Last week, Workday announced a second half 2016 release of Workday Learning – their homegrown learning management system (LMS) that will be fully integrated into their enterprise suite of finance and HR products. This is big news. Change is in the air.
Workday, founded by ex-PeopleSoft execs in 2005, disrupted the enterprise software industry when they built a pure cloud, affordable, easy to deploy and use, multitenant solution to compete with Oracle, SAP and the rest. Just like Facebook or eBay all of Workday’s customers are on the exact same version of the application. This ensures that every dollar Workday invests in research, customer support and professional services directly benefits every one of their 900 plus customers.
Conversely, even though they are trying to get to all customers on their cloud, SAP and Oracle have legacy applications and customers they need to support and that dilutes their focus and limits the effectiveness of their investment. Workday’s focused cloud approach allows them to build their own solution from the ground up faster and better than cobbling together acquired vendor solutions which is the strategy of most of their competitors.
I’m a research analyst that studies the global learning technology market. I’ve personally reviewed 100 LMS solutions over the last couple of years and before that I sold high-end learning and performance management systems for 13 years. I’ve read the publicly available information about the Workday Learning announcement, sounded vendors and buyers alike and here are my thoughts:
The Return of HR/Talent LMS Value
I heard a story recently how Oracle went into a major new account opportunity and pitched for 2 days straight and the LMS portion of the pitch was five minutes at the end of day two. To say that learning is not a core competency of the enterprise software providers is an understatement. Typically the enterprise HR and finance buying decision happens at the highest levels of an organization and the LMS is just thrown in for free or near-free with a new enterprise software purchase although efforts are continually made to sell the LMS at regular price to existing customers.
The HR/talent suite LMSs are the old school LMSs that were acquired over the last five years by the large HR and ERP providers. They were born before the cloud, are admin heavy, tough to install, terrible to use, mobile as a boulder and as social as a hermit. Organizations typically are not buying HR/Talent LMSs if learning is their primary decision and focus. The big HR players appear to see little or no value in LMS.
Workday recognized this trend and strategically held off acquiring or building an LMS in lieu of prioritizing other HR components (payroll, expense, recruiting, etc.) to catch up to the market leaders. For LMS, instead of a having nothing, Workday chose to identify quality LMS partners, primarily Saba and Cornerstone, to provide that piece of the solution if LMS was important to the opportunity.
At first I thought this strategy was shortsighted and left a plateful on the table. Upon reflection, it wasn’t a bad strategic decision. Workday has had years to watch Saba and Cornerstone, two extremely powerful and popular LMS choices in the world, up close. They have observed the LMS sales process, implementation, Workday integration, and their customers’ reaction to it all. They became LMS experts without having to incur any costs to do so.
Workday’s customers never get a free LMS, but always have to pay top dollar for their integrated partner LMS solution. The LMS has value, lots of it, in a Workday solution and they don’t even have their own – yet.
The enterprise software, HR, training and LMS industries are officially on notice.
Workday asserts in their recent blog post that they spent 120 hours with 16 customers interviewing and brainstorming to identify learning pain points. They discovered what everybody already knows – organizations and learners are disenchanted with old school LMSs.
Workday is looking to change the game by building their own LMS targeting the millennials and the new way they learn. They claim to be designing a fully integrated LMS capable of managing any type of learning from formal to informal, large to micro while providing an engaging, modern, mobile, social and contextual learning experience – or as we say in the business – a NextGen LMS.
The LMS bar is low in the HR/Talent LMS market so Workday has the opportunity to knock it out of the park by just following the blue print of the standalone LMS specialists and make a usable LMS that looks and acts more like Facebook and less like a database.
If Workday does indeed succeed in building their LMS as they intend, they will be one of the only HR/Talent LMSs able to compete in standalone LMS opportunities. This is going to cause heartburn with the current tier 1 standalone LMSs and HR/Talent providers in general.
When Partnerships Sour
Saba and Cornerstone are the scorned lovers here. They have been great partners, enjoyed the easy sales and have been living it up remora style on the Workday shark. No more, I’m afraid. Going forward they won’t get invited to the larger Workday sale and they have to compete with Workday on other LMS opportunities.
No matter what Workday says about being a good partner, I’ve seen this movie before and you can’t change the ending. Years ago, SumTotal partnered with SuccessFactors, learned how to sell Talent and then bought a talent company to compete with SuccessFactors. Skillsoft, once a partner to all LMS companies, went ahead and bought SumTotal and introduced an LMS competitor into all their partners’ backyard. Workday has 900+ clients with some significant unknown portion having partner LMSs that they are dissatisfied with yet paying a premium for. Seems like fertile hunting grounds to a recovering LMS sales guy like me…
In all I have read about Workday Learning, one thing struck me – not a single syllable about supporting extended enterprise learning with their LMS. Of course their DNA is HR and finance and they have precious little experience in non-employee learning, but with their client base they have a huge opportunity to turn their LMS into a channel, partner and customer facing solution and triple down on the size and value of their LMS sales. (Workday, that tip is for free.)
Employee LMSs are about cost savings, compliance and automation – extended enterprise LMSs are about making money.
The HR/Talent LMS providers devalued the LMS market when they acquired the former tier-1 LMS providers and halfheartedly integrated them into their broader suites. Employee LMSs became a commodity and certainly not a competitive differentiator when included in enterprise software sales opportunities. The losers were all learning and training professionals as well as the employee learners.
Workday has taken the first step to change all that. With Workday Learning an incremental competitive advantage will once again tilt the playing field. Other enterprise software providers will need to figure out what to do with their antediluvian LMSs, will decide it is too difficult to build a NextGen LMS themselves and another round of LMS acquisitions will kick off in the industry. History will repeat itself with delicious, predictable irony. Fun times ahead.
My thoughts anyway.
Thanks for reading!
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