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Workday CFO: Cloud, SaaS Growth Requires Channel Partners

Robynne-Sisco

Robynne Sisco

Workday — the fast-growing provider of cloud-based HR, financial management and PSA software — plans to work more closely with channel partners, according to Robynne Sisco, CFO of Workday. Sisco described the professional services partner strategy during Workday’s Q1 2017 earnings call last evening.

“As we mentioned on our last earnings call, given our success in simplifying implementations combined with the growth and maturity of our partner ecosystem we are increasingly shifting our go-to-market approach within professional services towards our partners,” Sisco said. “While Q1 was a strong quarter in services, going forward we will not be ramping our professional services organization at the same growth rate you’ve historically seen.”

Workday, Cloud Sales Models Evolve

Translation: Although Workday’s professional services grew 31 percent to $65 million in the quarter, the company will increasingly lean on channel partners and systems integrators for customer installations and related services. In the current Workday quarter (Q2 2017), the company’s professional services revenues will grow only 15% to 17% year-over-year “as a result of our pushing more services to our ecosystem,” Sisco said.

Overall, Workday has been evolving beyond its core, SaaS-based HR offerings to offer financial solutions and a PSA platform, though we haven’t about potential VAR or MSP adoption. The company positions itself as an alternative to traditional applications from Oracle, among others. For its just-completed Q1 2017, Workday said revenues grew 38 percent to $345.4 million, which largely beat Wall Street’s expectations.

Workday Professional Services Channel Partners

Workday’s key channel partners include big consulting firms like Accenture, Capgemini and CSC (among others) as well as a range of smaller cloud consultancies. During the earnings call, the company did not mention whether it would recruit more partners into its ecosystem.

Overall, the cloud applications market (i.e., SaaS) has shifted from a direct sales model toward a channel-driven model. More than half of all cloud revenues involve channel partners influencing or managing the deals, according to research from Gartner and IDC, respectively. Still, many of the engagements involve simple reselling rather than true value-added services.

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