WORKDAY BRINGS THE POWER OF ONE TO PLANNING AND ANALYTICS

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1 October 2016 WORKDAY BRINGS THE POWER OF ONE TO PLANNING AND ANALYTICS About Workday Founded in 2005, Workday delivers human capital management (HCM), financial management, and analytics applications. Born in the cloud and targeted at medium-size to large enterprises, educational institutions, and government agencies, Workday currently boasts 1,350 customers of its HCM solution and 250 financial management customers. Data Source In this report, Mint Jutras references data collected from its 2016 Enterprise Solution Study, investigating goals, challenges and status and also benchmarking performance of software used to run a business. A total of 525 responses were collected from companies across a broad range of industries. This sample includes responses from a variety of disciplines in companies of all sizes, ranging from very small to very large enterprises. A key strength of Workday is what it calls the power of one - one code line, one security model, one mobile app, one data model, one user experience (UX), one platform, one version. At Workday Rising 2016, Workday announced it had extended that one solution to include planning. A recent Mint Jutras report posed the question: Is Planning & Performance Management a Marriage Made In Heaven? We concluded that if you find the two live entirely separate lives, either consciously or unconsciously avoiding each other or, even worse, they are in a contentious relationship, perhaps it s time for a divorce. Conversely, with the right solutions, you can marry actual performance to the plan, in all the relevant detail. And that plan can evolve over time to lead you down the most effective path to growth and profits. Ahhh marital bliss! Workday has indeed wedded the two and has actually taken one step further by unifying financial and workforce planning with transactions in one cloud system. Organically built as part of the Workday system, the new application is designed to support collaborative planning and continuously adapt to changing business climates and requirements, to keep up with the accelerating pace of change. WORKDAY FINANCIAL AND WORKFORCE PLANNING As we noted in our report, Is Planning & Performance Management a Marriage Made In Heaven? not all marriages are equal. Those that encourage and support continuous monitoring create a living plan. If you simply put the plan on the shelf and go about business as usual, you don t have a marriage at all. Planning and performance management wind up divorced even before the honeymoon is over. World Class implementations are 26% more likely to monitor performance against plan continuously, modifying as needed. But only about one in three of the 2016 Enterprise Solution Study survey respondents are able to keep their fingers on the pulse of their businesses in this way. By building the planning application rather than acquiring or partnering (to offer a separate application), Workday has set the stage for real-time access and continuous monitoring. Of course, Workday customers already had visibility through financial statements, functional and operational reporting, which is how many today

2 Page 2 of 8 World Class Mint defines World Class in terms of the performance of the implementation of enterprise software that runs the business. Survey responses are used to measure cost savings and other improvements since implementation, progress made in achieving goals and selected current performance metrics that can apply universally to any business. The top 15% in performance is categorized as World Class and the remaining 85% are referred to as All Others. still monitor performance. This includes about 3,000 standard reports, 1.6 million custom reports available through sharing and leveraging the power of one line of code. In addition, Workday customers have access to packaged dashboards, including 14 internal audit reports, and executive scorecards containing metrics and insights. Optimal performance however is largely dependent on the plan itself and how well you execute. Workday also maintains close contact with its 250 financial management customers and those customers were very clear in terms of what (more) they were looking for from Workday. Three categories of requests rose to the top of the list: 1. Focus on core financials (keep those core enhancements coming!) 2. Deliver planning 3. Support non-workday data As a result, full-fledged planning, budgeting and forecasting have just become available in the latest release of Workday 27. While certainly not alone on the market, Workday Planning has some noteworthy capabilities. CONFIGURE PLANNING TO BUSINESS NEEDS Customers start by defining share settings. By nature, planning should be a very collaborative process. But without the proper tools, many companies struggle to collaborate effectively, instead winding up with a series of spreadsheets and a nightmare of version control. Workday settings allow customers to very clearly specify not only who can see what, but who can edit. Next, customers set up their plan structures for financial or workforce planning by month, quarter, or year. Planning dimensions can be carried over from the financial statements (corporate or division, account type, top level hierarchy and level) or established specifically for planning. They use the plan generator to create baseline plans using historical or real-time finance and HR data in the system. The baseline can be derived from actuals only, prior budgets and actuals, or prior budgets only. Plan treatment rules can be applied by categories of costs. For example, salaries can be uplifted by 5% while other costs might be reduced. Forecasts can be created using driver-based models to analyze the impact on revenue, spend and profitability, based on an unlimited number of different modeling assumptions. COLLABORATE ACROSS THE BUSINESS Most collaboration today happens through the sharing of spreadsheets. While 63% of our survey respondents use financial reporting to monitor, plan and predict corporate performance, 59% also use spreadsheets in conjunction with other tools (Figure 1).

