Duffield 2.0: the new kid on the SaaS block

Dave Duffield 2.0 formally launched this week, setting the former PeopleSoft founder back on a collision course with arch enemy Oracle.

The 66-year-old software industry veteran kicked off Workday a software as a service (SaaS) firm that sells web-hosted software for human capital management.

The new company is on a direct collision course with Oracle which acquired PeopleSoft for $11.1 billion in January 2005, something which Duffield opposed. "I worked like crazy to keep PeopleSoft out of the clutches of Oracle," he admitted. "When Oracle prevailed, it inadvertently offered an opportunity."

"Oracle brought to an end certain people's careers, including mine. It also enabled a group of people to get together and try something new. People were available and they enjoyed working together."

For example, Workday's co-founder is Aneel Bhusri, former vice chairman and senior vice president in charge of product strategy at PeopleSoft. He is now a general partner at Greylock Partners, which is investing in Workday.

Workday is targeting mid-size companies, which it defines as companies with between $200 million to $1 billion in revenues and 1,000 to 5,000 employees. Next year, it plans to offer financial-management and supply chain-management applications for this market.

AMR Research data on growth in the online applications sector suggests that HR is currently a slower-growth area than some others. It rose 13 per cent between 2004 and 2005, compared to 300 per cent for ERP generally, 60 per cent for CRM and 125 percent for sourcing/procurement.

"This is different from enterprise applications of yesterday," said Bhusri. "Our applications are built for all employees to use, not just accountants and IT managers.

Workday plans to initially target services companies in North America with 1,000 to 1,500 employees and $200 million to $1 billion in annual sales, said Bhusri. "As our product gets more breadth and depth, our intention is to go to Fortune 2000 companies, much as we did with PeopleSoft.”

But he admitted that the offering would not have universal applicability. "It's not for everybody," he said. "It's for the new generation of growth-oriented companies looking for a new way to run their business. Some companies may find this is too much change for now.

"We've seen the emergence of Web 2.0, of software as a service and open source, and (forces) that have come together to create what some have called a work 2.0" of mobile workers, globalisation and partners, he said. "We incorporate a lot of these Web 2.0 things - hyperlinks, AJAX, RSS, search."

Other SaaS vendors welcomed the appearance of another player, especially one riding on the reputation of its founder. "Dave Duffiled’s new company is yet another example of the proliferation of the on demand model," said Greg Gianforte, CEO of RightNow Technologies. "This is how software applications will be delivered moving forward. Software delivered as a service is faster to deploy, easier to manage, and drives results faster. Global enterprises are recognising thse benefits and are increasingly implementing and often standardising on software as a service solutions."

But at least one analyst firm warned that Workday was a work in progress with some rough edges. "Although Workday touts its tool as the first one designed for the business user, not the power user, the employee role interface was the least developed in the demo," said AMR’s Christa Degnan Manning. "Everyday users will be disappointed until more is done to make employee self-service user friendly. Workday promises the employee self-service interface will shortly look more like MySpace than text-based lists.

"As with any first release software, and especially with one trying to reinvent a well-established category of functionality, all of the capabilities one might expect to be there will not be there with earlier releases. Although Workday plans to add more robust HR administration functions and even strategic HCM areas, like performance management, in coming releases in 2007, these will not be as specialised as best-of-breed products out there today. That said, our inquiries tell us that many midsize organisations still have opportunity to automate basic HR information collection and administration and would benefit from an easy-to-implement-and-integrate approach.

"Ultimately it will be Duffield’s and his colleagues’ experience and reputations in the industry, as well as their commitment to a customer-centric culture—the same culture that helped the early PeopleSoft flourish—that will provide reassurance that this is no fly-by-night operation and fuel the early adopter success required to bring the company to the next level. Its financial backing by Duffield, as well as his connections at Greylock Partners, also removes viability risks, and promises to provide a serious start-from-scratch technology alternative to what’s out there for ERP today."

Certainly Workday will bring much of the corporate culture that characterised PeopleSoft. "Many people ask me if Workday is the reincarnation of PeopleSoft," said Duffield. "My answer is yes and no. We're going to preserve the world-class work environment for which PeopleSoft was known.

"We'll conduct business with the highest level of integrity and trust. We'll have fun at work, serving our customers and collaborating with business partners."