What the Workforce Software Acquisition could mean for SAP and the HR Tech Ecosystem

[00:00:01] Hey everyone, welcome to the podcast today. Just about to go to Success Connect but had some thoughts. It's just been a lot of these conversations that I've been having over the last couple weeks and I figured, you know, why not record a podcast episode?

[00:00:15] So in case you haven't heard, ADP has acquired Workforce Software and to many people in the industry this wasn't necessarily a huge surprise but at the same time there are definitely some ramifications, all right, because Workforce Software, one is an SAP solution extension which means SAP sells Workforce Software on their payroll in kind of a white-labeled manner.

[00:00:37] But one thing to recognize is this acquisition will definitely have an impact beyond SAP to the broader HR Tech market.

[00:00:47] So yes, while SAP does have a very close relationship with Workforce Software which is clear because they're a Solex and they've done a lot of business together, it's also important to realize this was not an exclusive relationship.

[00:01:01] And from what I've heard, there are many Oracle customers that use Workforce Software, Workday has a relationship with them and their customers use it too.

[00:01:11] Plus, it even changes the dynamics at ADP, right? And so my understanding is they did a lot of work with Kronos before and so now that's in all likelihood going to be going to their newly acquired Workforce Software product.

[00:01:26] So overall, I think this is a big deal that impacts a lot of players.

[00:01:32] Generally speaking, I think it was a pretty smart move by ADP and now gives them a very mature and capable workforce management, especially to their enterprise clients.

[00:01:43] So one of the reasons I'm even doing this podcast is I posted on LinkedIn about this topic and I actually got a lot of comments and separately, I just had a lot of people messaging me, asking me questions and reaching out about this.

[00:01:57] So I figured it'd be a good topic to discuss.

[00:01:59] And so I haven't done an episode in a while and I'm trying something a little different where I'm recording this by myself just to get my thoughts out there.

[00:02:07] So let me know what you think. And I'd love to hear anyone's comments and thoughts and feedback on this particular topic too.

[00:02:14] It is important to note, like I don't work at SAP anymore. I think people know that, but this is just my specific thoughts and definitely not anything official.

[00:02:22] Plus, I also don't have any inside information on this transaction or anything like that either. So yeah, just wanted to throw that out there.

[00:02:30] Additionally, if this is a topic of interest, I would definitely recommend you listen to the HR and Payroll 2.0 podcast from Pete Teliacos and Julia Fernandez, both who I have just a tremendous amount of respect for and they just know their stuff.

[00:02:43] So I'll share the link to that episode in the description too. It's certainly worth the time to take it in and listen to that if this is a topic of interest.

[00:02:51] So let's jump into it. It's important to remember that SAP and ADP are partners and in recent years they've even gotten closer than any time probably in the last 10 years, right?

[00:03:02] I've been pretty involved with that relationship and you know, seeing it firsthand when I was at SAP, but it's definitely a case where they're getting closer.

[00:03:11] So you can start seeing a joint strategy where before they were kind of on different courses previously. ADP focused more on building their own technology, but you know, I think that's evolving a little bit as well.

[00:03:23] So there's a couple of things to discuss in this podcast that keep coming up in my conversations. The first one is, well, should SAP have bought workforce software, right? I think people always ask that question.

[00:03:34] And I certainly have some thoughts on that. And my general answer to that as well, maybe if we were having this conversation five years ago, that might've made more sense.

[00:03:44] But the reality is that SAP has gone pretty far down the road with time tracking and they've done a really phenomenal job with that. I'll talk a little bit more about that.

[00:03:54] But when you look at time tracking, right? The fact that it's natively built and integrated with employee central, there's a huge value prop. So when I'm out there talking to clients and I'm able to demo employee central time tracking payroll together, it's just a huge value prop.

[00:04:08] So if they would have acquired a workforce software now, like it, it just would, would make their strategy a little more unclear. So, and then additionally, do you pay the full price and the premium if all you need is just scheduling functionality, right?

[00:04:24] And so you'd almost be overpaying for something. So, and then plus you would still have to figure out the whole cats thing and what SAP has to do there for their existing on-premise customers.

[00:04:37] So when people ask me, should SAP have bought them? I don't think it makes sense based upon their current portfolio, but it does open up some questions that where, where are we going to go from here?

