Saugatuck just returned from Workday Rising in San Francisco, which included not only one day at the conference but a second full day of briefings / presentations as part of their analyst Tech Summit. Overall, we came away with a strong sense that Workday is well on its way to fulfilling expectations being established with their amazing marketcap valuation since going public last year ($13.3 billion – or roughly 30X current fiscal year revenue estimates).

Relocating the event to the Moscone Center was a good move this year. We had a chance to talk with more than a dozen clients and prospects on Tuesday (among the 3,500 attendees – up from 1,900 in 2012), and universally walked away from the discussions with the kind of “satisfied / happy & eager to do more” attitude most notably found at Dreamforce events that we regularly attend. But the big difference here is that this was an audience of predominantly HR, Finance and IT execs – versus your average upbeat Sales & Marketing execs.

Find below some of the key takeaways that we came away with from the event:

Workday’s Evolving Architecture – Cloud, mobile and analytics are core to Workday’s continuing growth, with social / collaboration merely viewed as part of the underlying application fabric. Increasingly, Workday is taking a “mobile first” design perspective, which we think will serve it well going forward.

New User Interface – Like many Cloud players, Workday has developed a new HTML5 User Interface – as it had previously used Adobe’s flex technology. This will no doubt help it facilitate supporting the myriad platforms from a design and deploy perspective.

Big Data Analytics – Workday announced the ability to import Hadoop clusters into Workday’s object model, along with the ability to easily transfer in a variety of external information sources – toward what some analyst colleagues at the Tech Summit were calling a “Data Mart / Data Warehousing”-like analytic environment. Workday demonstrated a variety of reasonably strong use cases (mostly HR related – whereas we could envision some really important ones on the financial side of the house as well), and will be actively building out a portfolio of templates that will help with the extraction and aggregation of data – both structured and unstructured. We think this is a smart strategy, as it both satisfies growing customer demand while maintaining customer control – and helps reinforce how the Workday environment helps create unique customer value (rather than having the data travel elsewhere).

Financials – We have been tracking Workday’s progress here for some time, and the good news is that the product roadmap continues to be well thought out (with an emphasis on analytics, global support and industry functionality), at the same time that it fleshes out a plan to support bigger-and-bigger client workloads (e.g., scale). While Workday stated that they can currently support companies up to the beginning of the Fortune 500 (100 million journal entries), with a goal over the next year of supporting companies up to the Fortune 250, my guess is that they can probably get there now anyway – as most companies use divisional financial ledgers anyway, in a 2-tier financial consolidation roll-up. Barely mentioned at the event were its longer term plans to add budgeting / planning functionality – in either a build or buy scenario. If the latter, Host Analytics or Adaptive Planning could potentially be very good fits.

Customization Capabilities – There is always a tradeoff between the desire to keep all clients on the same path vs. allowing some degree of customization to address unique customer requirements. As Workday serves ever-larger customers, this need will only grow stronger (and louder). To that end, Workday is now allowing customers greater extensibility via the ability to create new custom fields, and augmenting the Workday object model with the ability to bring in external data.

Verticals Here We Come – With the announcement of its new Student admin solution (2014/2015 GA) and the creation of a Higher-Ed vertical, this is the first of what be a wide range of industry-specific and vertical plays going forward.

Recruiting: As expected, Workday demonstrated its new Recruiting application, which helps both fill a gap in its evolving Talent Management portfolio, but will also help Workday compete more aggressively against Oracle Taleo (the behemoth in the space), as well as others in the broader HCM / Talent ecosystem (e.g., Cornerstone, IBM-Kenexa, SAP-SuccessFactors, Silkroad).  We especially valued their “mobile first” design strategy, and the way that they have woven collaborative / social threads throughout the application workflow.

Private Clouds – One of the low-key mentions at the Tech Summit was the ability to support client’s Private Cloud yearnings with an OpenStack-based version of Workday. Not many details here, but something to watch.

Going Global – continued push to add offices and data centers outside of the US (accelerated by recent NSA scandals – with non-US customers not wanting their data to reside in US), and toward supporting unique country-specific functionality (e.g., UK / France Payroll).

Overall, Workday is staying on track with its focus on HCM and Financials, and avoiding the pitfalls of yester-year’s broader ERP suite play, which centered on Manufacturing – although Aneel Bhursi, co-CEO stated in the meeting with Financial Analysts that it could be on the drawing board in 5+ years (see Seeking Alpha summary). We think this is smart, as shop-floor manufacturing and associated plays in logistics and the supply chain are likely to more slowly go to the Cloud over the planning horizon. The one bright spot in this space today is Plex Systems (as I discuss in a Lens360 blog post here), but it is an outlier relative to the customer acquisition that is clearly occurring in HCM and Finance.

At the same time, we walked away with a sense that Workday needs to do more to articulate the business case and value proposition of its shared HCM and Financials vision. While strong, it is not very well messaged yet. With roughly 10 percent of its 500+ customers having Financials today (half of which are live) – we see no reason not to believe that 30 percent or more of its customer base could potentially be deploying both HCM and Financials within 3 years – with accelerating deal activity often led by Financials, rather than by HCM.

No doubt, each offering set uniquely provides a very attractive value prop. The issue is how best to communicate the combined and synergistic business value that is being created and released based on the shared object model backbone that Workday is providing. Its move into Big Data will surely help, as will the expansion of its growing arsenal of advanced analytic capabilities.  One answer may lie in the development of a next-generation performance management fabric and leadership dashboards that emphasize not only traditional financial metrics – but also “talent” as a central corporate asset to be measured and managed.

In closing, it was interesting to hear some suggest that the pipeline for SI’s deploying legacy ERP upgrades may be starting to soften – which further suggests that we may be entering a period of accelerating adoption of Cloud-based core systems of record, given that so much of this market is replacement driven, or keyed off of an impending legacy upgrade cycle (see Lens360 blog post Research Alert: 2013 Cloud Data Report: Business is Booming – More Than You Thought, 28 June 2013).

This blog originally appeared at Saugatuck Lens360. Published with permission.