August 31, 2012, 12:07 PM — The enterprise software market on Thursday suddenly got an intimate look inside Workday, a red-hot startup that makes cloud applications for human resources and financials, with the public release of its S-1 IPO filing.
Workday, which was co-founded by former PeopleSoft CEO Dave Duffield, has definitely held its strategic cards closer than most Silicon Valley startups looking to make inroads against the likes of Oracle and SAP, and it reportedly filed its IPO (initial public offering) confidentially with the U.S. Securities and Exchange Commission a couple of months ago, taking advantage of a recently passed law.
"Workday has been very secretive and done a great job controlling the news flow and message to the market," said Jarret Pazahanick, an SAP HCM (human capital management) software consultant and close observer of the industry, via email Friday. "The S-1 was the first chance for many outsiders to get a deeper perspective on their overall business. It is becoming obvious that acquisitions of Taleo and SuccessFactors by SAP and Oracle were largely defensive moves aimed at slowing down the threat of Workday."
Here's a look at five key revelations contained in Workday's S-1, both in terms of its history and future, that potential customers and investors should ponder.
There won't be another PeopleSoft situation: Duffield and co-founder Aneel Bhusri intend to retain a majority stake in Workday even after raising a hoped-for US$400 million in the IPO, the date for which hasn't been revealed.
On one hand, this is not altogether surprising, given the hostile takeover that led to Oracle's 2004 acquisition of PeopleSoft, and Duffield's well-documented angst about the deal's aftermath, which led to thousands of layoffs.
Still, the confirmation of Duffield and Bhusri's intentions should be welcomed by IT buyers wary of Workday's long-term future.
Of course, nothing prevents the co-founders from deciding to sell their stakes at some point. Then again, maybe they believe Workday has the potential to reach Salesforce.com-like revenues, and intend to stick around for the entire ride.
Employees' pay is tied to customer satisfaction: Duffield's PeopleSoft was known for its folksy, customer-friendly culture and in at least one concrete respect, the same is true for Workday. Its S-1 reveals that "customer satisfaction is an element of our executive and employee compensation models," although further specifics weren't revealed.