Workday, Inc. (WDAY) provides enterprise cloud applications for finance and human resources business units. Founded in 2005, Workday delivers software-as-a-service (SaaS) solutions to help organizations manage critical business functions more strategically, efficiently, and coordinately. The company offers its applications on a subscription basis with a pay-as-you-go pricing model.
It stands out as a strong player in the enterprise cloud applications space. Although this market is highly diversified with varying product offerings and target industries, Workday competes effectively against its top contenders. In the fiscal year 2022, the company had $5.14 billion in revenues, representing 19% YoY growth. The primary driver for this growth was a 20% increase in its subscription revenues.
In this Workday competitors analysis, we will closely examine its top five competitors and how they stack up in market share, essential products/services, financials, and other areas.
Bottom Line Up Front
Workday competes in a diverse market with many large enterprise software providers. Over the years, the company has executed well to grow its market share, and today it is a top player in the enterprise cloud applications space. Although there is fierce competition, Workday has a strong product offering and is well-positioned for continued success.
Top 5 Workday Competitors
Workday Overview and Business Strategy
Aneel Vhusri and Dave Duffield co-founded Workday in March 2005. Dave was the former CEO and founder of PeopleSoft, which was later acquired by Oracle, whereas Aneel was its chief strategist. The two started Workday to build an enterprise software company that was different from the existing ones. In 2012, the company launched a successful IPO valued at $9.5 billion, perhaps one of the largest for a software company at that time.
Workday’s success is in providing a cloud-based enterprise application, an alternative to the legacy on-premise and complex software systems. The company has developed a modern software architecture using new technologies such as in-memory computing, columnar databases, and web services. This approach makes its products easier to use, more reliable, and simpler to scale and upgrade.
Products offered by Workday include:
- Workday adaptive planning
- Financial management
- Human capital management
- Spend management
- Payroll workforce management
- Analytics and reporting
- Professional service extensions
- Workday peakon employee voice
- Platform and product extensions
Through its product offerings, Workday provides solutions based on industry, need, organization size, and role. Although, its platform and product extensions provide additional functionality that can be implemented on top of the core products. The company has a horizontal go-to-market strategy, which means it targets all industries with its applications.
The company’s business model focuses mainly on subscriptions. However, it also makes money by selling software licenses, professional services, and other support services. The company has a customer base of over 55 million people, with 50% of fortune 500 companies as its clients.
Workday’s primary revenue source is subscription revenues, which accounted for $4.55 billion of its total revenues in FY 2022. The company had a net profit margin of -0.49% and an operating margin of 1.08%. During the same period, it had $6.26 billion in cash and cash equivalent, meaning it had a strong liquidity position.
The company’s catalytic growth drivers include a strategic focus on client base expansion, geographical expansion, and product development. It boasts about 17 acquisitions since its inception, the latest being VNDLY, a provider of contingent workforce management solutions.
Workday Competitors Analysis
Workday competes in an industry with many companies, from small startups to big technology conglomerates.
Below is a detailed analysis of Workday’s top competitors.
1. Oracle HCM Cloud
Oracle HCM Cloud is a leading provider of human resource management solutions. As part of the larger Oracle ecosystem, it offers a complete set of HR tools, including talent management, workforce management, payroll, and benefits administration. It also has a strong analytics offering that helps organizations make data-driven decisions.
Workday competes directly with Oracle HCM Cloud in the human capital management space. While both platforms offer similar features and functionality, Oracle has the edge over Workday, especially in its focus on innovation, PaaS capabilities, reporting and analytics, and global reach. We could argue that Workday is a more agile company and can move faster in the market, but overall, Oracle has a more robust product offering.
For instance, Oracle’s AI and ML capabilities are helping the company drive high-value innovations like predictive talent modeling and succession planning. Moreover, Oracle has a more sophisticated cloud platform that allows users to build custom applications on top of its HCM solution. Until Workday fully matures its PaaS capabilities, Oracle will continue to have an advantage in this area.
