason, I believe What do you think we'd find if we investigated that? And if you don't want to speak to that, too, if you want to, but tension in the the retention financials versus, each see them.
Yes. You can comment. I'm happy to comment.
Yes. So we're always very transparent about this stuff, right? So If you look at the situation at Airbnb, they're a full platform customer. They've been on Workday Financials for quite some time. What they bought from Oracle was accounting hub, which is similar to the accounting center that we announced at the keynote, that we don't have built quite yet.
So what Airbnb will be operating on going forward Oracle's accounting hub to take their operational transactions and use Oracle's accounting engine to drive journal entries from that. And they're staying on Workday core financials, right? So, that's a, not atypical case where you know, the way Oracle presented there when there was not entirely accurate, or transparent. So Airbnb remains to the day, core financials customer workdays. With Legg Mason, frankly, we had a situation where their corporate their corporate team was very, very happy with Workday.
Their, subsidiaries or divisions, there was some noise there. And they decided that it was better to, or
they made the they made
the call to, you know, switch to, a different system that was perceived to be better for the, for the business units. And so we did that, that is a loss for us. And, and frankly, you know, Jim, pipe up here.
It's the
1st financials unplugged that I've ever heard of in my 6 years.
Alright. I think you I
think you may be right. Yeah.
So it's it's very, very rare. When when you talk about retention rates overall and, and in financials as well, generally when we have customers that we, that don't renew, it's because they went out of business or, like Toys R Us would be a great example, right? We're a great customer going out of business or they get bought by a company who is on another system and wants to put them on their system. And so, you know, the competitive losses of a, of a live customer are very, very rare.
Across HCM and financials just to be clear. Yeah.
Yeah. So so Marky is, is a great question. You know, I was just shipping, right, that on the hopefully, with the announcement of accounting half today, we can have for accounting center, as we call it, on our case, we can have conversations going forward on the first case. On the second one on Lake Mason, that's when to be at sound excused from my side, but taking it to the subsidiaries, it was getting to a cost point where honestly it was very unhealthy for us in a very, very small deal, right? So I want to be very clear about that.
We'd have gone to that price. We'd have still be our customer on a I don't know. I think that maybe yes, but I think we're already wasting more time on this conversation at the ACV number we were talking about, right? Well.
Mark Marcon from R. W. Baird. I was wondering, Robin, you were talking about the versus of leverage and increasing the margins over the long term. I'm wondering if you can talk a little bit about with 2 months of experience with Adaptive all the opportunities in financials, international planning analytics.
Can you talk a little bit about the slope in terms of sales and marketing in terms of the leverage there as well as the gross margins as we think about your your product set becoming more diverse and your client acquisition costs being perhaps a little bit different? Yeah.
I mean, I I don't see
the fact that we've got more products really changing our, you know, our sales efficiency ratios. I think I think what you'll likely see over time is the the curve of decline for both sales and marketing and G And A, and, upward for, for gross margins will flatten a little bit. It's, it'll get harder to get that percent of efficiency over time, just as we grow because I think we're, as you look at the data between us and our peers, we're already highly, highly efficient, both sales, marketing, in G And A, and gross margins. So I expect those curves will, will flatten a bit. But I don't see anything that we're doing today, and that includes Adaptive, that will significantly, change our, you know, the slope of what we thought we would do over time.
Really, we've got, we're in an anomaly year this year with the acquisition and, you know, a huge part of that margin to variation being the one time cost that will not repeat. And so, yeah, we feel very, very comfortable that we can continue the steady pace that we had planned for this year, incremental margin improvement year after year. And until we hit those 20% 25% target. So we're very, very confident in those our ability to get there. And unless we do another big, big acquisition, you should expect see improvement every single year.
