As recession looms, Workday warns that legacy HR systems need updating

HR and financial management platform provider Workday reckons that despite the uncertain economic climate, now more than ever businesses will need to overhaul legacy systems to manage changes ahead.

The California-based SaaS biz talked up its services when last night rolling out results for its Q3 of fiscal 2023 ended 31 October, with revenue up 20.5 percent year-on-year to $1.6 billion, including a 22 percent uplift in subscriptions to $1.43 billion.

The business reported an operating loss of $26.3 million versus an operating profit of $23.9 million in the year-ago period as costs soared by nearly $60 million to $259.4 million.

Wins for the Human Capital Management area of the business included SGS and Texas Roadhouse, and go-lives ranged from the State of Oklahoma to Best Buy and the Canadian Tire Corporation. New logos for the Financial Management side of Workday included Cincinnati Children's Hospital Medical Center and Thomas Jefferson University.

The company said its cloud finance and HR services are "mission critical."

Co-CEO Chano Fernandez, talking on a conference call with analysts, put his best foot forward to calm any concerns for what is to come in 2023 and beyond.

He said: "Despite all the challenges that companies are facing today, they increasingly realize the present need to modernize their HR and financial systems. The executives that I speak with have different viewpoints on what the macroeconomic climate will look like in the year ahead but one thing they agree on is that change is constant and it's nearly impossible to navigate with legacy systems."

The tech industry, for example, is already going through some change management, with companies whose headcount ballooned during the pandemic to deal with rapidly rising demand for products and services now going through a correction.

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Many have paused hiring, including Cisco and more. Google is under pressure to reduce the workforce, which swelled by 51,000 individuals since the start of 2020, Amazon is laying off 10,000 workers, and Meta is forcing out 11,000. Depending on the scale of the downturn and depth of any recession, businesses across multiple industries may follow suit.

Fernandez admitted that the "environment remains uncertain," which has led to "increased scrutiny and the lengthening of certain sales cycles, particularly with the new set of opportunities. While we aren't immune to these and see signs that it will persist into next year, we are confident in our diverse pipeline."

Workday, like other so-called "born in the cloud" vendors, has sold to line-of-business folk and CFOs. The company recently ran its Rising event in the US and Sweden. Nearly 16,000 people attended in-person and virtually.

CEO Aneel Bhusri on the same conference call said its community is "growing and evolving" as "highlighted by the fact that this year's event has a large percentage of senior leaders, finance and IT attendees ever."

"One big takeaway from Rising is that our innovation story is resonating with customers as we evolve to be more open and connected. While we've traditionally targeted the offices of CHRO and CFO, we have placed increased focus recently on the office of the CIO, which presents another growth opportunity for us."

Given the positives listed by the big boss, presumably we won't be seeing any bloodletting from Workday in the near future. ®