Financially, Oracle is a much larger company than Workday and generated $42.2 billion in total revenue in FY2021. Oracle also has stronger profitability, with an operating margin of 28.24% and a net margin of 15.83%. Given its size and scale, Oracle can invest more in research and development, which is evident in its continuous stream of product innovations.
2. Ceridian Dayforce
Ceridian Dayforce is a leading provider of human capital management and payroll solutions. As an integrated SaaS platform, it offers a suite of HR tools, including talent management, performance management, workforce management, and payroll. The software provides companies with a scalable and configurable solution to manage employee data.
Ceridian Dayforce is a major competitor of Workday, especially in payroll and workforce management. The company has a long-standing reputation in the market and offers a comprehensive HCM solution used by some of the world’s leading organizations. While Workday has made significant inroads into the Ceridian customer base, the latter still has a large installed base of loyal customers.
One of the key differentiators of Ceridian Dayforce is its strong focus on compliance. The software offers compliance tools that help organizations stay up-to-date with the latest employment regulations. This critical function is vital for companies with a large and complex workforce operating in multiple jurisdictions.
Although Workday has made significant strides in compliance, it still lags behind Ceridian Dayforce. However, Workday has a vast user base and is quickly gaining market share. It is also important to note that Workday has a much stronger financial position than Ceridian Dayforce.
In 2021, Ceridian had $1.024 billion in total revenue representing a 21.6% increase over the previous year. The company’s operating margin was -6.31%, and its net margin was -7.72%. While these are respectable numbers, they pale in comparison to Workday’s performance. In 2021, Workday generated $4.31 billion in total revenue, representing a 19.04% year-over-year growth. The company’s operating margin was -1.81%, and its net margin was 0.63%.
ADP is a leading provider of payroll, human capital management, and benefits administration solutions. The company has a long-standing reputation in the market and offers a comprehensive suite of HR tools. ADP is used by some of the world’s largest organizations, including more than 80% of the Fortune 500 companies.
The two companies compete in several areas, including payroll, benefits administration, and human capital management. However, Workday has a significant advantage over ADP in reporting and analytics. The company’s software provides users with real-time visibility into key HR metrics, which is a critical function for companies seeking to optimize their workforce.
The formidable size of ADP gives the company certain advantages over Workday. For instance, ADP has a larger sales force and a more extensive global distribution network. Business-wise, this allows ADP to penetrate markets better and win new customers. In addition, ADP’s financial position is much stronger than Workday’s.
In the fiscal year ending June 30, 2021, ADP generated $15.005 billion in total revenue, representing a 2.85% year-over-year growth. The company’s operating margin was 22.58%, and its net margin was 17.48%. These numbers are significantly higher than Workday’s FY2021 results.
SAP SuccessFactors is an American subsidiary of the German software company SAP. The company offers a cloud-based human capital management suite that helps organizations manage employee data, including talent management, performance management, workforce management, and payroll.
SAP SuccessFactors is a leading competitor of Workday, especially in performance management. The company’s software provides users with comprehensive tools for tracking and managing employee performance. This is a critical function for companies seeking to optimize their workforce and drive business results.
One of the key advantages of SAP Success Factors is its strong integration with the SAP ERP system. This integration allows companies to seamlessly connect their HR data with other business data, providing them with a more holistic view of their workforce. However, this advantage is offset by the high cost of the SAP software.
SAP SuccessFactors also wins when it comes to payroll. If you run payroll in more than one country, SAP SuccessFactors is the better choice. The company’s software supports multiple languages and currencies, making it easy to manage a global payroll.
As a subsidiary of the larger SAP Company, SAP SuccessFactors has access to significant financial resources. Its revenues for the financial year ending December 31, 2021, were 27.84 billion Euros, with 24.08 billion coming from its cloud and software sales. The company’s operating margin was 16.72%, and its net margin was 18.88%.
5. Ultimate Kronos Group (UKG) Pro
A 2020 merger between Kronos and Ultimate Software created the Ultimate Kronos Group, making it one of Workday’s newest and most formidable competitors. This merger saw the company specialize in human capital management and workforce solutions. The UKG software helps organizations manage employee data, including time and attendance, scheduling, payroll, and benefits administration.