3 Page 3 of 8 Figure 1: Tools To Monitor, Plan and Predict Corporate Performance Source: Mint Jutras 2016 Enterprise Solution Study Why do so many today still use spreadsheets to monitor, plan and predict corporate performance? Because planning needs are still largely underserved and because of the comfort, familiarity and ease of using spreadsheets. But many have a love-hate relationship with this universal tool. Why is that? Mint Jutras believes this happens for two reasons. First of all, even though we found 42% of respondents have specific financial planning and budgeting applications, planning needs are still largely underserved. The second reason is simply because of the comfort, familiarity and ease of using spreadsheets. While many have a bit of a love-hate relationship with spreadsheets, it is almost impossible to wean companies and individuals off of them. Workday addresses both of these problems by embedding what appear to be spreadsheets right in the application. They are called Workday Worksheets. While these look, feel and behave like the worksheets of a spreadsheet, they aren t. They are part of the application, thereby preserving the security, audit trail and data integrity of the data. Mint Jutras also believes there are two major problems with spreadsheets and this approach addresses both. The first problem arises when you download data from an application to a spreadsheet a capability that has become so prevalent that we get lulled into thinking this solves our problems. It doesn t. First of all, the promise of real-time visibility goes out the window. You only see the data as of that snapshot in time, and business doesn t stop once you download the data. Once you download data into a spreadsheet it starts to take on a life of its own, independent of its source. You begin to analyze, manipulate and edit the data. But how do you get updates to your budget/forecast/plan back into the

4 Page 4 of 8 Giving users the look and feel of a spreadsheet, but keeping them in the application is a win-win. Workday never removes the data from the application, so it is always current and upto-date. system? You have removed the data from the security of the application. You not only lose your audit trail, but data integrity as well. Giving users the look and feel of a spreadsheet, but keeping them in the application is a win-win. Workday never removes the data from the application, so it is always current and up-to-date. And it provides the ability to update the budget/forecast/plan, safely and securely, for reporting, performance analysis and execution. But the second problem is even worse. It is just so easy to introduce errors in spreadsheets. As you start to create formulae, think how easy it is to put that end parenthesis in the wrong spot. How easy is it to click on a neighboring cell rather than the one that should be in the formula? And as easy as it is to make mistakes, it is equally hard to spot them. Errors seem to get noticed only at the most inopportune time. Chasing down the cascading impact of a mistake is everyone s nightmare. Planning teams can instead use Workday Worksheets, which bring the familiarity and functionality of a spreadsheet into Workday s secure enterprise environment, to create models and scenarios, applying application rules and logic, while leveraging live transactional data. The technology behind this ability to embed spreadsheets into Workday came from its acquisition of Gridcraft last year. Since the acquisition, the original team from Gridcraft has continued to add more collaboration features. The team has not only grown, but now works in conjunction with dozens of people assigned to Workday Planning. In an upcoming release, look for features that automatically notify certain team members when select fields are changed. So how is this collaborative now? It keeps everyone (who has secure access) on the same page and supports communication between team members. Collaboration, by definition implies participation from multiple people (i.e. workers) in the planning process. The first step in collaboration is easy access to people and information. A very powerful aspect of Workday Planning is that it resides within the HR system-of-record. Anyone who might need to be involved with or collaborate on a plan is already in the system. All the data they view or enter is within the context of their role in the organization. CONTINUOUSLY PLAN AND EXECUTE ON BUDGETS While executing on plans, Workday customers can now leverage real-time financial and management reporting capabilities. They also have access to built-in analytics and visualizations to drill-down in order to track progress and make adjustments to budgets and forecasts as needed. This is really where the plan becomes a living, breathing plan, allowing you to take full advantage of opportunities for growth and profits. Of course, if you could anticipate these opportunities ahead of time, there would be little (or at least less) need to continuously monitor plans and

