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For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Carl Icahn Goes Into Yahoo and Workday Closes Biggest SaaS Deal Ever

Posted by Bob Warfield on May 14, 2008

That new generation I talked about in my last post on the HP/EDS deal is coming faster than ever it seems.

Workday has landed a 200,000 seat deal with Flextronics, marking the biggest SaaS deal ever.  That’s a definite shot to the On-premise wheelhouse.  Given that it’s a Human Capital Management deal, it’s also kind of a shot in the wheelhouse for the other SaaS HCM vendors like Taleo and SuccessFactors.  The system replaces 80 disparate HR systems deployed in 30 countries.  This is the kind of job SaaS is ideal for.  Getting through such a blizzard of legacy systems takes some real streamlining if you’re going to live to tell of the story.  The savings potential on such projects is enormous, but the risks around a conventional On-premise install are what led to the phrase “boiling the ocean”.  Choosing SaaS minimizes that risk.

Another fascinating aspect of the deal is that a lot of the impetus to go Workday had to do with how easy it is to customize the system.  Flextronics CIO David Smoley had this to say:

“What we’ve seen with object databases, is it gives you an incredible amount of flexibility in how you access and manipulate data, which translates into a much more powerful ability to create interfaces with less technical people, and update and modify as necessary,” he said. He likes that Workday will “create and maintain interfaces [with benefits providers or other partners] so that customers don’t have to.”

Other factors included off-the-shelf integration with providers of employee benefits (integration has played out before as a huge competitive opportunity for SaaS players), and the realization the HCM software is not really an area of innovation for companies, so why not go SaaS?

What does all this have to do with money man Carl Icahn?  Mathew Ingram says it means Yahoo has hit the big time, or at least that’s what his headline implies.  I think it’s a good deal less pleasant than that.  If a pure money man who made his bones making moves on companies like RJR Nabisco (aka Barbarians at the Gates Nabisco), and other low tech properties is interested, it means he thinks you’ve got an easily understood commodity business that’s only good for flipping to the next highest bidder.

Traditionally these characters have avoided the world of High Tech out of fear they couldn’t understand the business, sustain the innovation, or manage the geeks.  You know you’ve got another version of the New Generation phenomenon if they come knocking at your door.

 

 

 

 

Evidently Icahn has managed to acquire about 50 million shares of Yahoo and is contemplating whether to launch a proxy war for control of the company.  This guy helped define the term “corporate raider”. 

2 Responses to “Carl Icahn Goes Into Yahoo and Workday Closes Biggest SaaS Deal Ever”

  1. […] Bob Warfield explains: (The Workday deal) is a definite shot to the On-premise wheelhouse.  Given that it’s a Human Capital Management deal, it’s also kind of a shot in the wheelhouse for the other SaaS HCM vendors like Taleo and SuccessFactors.  The system replaces 80 disparate HR systems deployed in 30 countries.  This is the kind of job SaaS is ideal for.  Getting through such a blizzard of legacy systems takes some real streamlining if you’re going to live to tell of the story.  The savings potential on such projects is enormous, but the risks around a conventional On-premise install are what led to the phrase “boiling the ocean”.  Choosing SaaS minimizes that risk. […]

  2. Congratulations to Workday for landing the deal with Flextronics. This deal will surely become one of the standard references stories for SaaS.

    On the InformationWeek post you linked to, Dave Duffield mentions in the video interview how important it is to work with IT and integrate with their existing systems.

    Workday put its money where its mouth is when they bought Cape Clear. They were also clever to take their on-premise SOA and integration tools off the market (SaaS-only in future). I worked with the team at Cape Clear in a previous life and this was a clever move by Workday.

    This is perhaps not so surprising, as Duffield made some clever technical decisions at his previous company, PeopleSoft. In particular, I am thinking of their decision to embed the Tuxedo transaction processing monitor into PeopleSoft. This gave them a great performance advantage over the competing UNIX-based solutions.

    Integration takes on a new meaning with SaaS. ISVs must learn new tricks to meet market demands. Workday is a good role model that can teach ISVs a lot.

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