Workday enjoys the first-mover advantage in the human capital management market. However, UKG is quickly catching up, thanks to its Kronos Workforce Ready software. This software provides users with a comprehensive suite of HR tools, including payroll, benefits administration, and performance management.
Perhaps the biggest advantage that UKG has over Workday is its price. The company’s software is significantly cheaper than Workday’s, making it a more attractive option for companies on a budget. However, this advantage is offset by the fact that UKG’s software is not as user-friendly as Workday’s.
UKG is a private company, so its financials are not publicly available. However, the company generated $3.6 billion in revenue in 2021, thanks to strong growth in its Kronos business. This revenue was up 10% from the previous fiscal year, exceeding goals set by management. The company is investing heavily in research and development and will likely continue gaining market share in human capital management.
Workday SWOT Analysis
Below is a SWOT analysis of Workday:
- The first-mover advantage in the cloud-based human capital management market gave Workday a significant head start over its competitors.
- Its subscription-based pricing model is aligned with the value it delivers to customers, which has resulted in high customer satisfaction and low churn rates.
- The company’s focus on innovation has enabled it to introduce new features and functionalities that have kept its products ahead of the competition.
- Its strong financial position continues to give it the resources it needs to invest in its growth
- Mergers and acquisitions have helped Workday expand its product portfolio and customer base
- Despite strong growth, it has been making losses for years and may find it difficult to compete with larger, more established rivals that can subsidize their HCM offerings with profits from other business segments
- Workday doesn’t have offline capabilities, which can be a problem for companies with limited or no internet connectivity
- The company’s dependence on large enterprise customers makes it vulnerable to economic downturns
- The global HCM market is expected to grow at a CAGR of 9.3% by 2027, presenting a significant growth opportunity for Workday
- The increasing adoption of cloud-based solutions and the trend of Bring Your Own Device (BYOD) in the workplace are further tailwinds for the company
- The growing trend of mergers and acquisitions presents an opportunity for Workday to acquire companies with complementary products and technologies
- Workday faces stiff competition from Oracle, SAP, Ceridian, and ADP, all large companies with resources.
- The company’s dependence on the United States market makes it vulnerable to economic and political uncertainties.
- Workday’s products may not be suitable for small businesses due to their complexity and high price.
- The company’s products may also be challenging to implement, leading to customer dissatisfaction.
Workday Competitors Analysis (FAQs)
Question: What big companies use Workday?
Answer: Workday’s big-name customers include Walmart, Coca-Cola, Facebook, and Johnson & Johnson. The company is a host to more than 50% of fortune 500 companies and continues to grow its base. Other companies such as Apple, Virgin, and Netflix also use Workday.
Question: How does Workday compare to its competitors?
Answer: Workday is considered one of the leading HR software platforms available today. When compared to its competitors, Workday offers several advantages. These include a comprehensive suite of features, a robust mobile app, and superior customer service. Workday is also considered more user-friendly than many of its competitors.
Question: What are the main Workday competitors?
Answer: The main Workday competitors include Oracle HCM Cloud, Ceridian Dayforce, ADP, SAP SuccessFactors, and Ultimate Kronos Group (UKG). It competes with leading HR software platforms such as PeopleSoft and SAP.
Question: Is Workday owned by Oracle?
Answer: Oracle does not own Workday. Workday is a publicly-traded company with its headquarters in Pleasanton, California. Oracle is a leading enterprise software and services provider, with its headquarters in Redwood Shores, California. The two compete for customers in the cloud-based enterprise software market.
The above analysis shows that Workday faces stiff competition from vendors such as Oracle, Ceridian, ADP, SAP, and UKG. However, Workday has several features that make it a strong contender in the market. These include its user-friendly interface, robust analytics capabilities, and ability to integrate with other applications.
Workday also has a solid financial position, which gives it the resources to continue investing in innovation and expanding its product offerings. As the market for cloud-based HR applications continues to grow, Workday is well-positioned to compete against its larger rivals.
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