If can you talk if you think about the roll out of an ERP system in the olden days, it was all, you know, like the first big wave and non wave in a second, was all about, like, you needed to have a certain amount of reference customers in an area and then, you know, just everyone else was kind of totally comfortable. Where at China, where are you feeling that you are on that reference or both customer base in the different segments. And then as a follow-up to rubbing them or a channel for you and then rubbing, like as you reach that point, is there not an argument to kind of go a little bit more loser on the sales and marketing spending and throw more people at the problem? Because once you're there, is a tipping point that you want to use. That tipping point to kind of drive that customer base home.
So just maybe comment on that one. Thank you.
No. On the on the ACM, I think on the markets that we are present, we we are pretty comfortable on the foundation we have on all of those markets in terms to a reference ability. Right? I mean, if you look at Mark, I mean, I could go call the manual thing, right, but if you if you look at how we enter manual delete markets, you know, Korea. Winter will be customers like Samsung and then Jim and team does a great job, and they've been live with 380,000 employees.
Basically kind of 40 years after, and it's when we decide to go formally and officially into that market, right? You look at markets like the Germany and Siemens, soon to be going live, and, you know, on Deutsche Bank with customers and many others. So I'm talking standard the European ones, you know, clearly on in Spain, you have customers like something there, who are many other large customers. So in many of them, fans, I could carry on this and office and thereabouts and many others. So UK.
So at peak any customers, we have kind of good referenceability and great solution feeds and great referenceability in terms of the foundation for for HCA. That is none of a challenge. Of course, if you ask me on financials, as we are in earlier stages and when you go to international markets, I'm I'm by the way, to give you an idea close between 10% 15%, but more close to 15% than 10%. I already have those financial markers that I mentioned, sorry, financial customers, our international financial customers. But clearly, as you want, talking to the larger ones, they may want to see more peers into those particular markets, you know, that are headquarters into those Chris.
So we have more work to do, but I would say pretty comfortable in HR as a whole and solution feeding pretty well more work to do into the financial are.
Yeah. And I I would just, I would just add, and particularly in, in, on financials, that, we clearly, strive to build those reference customers by partnering with the products organization, by partnering with with, the ecosystem and ensuring that we're providing extra care for the early customers because we can't afford to have, any customer that's not wildly successful and happy in a, in a market where we don't have a lot of companies, right? So, it's, it's one of those areas where, where we make very conscious investments to build references. And, and so as as Toronto points out, it's not so much an issue with the HCM, but but in financials, and particularly in our internationals, some of the international markets. That's where we're we're spending time investing and partnering more closely.
From time to time, you, you know, you, you find out things that they are surprising, like, say, like, a customer, that's sort of like a market like France, financials used to be taking faster, though, as the same speed as HCM, right, We mentioned, you know, group phones here and there are others, and there are others that already are signed or just got to sign in Q3, and it's kind of quite surprising, even to me, looking into that, but we have great coverage from the product team, and we are preparing advance knowing that in terms of implementation. So we don't have a challenge either in deploying those projects. Keeping, of course, we need to keep a closer eye into making them successfully, right? That is quite surprising.
And I'll pay on the coverage model too, question. Right? It's when we plan our sales coverage, it's all about projecting how many opportunities we think are going to come market, right? So if we saw that really accelerating, that might warrant, you know, really accelerating hiring in that area, But I think right now, you feel like you've got the right coverage in terms of we're seeing all the opportunities we should see. We're engaging in all the opportunities.
So I
think we're comfortable with the coverage model we have for occurring that opportunity, yes.
Thanks. We have time for about 2 more questions.
Thanks. Derek Wood at Cowen, back in the back. China, on your product tax slide, a couple of things stood out. Recruiting, I think last year was number 3. It jumped up to number 1.
Learning also had a big uptick. So any color on what drove the strength there? And then on prism analytics, I think it's a 2% attach. Obviously, you've been refactoring some of the code from Platt Fora. How do you feel today in terms of, the ability to drive inflection there and what would, give you the
confidence? Thanks.