5 Page 5 of 8 These are exactly the problems Workday addresses. budgets. But you can t. This makes ad hoc analytics and data preparation that much more important. And this is exactly what Workday customers have been telling Workday. Workday Planning and Worksheets are an indication Workday has been listening and not just on the pure finance side. After all, Workday s first-ever product was human capital management. Workday cites some statistics from research conducted by the Human Capital Institute in 2014: 59% reported having weak workforce planning 90% indicated they currently perform workforce planning in spreadsheets 75% have difficulty in bringing planning and reporting together These are exactly the problems Workday addresses. The company continues to invest in more ad hoc query, reporting and analytical capabilities. Customers also said they wanted to get to product-line profitability. This speaks to the level of granularity in planning. Thirty-seven percent (37%) of our survey respondents are not able to plan at an appropriate level of granular detail due to limits in technology. And we believe this percentage is understated. Business leaders have been limited by technology for so long, they automatically place limits on themselves that may no longer be necessary with the proper tools and technology. The underlying architecture of Workday removes a lot of those limitations and therefore its customers are more likely to be asking for more. They have also vocalized the need to get answers to ad hoc exec questions faster. Early adopters of Workday Planning are using it to: Evaluate investment viability with ad hoc forecasting: Using existing financial, employee, and operational data in Workday, customers can create a driver-based model using collaborative worksheets without the inefficiency of offline calculations and multiple versions to analyze the investment s impact on revenue, spend, and profitability, supporting the decision to proceed or not. Determine the best staffing model to support growth: Workday Planning can model different staffing scenarios such as how many contingent, full-time, and part-time employees are needed in each region and how staffing changes may impact budgets and financial performance. This can be done collaboratively with key stakeholders across the organization for better alignment and execution. Better manage expansion strategies and costs: In order to expand business regionally or globally, organizations must determine the projected costs and benefits, and then compare these findings against other expansion strategies. With Workday Planning, headcount forecasts can be updated on a tablet during a meeting with the

6 Page 6 of 8 Analytics are important tools in bringing planning and execution together. executive team. From there, you can drill down into specific data such as open job requisitions, and determine how this will impact office space and budget, travel between locations, or location-specific employee benefit costs. ANALYTICS TIE IT ALL TOGETHER Analytics are important tools in bringing planning and execution together. In our prior report we noted that World Class implementations were 43% to 180% more likely to use various types of analytics, some of which are listed in Figure 1. While analytics was not necessarily at the top of the list of what Workday customers want, it is a necessary component in delivering on the other requirements, including the need to include non-workday data in the planning process (#3 on the list), ad hoc analytics and data preparation. To this end, Workday has announced plans to acquire another small company, Platfora. Like previous acquisitions, this one reflects the strategy of acquiring companies that have technologies Workday can build into the fabric of its solution, rather than bolting on components, thus preserving the power of one. A LITTLE ABOUT PLATFORA Platfora is a fairly young company, founded in But in that short time it has become a leading provider of operational analytics and data discovery tools that enable companies to visually interact and analyze petabyte scale data of all forms in seconds. While the acquisition of Platfora is particularly important for financial management and planning, it is important to note that, with (again) the power of one, all products, industries and solutions from Workday will potentially benefit. The immediate plans include utilizing this newly acquired technology to better address the needs of Workday customers in incorporating non-workday data into the planning process. According to Workday, The acquisition will enable Workday to continually enhance our analytics capabilities especially areas like managerial reporting and operational analytics where insights are gathered by collecting and connecting multiple data sources (Workday and non-workday data) to make business decisions. Customers want to drill down to transaction-level data and analyze it across multiple dimensions for calculating profitability, ROI, and other operational metrics. HOW DOES WORKDAY STACK UP? We concluded our prior report with a checklist of sorts to be used in looking for a solution that effectively manages planning and performance management. So how does Workday stack up?

