Just as Workday filed its long-expected bid to go public, Oracle and SAP are furiously integrating their acquisitions of Taleo and SuccessFactors with a refrain from one song in mind: "Gotta stop that man. I've gotta stop that man cold. Or he'll stop me." (In this case, the lyrics, from "How to Succeed in Business Without Really Trying," are referencing Workday's co-CEOs Dave Duffield and Aneel Bhusri.)
I love Silicon Valley. It's a small town stretching down both sides of San Francisco Bay, and the people in it act like small-town people do everywhere.
I prefer a neutral definition of "gossip": Two people talking about a third person they both know who is not present. A recent survey by the Institute for Backyard Communication revealed that small-town residents spend up to 60 percent of their leisure time gossiping about third parties (or about companies, in the case of the Valley).
So it was no surprise when the first person I met with on my yearly research trip announced, "Workday has filed its S-1, and I've read it!"
Actually, the second part was a surprise because Workday evidently filed that first document for an Initial Public Offering under the new JOBS Act. With the intent of making it easier for companies to go public, the JOBS Act affords complete secrecy for the required SEC filings until 20 days before the road show starts to sell the offering to institutional investors.
The idea is everybody makes mistakes; many companies have to file amended S-1s before going public; and isn't it nicer not to erode public confidence by doing it all in private? I guess.
But forget about private! Everyone that day and the next four had something to say about Workday's S-1, but no one else claimed to have read it. For my part, I just wish Workday well.
Others may not feel quite the same way. Full-day briefings at SAP and Oracle revealed some Herculean efforts to sprint to various product integration finish lines to compete on equal terms with Workday in SaaS HCM (with the company now moving briskly into Financials).
Both have already beaten Workday in competitive product selections. They briefed explicitly about the names of their new customers (not to be disclosed), what systems they had been using, their numbers of employees and modules purchased. The two even occasionally mentioned beating each other!
HR is certainly going to the Cloud and SaaS, the subject of Naomi Bloom's keynote panel at the HR Technology® Conference in October. But those clouds are getting dark and stormy. And the battle being joined has so many ironies.
First, before being acquired, Taleo and SuccessFactors had already been integrated with all the major on-premise HCM systems: PeopleSoft Enterprise, Oracle e-Business Suite and SAP R/3. But the two companies and their new owners are determined to make the integration much better and permanent. At least with the one they own! Both showed and explained their "integration roadmap," which is clearly Job No. 1.
Second, Workday, only seven years old, has the lead in this competition right now with a battle-tested SaaS HCM system, kicked around by more than 185 live customers of various sizes up to 200,000 employees and sold to more than 310. Because software is so organic, that's a key way it gets better: when a lot of people use it, complain or make helpful suggestions, and the vendor responds. In proper SaaS style, Workday's 17th release is coming out.
At SAP/SuccessFactors, the focus is on Employee Central, the core system of record, the HRMS that has been (and will be) integrated with the talent-management applications. Employee Central has had about 15 releases (four a year), and has been bought by about 110 customers, with about 60 live.
But most of that was before SAP took over, changing the rules of the game and raising the barre (as in ballet). It declared that Employee Central would, in effect, be SAP's SaaS R/4 and, therefore, had to meet the needs of its current customer by being as global (54 countries) and as functional as the on-premise R/3.
This is no small job, but SAP is no small company. It has re-assigned about 500 experienced HCM product managers and software engineers to the development effort, headed by Vice President for HCM Management Dmitri Krakovsky.
SuccessFactors Vice President for Engineering Adam Kovalevsky is moving to Germany to manage them. The entire effort is being overseen (mentored?) by SAP's Group Vice President David Ludlow, who has worked on R/3 (man and boy) for almost 14 years.
Of course, Oracle already has a Fusion core HRMS, which Senior Vice President for Applications Development Steve Miranda said has at least four live customers, including Elizabeth Arden. But Oracle still has to complete Fusion's talent-management suite by integrating Taleo recruiting and learning -- two modules Workday still lacks.
Steve reports selling Fusion HCM to 100 customers, with 25 live on various modules, and, in March/April/May, 60 percent of them buying the core HRMS.
The core HRMS is the big issue for Oracle Fusion: Its massive installed base of e-Business and PeopleSoft customers is obviously hungry for SaaS talent-management applications from their existing vendor. The same for SAP's base, which has enthusiastically embraced the SuccessFactors acquisition.
But will they rip and replace their on-premise core HRMS for Fusion? For Employee Central? For Workday? Customers have already done each -- many times for Workday.
But, the biggest irony is that, eight years after the PeopleSoft acquisition, Fusion HCM is only on its fourth SaaS release, a baby in software terms. Oracle can't fully unleash its gigantic sales machine until it has made enough customers deliriously happy and live on all of Fusion HCM to become solid sales references.
But once that happens, Workday is going to need every dime it gets from its IPO.
HR Technology Columnist Bill Kutik is co-chairman of the 15th Annual HR Technology® Conference & Exposition, returning to Chicago for one year, Oct. 8-11, 2012. The program is on the website or can be downloaded here. Many discounts expire on August 8. You can comment on this column at the Conference LinkedIn Group, which does not require prior or future conference attendance to join. He is also host of The Bill Kutik Radio Show®. He can be reached at firstname.lastname@example.org.