Hi, it's Roman from Partner Insight. Welcome to my weekly newsletter, where I deconstruct winning Cloud GTM strategies and the latest trends in the rapidly evolving world of cloud marketplaces. This week, we're turning the spotlight on Workday's partnership transformation strategy to drive revenue growth.
You will also discover why top cloud leaders are prioritizing automation in their GTM strategies. Finally, you'll learn about our insightful, free event on March 26, and how to win a spot in Cohort 5 of our course.
Let's dive in.
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Unlocking Workday’s Partnership Potential
Why has Workday, a leading SaaS company with $7.3Bn in annual revenue and a staggering $21 billion revenue backlog, made Partner Transformation its top 5 strategic priority? What was behind this pivot, and how is it shaping Workday's success?
Upon Carl Eschenbach becoming its co-CEO in December 2022, Workday reshaped its approach to partnerships in an effort to unlock growth.
Previously the company’s ecosystem playbook was centered on collaborating with 19.5K service consultants who deliver Workday products to customers. Now the company emphasizes a joint go-to-market and co-selling with partners, including hyperscalers like AWS.
This shift contributed to a profitable FY24, reversing a previous $222M loss in FY23, amid continued momentum from customer wins and the company's international expansion.
In FY24, Workday reported a revenue of $7.26 billion, marking a 17% YoY growth. Over the past year, Workday's stock has rebounded from its post-pandemic slump to reach new highs, demonstrating its sustained growth.
Looking back at FY24, Carl Eschenbach, its CEO, underscores partners among the main drivers of Workday progress:
“Over the course of the last year, we've made key investments across our leadership team, go-to-market and partner ecosystem, and our platform, positioning us to drive enduring growth in FY '25 and beyond.”
Highlighting this strategic partner momentum, he shared,
“our ecosystem…now includes more than 200 partners that have been onboarded to refer new sales leads and co-sell with us. We launched this pilot program last May, and we've seen momentum building throughout the year with a nice uptick in Q4 partner-driven pipeline generation…. the partners are really starting to bring us new opportunities and we're leveraging them for co-innovation.”
Let’s look at key aspects of Workday’s partner transformation and their partner-led GTM strategy.
Redefining Partnership Strategy
Workday at a Glance
Since its founding in 2005, Workday has been offering SaaS and solutions for human capital management, financial management, and ERP. Its software helps companies organize and manage their employee data (including payroll, benefits), financials, and other aspects of day-to-day operations. It stands out for its ease of use, quick implementation, real-time reporting, and continuous innovations, which now include AI-driven tools.
In 2023 Workday recognized the significant untapped potential in joint go-to-market strategies with partners. At that time Workday’s partners sourced less than 3% and influenced less than 25% of their Annual Contract Value (ACV), lagging behind the industry standards for SaaS companies at Workday’s level of maturity.
Responding to this realization, Workday initiated a comprehensive partner transformation program in May 2023. The goal was to enhance collaboration with partners through co-selling and referrals, setting the following targets:
100+ Referral Partners and 15+ Co-Sell Partners by the end of FY24
Forge Innovation Partnerships with industry leaders like AWS, Accenture, ADP, and Alight. In addition to driving co-innovation on the platform.
Strengthen the services ecosystem by driving more deployments to partners.
Leveraging Go-To-Market Partners for Growth
By the Financial Analyst Day in September 2023, this initiative became part of Workday's three-year growth strategy, placing partnerships alongside AI as a top 5 priority for sustained growth.
At the same time, Workday introduced its own marketplace, featuring 300 products to offer vetted AI solutions to its customers.
Carl Eschenbach, Workday's CEO, emphasized the potential to turn partnerships into a GTM engine at the Analyst Day:
“You can just walk through this conference and you'll see every big partner in the world, every big global system integrator, here sponsoring the conference. But really, if you look at what they've done, they've built massive businesses on deploying Workday for the 18 years of our existence. And now, we're starting to work with them to help us go-to-market. So that they're not only building big businesses around, you know, the Workday practice, but now we're giving referral fees, we're doing co-sale, we're doing resell – we're partnering with people like AWS, right, and selling to the marketplace. So, we are absolutely looking to expand the partner ecosystem, and not just for partner sake, but also for go-to-market operating leverage. And that'll take a while for us to get right, it'll take a while for us to get, you know, uh, the momentum we want to augment what we're doing in our direct side. But I will tell you, the early signs are quite exciting.”
