Morningstar | WDAY Updated Star Rating from 19 Nov 2018
Workday continues to gain share in the burgeoning cloud-based financial management market despite facing a pair of large incumbent ERP vendors in Oracle and SAP. After scoring an early blockbuster with its human capital management software, Workday is broadening its portfolio while simultaneously targeting the world’s largest enterprises. Cloud migrations for financial management software remain in the fairly early stages for many global organizations, but we believe Workday’s cloud-native applications are increasingly giving the firm a leg up on legacy vendors such as Oracle and SAP, competitors that are racing to move customers to their own modern solutions.Founded in 2005, Workday has targeted its approach to the market, choosing to approach only large organizations with more than 1,000 (and more frequently 10,000) employees. Initially, these deals focused primarily on Workday’s top-flight, cloud-based human capital management software, which features applications for HR and talent management within an organization. As the company's scale has increased, its ability to move down market has improved, unlocking midmarket opportunities.However, Workday’s product suite is much more than core HCM solutions, and the firm is looking to tighten the grips on its large customers. As a result, the firm has introduced applications for hiring and recruiting, payroll processing, and learning. More important, the company has also branched out into financial and supply-chain planning and management software, applications that we believe bear among the strongest switching costs for back-office business software. Attach rates have steadily increased for the financial product in particular, and the financial suite represents roughly 10% of subscription revenue.While Workday’s share in the broader, fragmented ERP market is dwarfed by Oracle and SAP, its share in the cloud ERP market is approaching 20%, and we expect the majority of new ERP spending to flow into cloud-based solutions. Oracle and SAP will fight tooth and nail to hang on to its largest customers, but we think Workday will be a force to be reckoned with as the cloud land grab rages on for the next several years.Workday is a provider of enterprise cloud applications for finance and human resources. The company's products include: Workday Financial Management, an application with financial capabilities, analytics and metrics, and auditable process management; and Workday Human Capital Management, which includes global human resources management (workforce lifecycle management, organization management, compensation, absence, and employee benefits administration) and global talent management (goal management, performance management, succession planning, and career and development planning). The company's other solutions include Adaptive Insights Business Planning Cloud, as well as Workday Data-as-a-Service.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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