The software industry around the world is focused on the cloud. Workday (WDAY) is one such company that joined the cloud bandwagon. The company pioneers in providing Human Capital Management & Financial Management software solutions over cloud. The global market for this software has witnessed immense growth in the past few years. Bigger players like Oracle and SAP are also in the race in this segment of software.
HCM, which falls in the domain of ERP solutions, has been gaining more and more acceptance ever since ERP solutions were provided over cloud. Workday’s HCM combined with its financial management software is being embraced by customers globally and is boosting the growth of the company.
Considered to be a best of breed provider of ERP solutions as SaaS applications, the company can explore the growing market of data analytics. The revenue for Workday is anticipated to grow by 30%, as it gradually increases its share in HCM space coupled with Workday’s Financials Management Suite.
The success story of Workday is exemplified by the fact that subscription revenues have grown over 100% over the past few years. This further goes on to state customer confidence in Workday’s subscription based SaaS solutions. The total customer base for Workday is around 600 and it sees a market potential of over 23,000 global customers.
The Market That Drives Growth for Workday
The global SaaS-based ERP software market is anticipated to grow at CAGR of a 14.21% from 2011 to 2105. The major factor for this ERP growth as SaaS model is primarily due to the lower cost of ownership. With SaaS applications, ERP solutions fall in the budget of small and mid-size businesses which earlier could not fit into the IT budgets of such companies.
The total global ERP market was estimated to be $45.5 billion in 2011 and is projected to reach $50.3 billion by 2015.
On competitive grounds, Workday provides best HCM remedies delivered through cloud, offering distinguished alternative as compared to old conventional on-premises solutions. The enhanced user friendly feature stimulates Workday to continue adding new customers for next several years, based on the assumption that there will be heavy workload of pending upgrades for many legacy ERP applications over the next couple of years
Bigger players like Oracle and SAP offer ERP solutions on a total cost ownership (TCO), which falls out of range for small and mid-sized businesses. Workday can be the alternative provider opted for by clients who cannot afford the TCO offered by Oracle and SAP. Even cost-centric bigger customers can be partial to Workday, looking into the cost benefits as compared with the bigger players.
The company is constantly increasing its customer base with 200 new customers added in the last quarter. It also recorded double-digit growth of customers for its financials, consecutive growth of two quarters in a row. The company is also looking to broaden its customer base by tapping customers from education and government agencies, making it a good buy.