PeopleSoft Founder Launches ERP Software Company

Workday, Dave Duffield's newest company, will have its foothold in human resources-the area of backend business applications where PeopleSoft made its name.

Dave Duffield, founder of PeopleSoft, announced Nov. 6 the launch of a new ERP company with its foothold in human resources—the area of backend business applications where PeopleSoft made its name.

The big difference with Workday, Duffields newest company, and PeopleSoft: software thats built using an on demand model versus on premises.

Duffield and co-founder Aneel Bhusri are applying "modern concepts and standards to software," according to Duffield, who led the Nov. 6 conference call with news reporters to launch the company.

The newer technologies have only recently emerged with the rise of the consumer (and business) Internet, or Web 2.0, that has enabled technologies such as Web services, software as a service and open-source technologies.

Workday, which launches with an HCM (Human Capital Management) suite, is basing its software on three core design principles: agility, ease of use and ease of integration—pretty much the mantra for any on-demand software provider.

The question, then, is how Workday will differentiate itself from established on-demand ERP software providers like Intaact and NetSuite? (Oracle founder Larry Ellison owns a stake in NetSuite; Ellison also acquired PeopleSoft only after a protracted, bitter battle with Duffield and the PeopleSoft board).

The short answer is in the technology itself, according to PeopleSoft co-founder Ken Morris, now the vice president and chief technology strategist at Workday.

"Were applying object-oriented technology at the business systems level," said Morris.

"Our systems are object-oriented, where developers live and work, as opposed to at the relational database level. Weve taken both the object-oriented technology and those [Internet] standards like XML and Web services, and have built our technology so that developers can totally define systems definitially. So our system is totally defined and stored as Meta data in our data repository, and interpreted at run time."

What Workday has done, according to Morris, is free developers from having to go between relational and object-oriented environments.

Using Workday, developers are able to live solely in the object model, as the only access to data is through the companys Object Management System.

"Technically data is stored in the relational database, but in a very non-relational way," said Morris.

"Where PeopleSoft was 30,000 tables in a relational database, we have three or four."

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The bottom line, according to Stan Swete, vice president of products and technology at Workday, is that its software will be much easier to modify.

"Well have applications we believe will be easier to upgrade and change as we go forward. It remains to be seen, but thats how we intend to compete," he said.

The company also plans to compete using good old-fashioned chutzpa, infused by the sort of loyalty only the likes of Duffield, who had an almost cult-like status among his former PeopleSoft employees, can establish.

"We will differentiate [from our competitors] through the highest level of integrity and trust. We will have fun," said Duffield. "And someday we will be profitable, as every sustainable company must be."

All those good feelings aside, Workday has about $15 million in the coffers—funding that often goes like water through a sieve in startup-land.

The vast majority of investment comes from Duffield—who reportedly raked in $600 million from his stake in PeopleSoft—with a small amount of investment from Greylock Partners.

Workday, based in Walnut Creek, Calif., launched with two initial customers: Kana Software and Biosite.

With 1,100 employees, San Diego-based Biosite is in the sweet spot of Workdays demographic: the upper mid-market.

The company intends to focus on the enterprise market in two or three years, after it builds more (and global) functionality. It plans to introduce its suite of core accounting software in 2007.

Company executives, however, seem blissfully unaware of the competition in the enterprise market segment.

SAP, Oracle and Microsoft—among the worlds largest software companies—are each embarking on an on-demand path.

Though not clearly articulated by either of the ERP vendors, its generally understood that each will reveal a stronger on-demand ERP strategy in 2007, as they move closer to finishing their respective SOA (service-oriented architecture) roadmaps.

"Frankly, I dont see us competing that consistently with SAP and Oracle in the next 18 to 24 months," said Bhusri.

"First of all, were on demand. In a three- or four-year time frame, there is no question well compete. But the competition will be based on tired-and-true ERP thats long in the tooth, versus what weve taken on."

Microsofts focus is too much in the lower to mid-market to be a real contender, according to Swete.

Likewise, Bhusri said that the companys intention is not to compete with niche vendors, but to work with best-of-breed. A partnership with on-demand poster child was not ruled out.

"Our desire is to be the system of record for employee and financial information," said Bhusri.

The company also announced several partnerships at its launch Nov. 6: Microsoft is a strategic development partner; Accenture is a preferred integration partner; and CapeClear is the integration technology partner.

Workday will integrate its applications with Microsoft Office by 2007.

The initial focus will be on integration with Outlook, Microsoft Exchange Server, and Office SharePoint Server.

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