Memo to Workday CEO: WDAY Needs SaaS Resellers

Image Credit: Workday
Aneel Bhusri

When it comes to cloud-centric channel partner programs, Workday (NYSE: WDAY) CEO Aneel Bhusri yesterday made a casual comment that speaks volumes about the company's sales strategy.

First, some context: Workday is a rapidly growing provider of SaaS-based HR and financial applications. But the company faces intensifying competition from legacy client-server giants that are now repositioning for the cloud -- as well as pure cloud rivals.

During an earnings call yesterday, a Wall Street analyst asked Bhusri how the company is handling reseller relationships for financial software. Bhusri's answer was very direct -- literally and figuratively.

"Well, number one, we don’t have any resellers of our financial products," Bhusri responded. "We sell everything direct. We have implementation partners. I think that’s probably what you mean."

Cloud Channel Partner Programs

And therein resides a potential problem. During the early days of cloud computing, many SaaS providers ignored channel partners and instead attempted to sell everything direct. In many ways, there's still a big disconnect between cloud-centric software companies and the channel -- as ChannelEyes CEO Jay McBain recently pointed out.

Still, the gap between cloud services providers (CSPs) and the channel is shrinking. Much of the channel progress involves cloud-centric storage and security companies. But business application providers have also launched their share of SaaS partner programs.

NetSuite, which Oracle is now acquiring, helped to pioneer cloud-channel partnerships. The company has had a solutions provider partner program for a decade. Microsoft gradually embraced similar thinking. After early stumbles with Business Productivity Online Suite (BPOS) and Office 365, Microsoft finally pieced together more reasonable partner programs for its SaaS and IaaS cloud services. Even SAP is getting hip to the trend, recently introducing a solution provider program for Concur -- the expense management platform.

Workday Partners: Not Exactly A Channel Program

In Workday's case -- the company is selling direct but offloading project management work to IT consulting firms. In other words, it sounds like consulting firms can charge one-time fees for successful Workday deployments. But it doesn't sound like Workday is offering recurring revenues to resellers or influencers that drive business to the company.

At first glance, Workday's business continues to hum along. Revenues were $377.7 million in the company's Q2 2017, up 34 percent from Q2 2016. But take a closer look and you'll notice an operating loss of $86.9 million -- up sharply (in a bad way...) from a $67.7 million operating loss in Q2 2016.

Want to cut your losses and reduce your cost of customer acquisition, Workday? Then scale your business through the channel -- and reward resellers for sending customers your way.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.