Workday and A16z

Some comments on the comments about Workday.

A few weeks ago A16z wrote about SAP, and I responded here. Yesterday they (Joe) wrote about Workday. Read the piece and then pop back here. A couple of folks have asked me for my comments, so here they are.

Joe thinks Workday is done for, yet it continues to produce marvelous Gross Revenue Retention numbers. He doesn’t resolve that paradox adequately.

He describes Workday’s defensibility competently, TL;DR it is the ecosystem. He takes some minor liberties with the Workday history, but he illustrates nicely how Workday built its current market position, leading the cloud and SaaS transition. What he missed is that Dave, Aneel and the early Workday leadership created a powerful following, it was an HR movement, almost a cult. HR leaders felt empowered by Workday, and felt part of a caring, committed community. They built a tribe. It wasn’t about deploying software, it was about belonging to a movement.

Joe’s take that Workday is the least loved product in enterprise software is merely anecdotal, and he provides no real evidence to substantiate that position. I’m not convinced Workday is as disliked Joe makes out. His examples of what people don’t like about Workday are flimsy. HR software serves to instantiate corporate policy. So people that don’t like corporate policies tend not to like HR systems, but those people don’t buy or renew enterprise software. It is easy to find applicants who don’t like Workday’s ATS, or managers that find the performance management clunky but so f___ing what. Yes it was hard work to get it live, yes, it cost more than we expected, but yes, it works.

ERP software is not a popularity contest. Last time I looked I couldn’t find a salesperson that liked CRM software.

We can agree that Workday is less loved that it used to be, and that its innovation mojo has slowed down significantly. It has lacked a coherent product vision for a while, roughly since the “power of one” became unworkable. While it has made a couple of sensible acquisitions, Workday’s last few years have been marked by leadership changes rather than product breakthroughs. While I don’t buy Bersin’s latest lovefest, Workday still has the ear of Enterprise HR leaders, especially in North America.

HR systems are priced by number of employees, so a lot of the panic about users being replaced by agents is not relevant. Broader shifts in employment may well impact HR vendor revenue numbers, but that’s less about AI and more about the economy fundamentals.

This bit didn’t work for me.

First, enterprise IT is finally revisiting its core systems.

No they aren’t. They are still trying to get basic chatbots working. What enterprises are actually doing with AI and what most VCs imagine they are doing are miles apart. Replacing a reasonably adequate HRIS with something new is not on the top 10 list of any CIO that I know. There will be lots of action around the edges but core systems like payroll aren’t on the front lines of disruption. The only people asking for an AI native version of this are people who have a substack and an early soho house membership.

Second, the tools to actually rebuild this now exist.

No they don’t yet. There is a lot of progress but enterprise grade is still a little way off. Migrations will get easier, but they won’t be easy. (We have a next gen tooling bet that I would love to talk about, but I can’t quite yet).

Third, Workday structurally can’t close the gap from inside.

It is early days. SAP, Microsoft, IBM and others have reinvented themselves more than once. Lets not assume Workday can’t. Workday itself was a reinvention of PeopleSoft. Aneel’s return will be critical. Workday will need to be bolder than it has been this century. Workday will survive, but for it to thrive, it will need to rediscover and reinvent its purpose.

But my main concern with Joe’s argument is a more fundamental one.

It isn’t about the code.

Building the roughly same thing a bit faster with new technology is not going to be enough. Replacing the core HRMS systems will not be driven by a new shiny technology. Many organizations still run old versions of PeopleSoft, because the product works. Replacing Workday will require a compelling vision of a new way of doing HR that is impossible to deliver with the existing technologies. It starts and ends with a new vision for HR. We don’t yet have that vision.

What Joe lays out for the future of HR is simply not compelling enough. It is thin gruel. It’s basically the short term roadmap of every incumbent.

1. Deploy in one month: coding agents collapse 12-month implementations into 1.

2. Workbench-native: HR teams become analysts and builders, not ticket-writers.

3. Agent-first: employees work with HR inside the tools they already use.

4. Open: customer agents can read the HR data model directly.

5. Secure and permissioned: intuitive per-agent access controls built into the system.

6. Always-on compliance: monitoring agents track the regulatory surface in real time.

The technical factors to reduce implementation times are lining up nicely, but the human decision making factors haven’t changed. I remember getting in trouble in the late 1990s when a CHRO asked passive aggressively, “How long does it take to deploy SAP?” and I responded passive aggressively, “ Just a little longer than it took you to buy it.” For implementation times to genuinely plummet, we need faster decisions.

SAP, Oracle, Dayforce, ADP, Workday, ServiceNow and UKG will all deliver competent agentic capabilities into their applications over the next 18 months or so. They will also figure out licensing models that monetise third party agent access. They will also improve compliance capabilities. Elements of this will be internally developed, but we will see continued acquisitions and partnerships too.

Like Joe, I spend a lot of my day looking for the founders that will make Workday and SAP obsolete. Finding someone that can rebuild a slightly better Workday with an AI native technology stack is going to be relatively easy, and a16z is welcome to it. Finding someone that is fundamentally rethinking how work gets done will be more challenging.

There are so many exciting things to do in Worktech that don’t involve replacing a core HR system that works okay. I look at Compa, Figures, Techwolf, Origin and more just in our portfolio. This is a great time to be investing in work tech.

As I usually do, I’ll end with a song.