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Workday cloud HR software is most expensive, but customers are pleased

First-ever Gartner Magic Quadrant cites Workday for investments in underlying technologies and advances in customer support, and it taps Ultimate Software for reporting and analytics.

In the second part of a two-part Q&A, Ron Hanscome, research vice president at Gartner, discusses Workday's premium...

pricing and No. 1 ranking on the Magic Quadrant for its ability to execute and completeness of vision for cloud HR software, as well as Ultimate Software's predictive capabilities. Read part one, in which Hanscome considers SAP's integration difficulties and good marks for talent management.

Workday was ranked the highest on ability to execute and completeness of vision for a cloud human capital management (HCM) suite. How is the Workday cloud HR software differentiating itself from competitors?

Ron Hanscome: Workday deploys all of its HCM functions on a natively developed application, with a single security model and user experience. Everything developed within Workday is on a single tool set. There are no pieces that need to be integrated. There are no different user experiences that need to be reconciled. The systems administrators can manage security from a single view of, 'What are the functions that need to be accessed by a role within the system?'

Ron Hanscome, research vice president at GartnerRon Hanscome

You like Workday's investments in underlying technologies and customer support for cloud HR software. What are some examples here?

Hanscome: An example of investments in underlying technologies is that, as the Workday customer base has grown, Workday has added or changed its approach to data storage. The vendor has added different databases or data storage capabilities to enable certain types of data to be stored more quickly and effectively. Workday added an integration engine, called Cape Clear, which was woven into the technology and now provides an improved ability to drag and drop for customers to quickly develop simple integrations. Workday also bought a company called Identified, which is a sorting and searching algorithm and classification technology that now is the base of the vendor's Insight applications. An example of support is that Workday is continuing to improve a customer interaction portal to take into account users' requests for enhancements and allow other customers to view and vote on those requests to get a sense of what needs to be added or fixed in the application moving forward.

Is Workday the most expensive of the cloud HCM suites?

Generally speaking, yes. It doesn't occur in every geographic region, but, generally speaking, Workday is a premium-priced solution.

Do you get what you pay for with Workday?

Hanscome: I can't tell you that is true in every case, but if customer references are any indication, they do realize it is an expensive product, but they are satisfied with its ability to deliver what they need to run their businesses from an HR perspective.

The Magic Quadrant report cautions that users should consider substantial upfront switching costs with Workday cloud HR software. Why is that?

Hanscome: That is the cost to switch from the product they are using to Workday. They need to invest in change management. With software-as-a-service applications, an update is coming twice a year. You might have to invest a bit in your ongoing support team to handle those updates and determine how to enable those enhancements to evolve how the product meets changing business needs going forward.

Workday delivers core HR, benefits administration and post-hire talent management, except learning, as a single module. But customers pay for all functions, regardless of how long it takes to deploy processes globally. What is the upshot of that?

Hanscome: Workday includes many capabilities in one line item. You buy HCM, then you have all that embedded capability and you may not be able to implement all at once. You may put in the administrative HR and then turn on self-service, and then later, maybe the next year, you turn on performance management and roll that out, and then career and maybe succession. You bought those as part of a single price, but it may take an organization longer to be able to leverage all included functions.

You like Ultimate Software's embedded reporting and analytics. What are some examples that stand out with this cloud HR software?

Hanscome: Customers are very satisfied with the basic reporting capabilities that are embedded within the product. Customers also like the deeper, more sophisticated analytics capabilities that Ultimate is rolling out with the product. These include some predictive analytics tools. Ultimate also recently acquired an analytics company called Vestrics that is meant to help Ultimate double down on analytics capabilities. We'll be looking forward to seeing how that acquisition plays out. Ultimate is one of the vendors that offers a flight-risk predictor, and it is working on an attrition tool and some other predictive analytics tools. Ultimate says about 600 or so customers have turned on the predictive analytics capabilities and are starting to use them and provide feedback. It's work that will continue to grow and increase in sophistication over time. Attrition is who has actually terminated from a position for one reason or another. Flight risk looks at who has a chance of leaving. Attrition is more about what has happened, where flight risk is trying to predict what might happen.

Ultimate supports HR data requirements for 34 countries, but the vendor is not quite up to the automation of other vendors. What is going on here?

Hanscome: In the end, Ultimate Software sells to U.S. domestic businesses and multinationals headquartered in the U.S. that might have most of their workers in the U.S., but pockets of employees abroad. Over the last three years or so, Ultimate has intentionally built capabilities for its product to be a global system of record for the core HR information, and then also process payroll for the U.S. and Canada directly on Ultimate. Ultimate has a partner, Celergo, that is its global payroll aggregator that enables the companies -- the customers that want that -- to process those local payrolls, and then feed those results back to Ultimate for consolidated analysis. We have looked at how customers set up those capabilities and how they have implemented the additional data elements that are needed to store new HR data. It's been a work in progress. Ultimate and Celergo are continuing to build out those capabilities.

Should a company only consider Oracle, SAP and Workday, the leaders in this Magic Quadrant report?

Hanscome: Absolutely not. The Magic Quadrant is an overall rating that includes 15 different criteria, some of which may not be important to any given organization. We always advise Gartner clients to use the Magic Quadrant as a starting point based on their requirements and to do a lot more due diligence, including RFPs and scripted demonstrations, before they make a decision. It may turn out that a challenger or niche player in the quadrant will be the best fit, based on an organization's requirements.

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