Important Questions I'm Asked
Everybody always wants to know who's up and who's down in the incredibly competitive vendor world of HR technology. The status of Workday, in particular, and recruiting vendors, in general, seems to be on the minds of many.
By Bill Kutik
The most frequent question I'm asked is, "How is Workday doing?" Both because it's the newest, most ambitious entrant to our world and because some people realize I've known CEO Dave Duffield for a long time, though that hardly gets me the inside track. Just clothing and mugs.
The answer is "pretty darn well." Early on, people had the fantasy that Dave could just pick up the phone, call his 10 favorite PeopleSoft clients, and get 10 signed contracts. Hardly. He and his son Mike (head of sales) have fought for every one of the 38 mid-to-large-sized customers signed in less than two years. That includes some Oracle and PeopleSoft customers: their eventual targets.
I was pleased to hear that Workday recently signed the defense division of ITT (16,000 employees), a client they first met at the 2006 HR Technology Conference
®
, which I have long co-chaired. But ITT initially turned them down six months later.
My pleasure is utterly selfish, since I believe the deal illustrates a major advantage of real world, face-to-face conferences. Chiquita has also become a client: Workday's largest, with 27,000 employees.
Other metrics: Workday's headcount has gone from 65 to 175 in 14 months, spilling over into a second building. The new payroll module comes out in May. A sales office is opening soon in the United Kingdom, to be followed by ones in Australia and China.
In addition, Workday bought partner Cape Clear to get its integration technology and expertise, especially for big customers' legacy systems. VP of Marketing Jeff Pulver says one signed customer requires 225 system integrations!
The second most-frequent question is, "How will recruiting vendors fare during a softening economy?" The conventional wisdom is that when companies lay off workers or freeze hiring, recruiting vendors are the most vulnerable. Taleo, at least, seems to be doing more than fine.
In the last quarter of 2007, it sold 26 enterprise deals, the largest quarterly total in its history. The company also signed 717 deals last year for Taleo Business Edition, its recruiting product for smaller companies with 50 to 3,000 employees.
President Mike Gregoire says, by the second half of this year, Taleo will also have a small company performance-management product based on the enterprise product now in general release. Even without those products' sales, he predicts 2008 revenue will increase about 32 percent over the prior year, to between $154 million and $157 million.
Of course, that's the eventual benefit of selling cheaper monthly and yearly subscriptions, instead of expensive perpetual software licenses: Revenue is recurring and becomes additive. When Taleo (or any SaaS vendor) says it has a revenue backlog of $200 million, that includes the full value of every multi-year contract in its pocket, assuming no unscheduled cancellations -- and not including potential renewals.
And it's not just Taleo. Its biggest competitor, Vurv, is also steaming ahead. In the fourth quarter, Vurv sold 23 enterprise deals and 79 for the year, and added about 700 new clients for its small company product, Vurv Express. So continuing market vitality is not just a one-company phenomenon in recruiting.
Moreover, Gregoire is very persuasive in arguing that even in an economic slowdown people continue to leave jobs and companies continue to create new ones and hire new employees. He quotes government statistics that 63 million jobs were created in the bust years of 2001 and 2002, down only 7 percent from the boom year of 2000.
I know I'm stealing this thought from someone (perhaps Nate Swanson of ThinkEquity), but it may be the transactional recruiting vendors (commercial job boards, staffing agencies, etc.), that are most vulnerable in bad times. No company is going to quit the recruiting vendor who powers their corporate job board and back-end applicant-tracking system, no matter how bad things get. Though they certainly might switch!
Finally, the question: "What is going on at Workstream?" -- the subject of my
previous column
-- was answered on Feb. 13. The roll-up of 16 HR technology companies is truly merging with Empagio, the latest owner of the mainframe HRMS gold-standard Tesseract and many other applications besides.
About 40 Fortune 100 companies still use Tesseract for payroll. The integration of the two companies' applications born decades apart (Empagio's are largely transactional; Workstream's, mainly strategic) will be a formidable task and worth watching.
HR Technology Columnist Bill Kutik is also co-chairman of the 11th Anniversary HR Technology Conference & Exposition
®
in Chicago, Oct. 15 to17, 2008. The full agenda will be available in late April at
www.HRTechnologyConference.com
. He can be reached at
bkutik@earthlink.net
February 11, 2008 Copyright 2008© LRP Publications
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