By Mary Hayes Weier
While the cost and resource savings of software-as-a-service (SaaS) roll-outs versus onsite software implementations are widely known, what's often left out of the discussion are the benefits enterprise software users experience when moving from the traditional ERP software industry's "upgrade" model to the SaaS industry's "update" model.
Workday, a provider of cloud applications for Human Capital Management, Payroll, and Financial Management, delivers software updates to its entire customer base three times a year. These pre-scheduled updates are managed and executed by Workday over a single weekend of the customer's choosing during the update window, delivering new feature innovations and compliance requirements (such as compliance with new laws) at no additional cost. Customers are also provided with the flexibility to switch on only those features they need on their own timeline.
This is in stark contrast to the on-site software upgrade model, which delivers new innovations only every two or three years, and typically comes with a significant upgrade budget, unpredictable cost overruns, and a small army of consultants to implement the upgrade. The pain and cost of upgrades can be so great that many organizations do nothing and are left behind on old releases.
For McKee Foods, maker of Little Debbie® and Sunbelt® brand snacks, elimination of onsite software upgrades—which increasingly required the hiring of highly specialized and costly consultants—was a key motivator for moving from on-site systems for human resources and payroll to Workday SaaS. Mark Newsome, senior corporate HR manager for McKee Foods, says he was at first skeptical of the update model.
"I'll confess," Newsome says. "When we went live with Workday, I didn't really believe that we wouldn't have to pay for updates. So I saved money in my next year's budget to handle the three or four updates that I thought we would have in that first year. And I'm here to say that we have spent zero dollars on updates. Zero. And we spend three to five days testing the product three times a year. Three weeks versus nine months, zero dollars versus hundreds of thousands of dollars—that speaks for itself. There's your ROI."
Chris Byrne, VP of Update and Support Operations at Workday, worked for many years at a traditional software vendor, including managing its upgrade development team, before joining Workday in 2006. Workday was still a start-up at the time (Byrne was employee No. 45), and she joined because she shared the philosophy of Workday co-founders Dave Duffield and Aneel Bhusri (founder of PeopleSoft and a former PeopleSoft executive, respectively), who believed that the traditional software upgrade cycle was expensive, flawed, archaic, and most importantly, a poor option for customers.
"In the first year of Workday's existence, we all looked each other in the eyes and said, 'We're going to be great at this. We know what the problem is, and we're going to solve it,'" recalls Byrne. "Change is inevitable," Byrne continues. "In the old world of software, all a company could do was try to control changes that were required of a software upgrade. We decided that with the new SaaS model, the point should be to not try to control change, but control the impact. Our design goal and our process goal are around having no negative impact to the customer for change."
Also part of Workday's philosophy from its inception is that change can and should be good, especially when delivered in more digestible and relevant updates. "Certainly there is a big cost savings with updates vs. upgrades, but there's also the ability to benefit from new features more quickly and stay current with what's going on in the industry," says CTO Stan Swete, who leads technology strategy, direction, and execution at Workday. "The business landscape has changed and users have changed; people want access to innovation quickly that results in a quality experience, much like how they benefit from continuing innovations as consumers of Google and other online services and as users of mobile devices. At Workday, no one is left behind. There is one software code line that all customers are on, so all have access to the latest innovations in our updates at the same time."
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