Yeah. I know. Great question. I I think, you know, recruiting and learning, I would say, has a lot to do with those jumps has a lot to do with the new go to market model. Terms of having more people focusing on the customer base and seeing that opportunity kind of matching interest with basically the offering we do have, right?
In terms of prison, take that 2% as we we are ahead of the targets. We were planning for prison because it's been basically a couple of, really quarters in the market, maybe three quarters. So we've not been selling pricing for that much, for that long. The deals there in terms of average ACV significantly larger, but even we have a minimum deals value that are you know, significant, you know, that are serving serving size more like a 100 k plus or, you know, kind of deal size in terms of, average contract value per year. We're pretty pleased with how that is going and there is tremendous interest.
So we're expecting that one. You should be as if I would predict, there will be a nice jump forward next.
Thanks, Tedlyn. And now
that we're roughly, this is is obviously much more based. How are you thinking about, you know, building it yourself versus offloading it to partner? Thanks.
I mean, the industry build out something we've been working on for a while. So for example, we've got student for IR ed. We've got, inventory supply chain for health care, right? So it's it's something that we've been working on for quite some time, and we continue to build out for those specific industries that we're going after. And there are ones that we're not currently going after that we could choose to do at some point, like supply chain manufacturing, right, who knows?
And so that's that's a key investment area. I don't know that we've seen, necessarily industry specific features being built in cloud platform yet.
No. Yes.
But I think we could. Definitely.
It's it's a matter of time, as I mentioned before, as soon as we can as soon as we have one platform that serves the development community, as well as the customer community, you will see a larger uptake of customers using it to extend the system.
But to complement with, this morning, we announced accounting center that is tremendously important Financial Services, other industries as well for insurance and financials. PSA has had a tremendous improvement, even I had had customers lately say me what a great progress of PSA in the last 2 years, and we've seen a significant uptake on professional services. So it's building up. So it's good as to petros on the product organization when they're bringing their strength and in the offering. So that's giving us more opportunity to those core industry we are still trying to serve.
Okay. So it's dangerous to be the last guy between a meeting and liquor But, in case Richard Davis at Canaccord, last question is, you announced the opening of platform your platform last year or kind of a year into that. What it would say reasonable as outsiders, what should our milestones be as to to measure the success of that? And then, you know, broadly speaking, at least, how should we think of the kind of revenue and profit contribution of that effort over the next few years? Thanks.
I can tell you about the opening. It's in the control right now. So we have specific customers that work very closely to us. When you have something like a platform, it brings it up a variety in your direction. So that's why it's more conservative in a way to be able to control what those questions are.
And even after we're going through a year right now, I'm understanding what those questions are. To know what we have to improve. But I'm sure we're sitting here next year, and it should be we should be ready to be general available. You've got to get support ready. You've got to get community ready.
You've got to give meditation ready. Those are the components that we have to work out beyond just, there's a bunch of tools run with them.
And on the monetize the inside, we're still discussing internally what we're going to do on that front. There are early adopters are paying us very small fixed fees just to cover our costs to support them and it's negligible. And how far do we move from how we price today to, you know, a usage based model or maybe just a tiered model based on usage. We're watching these first use cases to really see right, what's the right metric for us to price off of, longer term to the extent we have partners building things and then selling into our customer base, you know, we're going to have to figure that one out too. So it's really early.
I think one of the big benefits we're going to get from those, I'm hoping that it actually increases our win rates on HMN Financial as well because it becomes a more compelling use case for our customers, and that's going to be difficult to measure too. So I think there are lots of ways that what we to monetize it, and it's, you know, it's still too early for us to tell. We haven't built any revenue in any of our numbers for it because we just don't know, but I certainly we all believe that it'll be a significant contributor over time in one way or another and probably across multiple fronts.
From a technical perspective, we are actually instrumenting you to be able to work with metering. But you don't know right now. It's too early.
Awesome. Thank you so much, on behalf of the management team. Thank you so much for joining us today.