Deepening Collaborations to Drive Sales and Innovation
The results of this strategic partnership pivot began to show, particularly with AWS, where Workday promptly witnessed $70 million in closed contract value.
“Usually, we're selling in most cases selling side-by-side, but then taking that all the way through delivery into the project outcome. And we're seeing really good early signs of that. Already with the AWS announcement that we did earlier this year, we've seen $70 million of total contract value created and closed so far with this partnership, and the pipeline is building.” - highlighted Doug Robinson, Workday's Co-President in September.
Beyond sales, partnerships with hyperscalers became important co-innovation relationships, enhancing Workday's capabilities, especially in generative AI. Aneel Bhusri, Workdays Co-Founder and Chair underscored at the same conference:
“Carl mentioned AWS and partners. I do think they're really, really important co-innovation partners too…. As we move more of the workloads from the private cloud to the public cloud, we're able to leverage their capabilities, and we have great relationships with both of those companies [AWS and Google Cloud]. I was on the stage for Google Next, and they're really working with us to do some very cool things on Gen AI.”
Exceeding Partner Program Goals
By the end of FY24 in Jan 2024, Workday had beaten the initial targets of its partner program, enlisting over 200 partners for referrals and co-selling. It also started to see an uptick in partner-driven pipeline generation in Q4.
The company's performance serves as a testament to the efficiency of this strategy:
Total revenues in FY24 were $7.3 billion, an increase of 17% from FY23.
Operating income in FY24 was $183 million vs an operating loss of $222 million in FY23.
On January 31, 2024 Total subscription revenue backlog was $20.9 billion, up 27% from the year ago.
The company is forecasted a continued growth at the same rate, while expanding its operating margins, aiming for 24.5% in FY '25.
This strategy not only enhanced Workday's performance but also showcased the potential of growth via joint GTM with partners and cloud hyperscalers.
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Why 9 of 10 Cloud Leaders rank automation among their top priorities in GTM strategy?
Did you know that 9 of 10 Cloud Leaders rank automation among their 🔝 top priorities in GTM strategy?To explain this in-depth, I'm delighted to welcome Trunal Bhanse, CEO of Clazar to our Co-Sell Panel at the upcoming event "How to Unlock Next-Gen Cloud GTM to Co-Sell, Partner, and Scale" on March 26th.
Trunal brings over a decade of top-notch experience as an engineering leader across Confluent, Airbnb and LinkedIn.
At Confluent, Trunal managed a team of engineers who built a world-class platform for cloud marketplaces and billing. Having witnessed the complexity first-hand, he launched Clazar to democratize Cloud GTM access for other businesses.
Here is 3 key reasons from Trunal’s recent course session - a sneak peek of what’s coming in our event panel on Building Successful Co-Sell Motion with Clouds:
🔄 Bi-directional Sync is Key
The core of co-selling is the CRM and Partner Portal sync. This is the most important thing that every single one of us needs to make sure is kept in sync. This is how the hyperscalers rate the partnership.
This is how the AEs on the other side are achieving their quotas, so it's a very critical system...I would recommend implementing a bidirectional sync. That way, your team is only working on one system, and the changes are being automatically propagated to the other system without them having to worry about anything.
🔔 Alerts are essential to Stay on Top of Marketplace Events
You have to be on top of the marketplace events with alerts in your internal systems, where all of these marketplaces will keep on sending you events as your buyer is going through the journey of purchase - like contact upgraded, contact added, all these types of things.
You can get an email as well, but what we've seen is an automation in either Slack, Teams or using webhooks and going directly deeper into your ecosystem is very, very helpful.
📊 Analytics from Day One
Analytics, it's what needed on day 1. Because the analytics shows:
who's buying, who's visiting, how much are they buying
how much am I paying to the marketplaces as a cut
how much of it is already in the bank, how much of it is scheduled for future payments - all of that visibility needs to be at the tip of your fingers.
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📈 Accelerate your Growth in Cloud Marketplaces
Transform your marketplace strategy with first-hand insights from Cloud GTM leaders in our 5-week cohort course. Learn in a community of great alliance leaders. Join 100+ alums from companies like GitLab, Darktrace, IDC and others.
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