Dave Duffield Inherits the Earth

Dave Duffield, most famously the founder of PeopleSoft and now Workday, was giving a keynote presentation at the RightNow user conference in Colorado Springs, Colo., when it hit me. Duffield is about to become a kingmaker in the on-demand market.

Please forgive the apparent hyperbole and continue.

For the record, I don’t know Dave except by reputation — which is sterling — and until I saw him in Colorado last month, I couldn’t have picked him out of a two-man lineup. To be honest, what he said in the keynote is not what stirred up my thinking; it was more simply having the time to reflect on the fact of Workday’s existence that led me to my conclusions.

From Front to Back Office

Here’s what’s been rattling around in my brain. For quite a while, another on-demand software CEO, Zach Nelson of NetSuite, has been telling anyone who would listen that the back office systems are the systems of record. He’s right too. The relevance? Front office systems without back office integration will find a bottleneck in their futures that slows down their growth. Siebel went that way and no one wants to follow.

Nelson is in what he believes to be the catbird seat because NetSuite incorporates front and back office technologies — in other words, what’s not to like? I think he’s got a point, but there are many ways to skin the proverbial cat.

Salesforce.com decided to build out a platform that can embrace many partners’ applications to round out its core CRM offering, and that’s another example of how to get the job done.

If NetSuite wants to be McDonalds, Salesforce.com is simply being Burger King — telling its customers they can have it their way or ways. Moreover, there are plenty of other companies vying for similar positioning, including SAP and Oracle. The last two are having great difficulty with the on-demand business model, and they may never make the transition.

Promoting Integration

Enter Duffield. I think one of the reasons on-demand sprouted in the front office was that there are just too many moving parts in the back office, which make it a more conservative place. On-demand needed to be proven in a more hospitable environment but now that it’s done there is undeniably an opening for on-demand ERP (enterprise resource planning) and all other things related to the back office. Who would be better to bring ERP into on-demand than the guy who took ERP away from the green screens?

At the moment Dave is selling a message with roots in the earliest days of the on-demand era — lower costs, better adaptability, low risk and on and on. While it might be true that ontogeny recapitulates phylogeny (the development of the individual replays in microcosm the development of the whole class) Duffield will need to move that message along pretty quickly or risk being overtaken.

Being overtaken is not very likely.

To his credit, Duffield is — correctly in my opinion — also selling the idea of integration, and he is doing what is needed to make Workday capable of integrating with anything else that’s out there, and that’s significant.

Novel Combinations

Before Workday, if you wanted to be a big-time software company you had to build everything — front, back, up, down, you name it — but now there’s another option. With good, capable and fast integration, any company that can build a front office system can have a competent back office solution for customers who want it. I think Workday could become a de facto standard in on-demand ERP PDQ simply by virtue of the fact that it is agnostic to front office differences.

The important point for front office companies — and RightNow gets this in spades — is that if you are a front office company, you don’t necessarily have to adhere to the sales-marketing-service and support model of CRM.

While RightNow might have all of those modules, they concentrate their focus on service and support where they compete favorably. It’s hard to say what other front and back office combinations might be waiting to be exploited, but the fact of Workday’s existence makes many more combinations possible.

The ability to make novel combinations is what makes Workday potentially so important. Where I think Workday can do a lot of good or disruption — depending on how you look at it — is with emerging companies whose solutions rely on front office data, as well as data from the back office. Many of those companies currently have an easier time integrating with front office solutions than legacy back office systems.

Workday still has a long road ahead before it is crowned the champ, but the company has a lot of things going for it. The thin ranks of the competition coupled with its missionary on-demand messaging and the legions of people who bought from Duffield before and who were pleased to be PeopleSoft customers are all on the positive side of the ledger. Couple that with some aging applications that are owned by SAP and Oracle, and you could expect a minor earthquake emanating from the East Bay.