As part of his grand plan for Workday to become one of the world’s largest and most-profitable enterprise software companies, co-CEO Carl Eschenbach is eagerly pushing more and bigger opportunities to ecosystem partners while simultaneously expecting them to deliver more in return.
As Eschenbach put it during our recent interview for this Partners Ecosystem Innovation series, “You’re building these massive businesses around Workday — and my simple ask is, ‘In return, can you help us drive net new licenses, net new offerings into our existing customer base, and help us find new customers?’ “
That up-front sense of “reciprocity,” as Eschenbach put it, is a very clear indicator of big ambitions he has for Workday, where he’ll become the sole CEO in about 10 months when cofounder and co-CEO Aneel Bhusri moves over to executive chairman and devotes all of his considerable energy to his first loves: products and strategy.
It’s clear that Eschenbach is not waiting until February 2024 to start pushing Workday to meet a more-demanding set of expectations, and that ambitious stance certainly extends to the Workday ecosystem as well. This article offers some exclusive insights into Eschenbach’s thinking, and you can also check out my full video interview with Eschenbach here.
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Company Overview: For its fiscal Q4 ended Jan. 31, Workday reported subscription revenue of $1.5 billion and is fully committed to reaching $10 billion in annual revenue over the next few years. With more than 50% of the Fortune 500 using its HCM products and with a rapidly growing Financials suite of applications, Workday offers “mission critical” applications that are resistant to economic downturns, according to cofounder and co-CEO Aneel Bhusri. And while Workday’s always deployed advanced technology to differentiate itself from larger competitors and provide new levels of innovation for customers, the company has begun doubling down on infusing its entire product portfolio with AI and ML capabilities to remain a leader in that space.
Ecosystem Leader: Co-CEO Carl Eschenbach, who oversees global sales and go-to-market operations, including the ecosystem
Ecosystem Position: “We can bring this true notion of a digital transformation to a customer and help them build this intelligent digital backbone to support their two most crucial and important assets: their people and their financials,” Eschenbach said. “And I think our ecosystem is so strong right now that we are helping people truly experience digital transformation and build this infrastructure that allows them to be more agile and be able to move from a jobs-based world to a skills-based world. That’s what’s going on, and it’s thanks to the ecosystem and to our platform coming together to help our customers through this journey.”
Ecosystem Priorities: Eschenbach said his advocacy for a strong and fully engaged ecosystem was shaped during his many years driving VMware’s hypergrowth and also over the past seven years as a venture capitalist guiding young companies. And he’s looking for big things — very big things — from the Workday ecosystem. “Over the years, Workday’s built a great practice with some of the global system integrators like Accenture, Deloitte, KPMG, and PwC, as well as regional SIs,” Eschenbach said. “And most of our partnerships today do one of three things. Number one, they help drive implementations and installation of our platforms, whether it’s on the HCM side or Financials, and quite frankly, they do an amazing job. Some of these partners have built upwards of billion-dollar practices over the years, and they’ve just done amazing work helping us drive our products deep into the market and get them implemented and get customer value. But they do more than just that. They actually leverage our platform and our Extend architecture to build their own solutions and innovations on top of Workday, which drives us to be more sticky but also allows them to monetize their own offerings, which is really powerful, and again, all for the good of the customer. Now, all that being said, we are leaning into the partners more than ever. On our most recent earnings call where we provided guidance to the street, one of the things we talked about specifically was our services revenue, where we said it’s going to actually be flat to maybe even slightly down. And some people said ‘But hey, you’re not a slowing business, you’re a growing business.’ And we decided to do that because we want to turn more and more of those implementation and innovation services over to our partners to drive Workday deeper into our customer base or net new customers.”
Innovation Agenda: “Our systems integrators can win HCM, they can win Financials, or more importantly what’s starting to happen — and this is a huge value — more customers are going with a full platform solution from Workday so they get all of those implementation services turnkey from Workday with an ecosystem partner,” Eschenbach said. “The state of Georgia just did this. Workday doesn’t have the skill set to implement our full platform across the state of Georgia, so this is where an ecosystem comes in and that’s where we differentiate ourselves. We’re the cloud leader in HCM, we’re emerging as the leader in Financials, but when you combine the two, no one else has two systems of record like we do. And if a partner can build services around that, not only will Workday continue to grow at roughly 20%, but we actually think our partners can grow their services around us even faster… And we want to make sure we maintain that openness, leveraging the Extend platform to allow them to innovate on top of us and build their own IP. They can build it with a customer and then resell back into the market like Accenture has done with their Skills Cloud offering — it’s super powerful. And we go to market both horizontally and vertically to ensure we’re aligning with our partners.”
Unique Approach: “At our sales kickoff conference, we had 4,000 people in Las Vegas and our ecosystem set of partners were right in the general session with us. We don’t break them out because we truly think they’re part of our sales force, not an extension of our sales force. And one of the things I said to the partners was we want you to continue to innovate and to continue to build more services for yourself and for our customers, but I also would like to ask for a little reciprocity as you build these massive businesses around Workday. And that simple ask was, ‘Can you help us drive net new licenses and net-new offerings into our existing customer base, and help us find new customers?’ “At our sales kickoff conference, we had 4,000 people in Las Vegas and our ecosystem set of partners were right in the general session with us. We don’t break them out because we truly think they’re part of our sales force, not an extension of our sales force. And one of the things I said to the partners was we want you to continue to innovate and to continue to build more services for yourself and for our customers, but I also would like to ask for a little reciprocity as you build these massive businesses around Workday. And that simple ask was, ‘Can you help us drive net new licenses and net-new offerings into our existing customer base, and help us find new customers?’ “
Big Quote: People from across the Workday organization have told me that Eschenbach’s arrival about four months ago triggered a noticeable spike in the energy and ambitions of the sales organization. Here’s how Eschenbach described that outlook during our interview: “Listen, Bob, I didn’t take this job to be co-CEO of a ‘value’ company. This is a growth company, and it’s always been a growth company,” Eschenbach said. “We’re achieving what we want to achieve, which is $10 billion in scale in the next few years, and we’ll have good operating margin. And there’s no reason we can’t do that. If you look at the market opportunity we have, I’m all in, I know the team is all in, and [co-founder and co-CEO Aneel Bhusri] Aneel’s all in. This is an exciting journey ahead. And each and every day, we’re going to strive to get a bit better. And if we do that, the future’s as bright as we want to make it.”
See the complete discussion in this video featuring Carl Eschenbach.