Workday’s $1.6 billion acquisition of Adaptive Insights is drawing scrutiny from a number of quarters as the HCM technology community tries to interpret the drivers behind it.
It’s not a cheap deal. As TheStreet noted, Workday is paying about 13 times Adaptive Insights estimated 2018 billings for the company. Noting that the firms have limited overlap in terms of customers and capabilities, the financial site posited that the purchase is part of a trend among larger enterprise software companies to ramp up acquisitions while smaller firms look for ways to cash out.
Obviously, Workday’s products are focused on workforce management while Adaptive’s are geared toward finance and sales functions. Also, Workforce is enterprise-focused, while its new unit makes most of its money from small and mid-market firms.
In announcing the acquisition, Workday CEO Aneel Bhusri said combining the businesses’ platforms “will help customers accelerate their finance transformation in the cloud,” adding that he looks forward “to coming together to continue delivering industry-leading products that equip finance organizations to make even faster, better business decisions to adapt to change and to drive growth.”
Tom Bogan, Adaptive Insights’ CEO, sounded a similar note. “Joining forces with Workday accelerates our vision to drive holistic business planning and digital transformation for our customers,” he said. “Most importantly, both Adaptive Insights and Workday have an employee-first and customer-centric approach to developing enterprise software that will only increase the power of the combined companies.”
Keeping Enterprises Happy
To hear Workday tell it, the combination is all about enabling collaboration across customer organizations. By combining its workforce-focused tools with Adaptive’s financial and sales solutions, customers will be able to “plan, execute and analyze across the enterprise all in one system.”
Packaging solutions has been a theme of Workday’s for the last few years, as witnessed by its investment in increasing the capabilities of its financial tools. In a blog post, Chief Product Officer Petros Dermetzis said the acquisition will accelerate those efforts, “fast-tracking” its financial planning roadmap by at least two years. Customers have been asking for more help in upgrading their financial systems, especially in financial planning related to general-ledger issues, he said.
Workday’s plan is to incorporate Adaptive’s Business Planning Cloud with its own suite of financial applications, Dermetzis said. What that will look like isn’t clear yet, but Dermetzis said specifically that combining Workday and Adaptive won’t be done by simply bolting them together. Customers, he said, will continue to access “one data model, one security model, one user experience.”
While he didn’t explain exactly how that would be accomplished on the ground, Dermetzis said the company will update customers throughout the year. We expect we’ll see a lot of interface changes take place on the Adaptive side.
Recently, Workday’s been feeling pressure from investors to accelerate its growth, and seems to have decided the way forward is to expand beyond HCM. At the same time, Adaptive strengthens Workday’s presence in market spaces where it’s been relatively thin. But most media reports indicate the deal is more about getting Adaptive’s capabilities in front of larger customers than drawing in smaller ones. Diginomica quoted Bhusri as saying, “We wanted to be in the market now with a financial planning solution — and our product was three years away.”
Bhusri also said Workday’s current planning product will continue to be the preferred planning tool for HCM users. “Workday Planning is now going to focus on workforce planning, which is a key requirement for many of our mega HCM customers,” he explained.
After the transaction is complete at the end of October, Bogan will continue as Adaptive’s CEO, reporting to Bhusri. Adaptive’s team will become Workday employees.