Workday Acquires Adaptive Insights: Part Two

In June of this year, Workday acquired Adaptive Insights for $1.55B. You can read our initial reaction to the news on our blog. As more information about Workday’s plans for Adaptive are revealed, it’s clearer what this acquisition will mean for mid-market Corporate Performance Management (CPM) customers, prospective buyers, and providers. Since Adaptive is a publicly traded company, the parent company is obliged to provide information to the market at a regular cadence. Earlier this week, Workday held their second-quarter results call, which provided some valuable insight into their go-to-market strategy for Adaptive Insights. At an initial glance, Core HR, a Workday product, currently represents 90% of Workday’s business. However, their ERP software, Core Financials, has made some significant strides in the past year. During the call, it became apparent that Workday plans to leverage the Adaptive acquisition to grow Core Financials faster, particularly in the enterprise market. Workday will cross-sell Adaptive into their 2,200 enterprise accounts, which will decisively move Adaptive away from the mid-market. Workday’s CEO, Aneel Bhusri, is confident they will see tremendous growth by leveraging their enterprise sales organization to move Adaptive up-market. Workday’s focus for the next 12-18 months will be on unifying the code base between the two products. With the goal being that one would not be able to tell that Adaptive was once a different product. A completely redesigned user interface will mean an entirely different look and feel to Adaptive, which could have significant implications for existing customers and a certain degree of uncertainty for prospects. Furthermore, 12-18 months is a considerable period of time to wait if a customer or prospective buyer is looking to benefit from a fully integrated product. If you’re an existing customer needing a CPM solution today, the alternative is the current Workday planning tool which is being retired or Adaptive, which will likely look entirely different in two years’ time. Existing customers and prospective buyers should look to stable, proven CPM solutions for their business to avoid the inevitable period of adjustment as Workday incorporates Adaptive into their product suite. Bhusri went further to say that their areas of development focus will include: refining their sales & incentive management product lines, replacing their HR planning capabilities with Adaptive, and then eventually reflecting on their other operational planning capabilities. As the Adaptive solution is brought into the broader Workday suite, it will invariably lead to pricing increases as Workday looks to recoup their $1.55B investment, as well as align this offering with their enterprise cost structure. As Workday begins to phase out their existing planning product, they plan to offer all modules (financial, workforce, sales) through Adaptive’s software and sell them on a stand-alone basis. This also means that most of Workday’s go-to-market efforts in the planning sector will be driven through Adaptive’s salesforce. This has the potential to create some discord in their sales organization as customers contend with the new sales structure and accounts are divided and assigned. All this said, one thing is clear. Existing Adaptive customers and prospective CPM buyers should begin looking for an alternative solution that caters directly to the mid-market, with a strong reputation for building lasting relationships with customers.