7 Page 7 of 8 Within the Workday solution, planning and performance management are one solution, combined with the transactions that form your financial system of record. Workday Worksheets give Workday an added advantage, allowing participants to stay in the comfort zone of working in spreadsheets, but with the safety and security of the application. Look for planning and performance management tools that complement each other. Within the Workday solution, planning and performance management are one solution, combined with the transactions that form your financial system of record. Make sure you can connect your overall financial plan to your operational plan. The extent to which this is delivered is limited only by the footprint of Workday. While not claiming to be a full enterprise resource planning (ERP) solution, in fact for some industries, Workday provides a full operational system of record. For other industries, particularly those that make and move physical products, Workday will co-exist with other operational solutions. Workday and Plex Systems have partnered to provide a two-tier system with Workday at corporate headquarters and the Plex Manufacturing Cloud installed at divisions or subsidiaries where manufacturing occurs. For these two-tier environments, customers might have to wait until Workday Planning can fully accommodate non-workday data in order to make this connection seamless. Select tools that encourage rather than prohibit collaboration. Anyone who might need to be involved in the planning process is already in the system and all the data they view or enter is put in the context of their role in the organization. Everyone is on the same page, operating from a single source of the truth. And Workday Worksheets give Workday an added advantage, allowing participants to stay in the comfort zone of working in spreadsheets, but with the safety and security of the application. Additional collaboration features will be added via the team acquired through the Gridcraft acquisition. Consider a cloud approach. Workday s solution is delivered entirely and exclusively as multi-tenant Software as a Service (SaaS). Evaluate not only the traditional desktop/laptop user interface but also the overall user experience, including the ability to support the mobile executive, on the device(s) of choice. Ask for a demo to evaluate the overall User Experience. Workday adapts well to various devices. Look for solutions that play well with others. Workday made a conscious choice to not position itself as a full ERP. That means it had to design its solution with this in mind. But don t be afraid to ask for specifics on your own configuration of solutions. Work with your information technology (IT) staff, but seek a level of independence in the planning and performance management process itself. The setup process for planning appears very easy to use with no specific IT skills required. However, always ask for a test drive. It s one thing to watch an expert make the software sing and dance. How does it look and feel and how flexible is it when you are in the driver s seat? Understand clearly what kind of reporting and analytics are available right out of the box. Same as above: look at the demo but the proof of

8 Page 8 of 8 Workday is built on inmemory technology that removes many of the limitations of older databases and solutions. tailor-ability is in doing. Again, ask for a test drive. And pay close attention to roadmap plans for Platfora. How much data can the solutions handle? How fast can they process it? Workday is built on in-memory technology that removes many of the limitations of older databases and solutions. But the proof is really in talking to reference accounts. While Workday does not have the tens of thousands of customers of some of its larger competitors, the company will not have a problem in giving you references, some of them very large enterprises, with large data volumes. Ask the tough questions, but we think you might be pleasantly surprised. CONCLUSION If you are an existing Workday financial management customer, expanding your solution to include Workday Planning is a no-brainer. A lot of the setup work is already done because you will be using accounts, actuals and dimensions already there and waiting. Why complicate your life by using a disparate system, which must be mapped and connected back to your finance solution? If you are a non-workday customer and your planning, performance management and transactional systems are just living together without the benefits of a true marriage, the power of one could make a replacement very attractive. Divorce doesn t have to be messy and often times the parties look back on the change as positive. Yes it means re-implementing financials, but if you can eliminate disparate systems and tenuous connections, the effort is well worth the rewards. About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 40 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 10+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC ( specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.