[00:04:48] So there's two things I think I'll discuss now. The first one is what does this mean for existing customers? And then the innovation on the workforce software platform. And then the second one I'll talk about is what does this mean for really like sales go to market going forward, or what do I think it means?

[00:05:06] So let's start with the first one customer impact for those who basically signed up and bought workforce software via SAP from their solex agreement, where it's really a, the contract is with SAP.

[00:05:20] So my thoughts are in the short term, really, if you look at the rest of this year, I really do expect it to be business as usual. If there was some, some specific item on a roadmap you're really hoping for, you know, take a look at that and follow it closely, ask questions, have some conversations.

[00:05:36] Right. The reality is with these types of mergers, there are now some new people coming in and making decisions. It doesn't happen overnight, but it is important to remember, they don't have the same context or priorities as the existing group that's already been there.

[00:05:51] And so that's been focused on this. And so that's why in the midterm, I would expect some changes on the priority and some changes on the roadmap. So you'll see some shifts there.

[00:06:02] I do think it would be naive to think there's not going to be some long term impact, but I wouldn't panic either. And I think everything that you expected to going away, it wouldn't be like that. Right.

[00:06:16] I don't think the innovation on the platform is just going to completely stop being delivered. It would be expected that there'll be a focus on integration with ADP, right? They bought them, they bought them for a reason. And that will now take priority.

[00:06:30] Since ADP does have many different platforms. That doesn't just mean like a single product either. So the reality is customer expectations are different in partner tech versus native tech. And I think that investment that ADP has made will reflect that expectation on their roadmap so that they probably will invest in a tighter native integration with their existing HR platforms and payroll platforms as well.

[00:07:00] So, you know, however, with companies like this, they may reallocate people to focus on a specific area such as integration, but they still have platform integrations and with cloud technology, you can still expect improvements, right?

[00:07:15] And so they can't just completely ignore the demands of existing customers or at least I would hope not. And that's not what you would typically see.

[00:07:22] So just my thoughts on the short, mid and long term of the roadmap for people that are already using workforce software today with SAP.

[00:07:32] Next, let's talk about how this shifts the go to market and sales going forward at SAP, right? I think a lot of the conversations that people are bringing up to me are more around that of like, hey, what's the dynamic here?

[00:07:45] So, you know, as I kind of talked a little bit about SAP has already been down the road to build their native capabilities.

[00:07:51] And they've even now begun to address some of the cash requirements. So if anything, I think this is an opportunity for them to speed that up even further, right?

[00:08:01] I truly believe time tracking has already become more capable than what most people give credit for.

[00:08:08] I've seen people go with workforce software and sales cycles just because it's the safe choice where you know it can do it.

[00:08:15] Whereas with time tracking, it's almost like you got to prove it and people are kind of scared of the gotchas or what do I not know?

[00:08:21] So I do think with this now happening, it will force people to do a little more due diligence and positioning time tracking more frequently and really vetting it as much too, which I think it will bet just fine when you actually go in and look at it.

[00:08:37] And that's been my experience too and some of the opportunities that I've worked on.

[00:08:42] I do think this also opens up opportunities for other SAP partner apps within the workforce management area, right?

[00:08:50] And so there are many app store. When you go to the SAP store, you see companies like Makeshift, WorkAxel, Quinix.

[00:08:57] Those are names I've heard come up and some of the partners, they really do have great functionality, right?

[00:09:02] Like I've seen it. I believe Makeshift can complement time tracking and they do a great job partnering on just the scheduling piece as an example where that wasn't always true with workforce software.

[00:09:12] They kind of wanted the time tracking and didn't just want the scheduling piece of time tracking, even if time tracking was a fit.

[00:09:21] So I think that's one of those areas and Adam's great too.

[00:09:24] So in the short term, I think it'll be business as usual and SAP will continue to sell workforce software.

[00:09:31] However, like given the growth and expanding capabilities of time tracking, I do expect there to be more distance in that relationship kind of in the mid to long term.

[00:09:42] You could argue that was always eventually going to be the case.

[00:09:46] But if anything, I think this speeds that up and time tracking will be ready for complex enterprise use cases sooner than people might realize.

[00:09:55] And inevitably, more people will position it, more people will learn the capabilities and it'll grow.

[00:10:01] There's a great video from Brandon Toomes on this fellow confidant and just expert, great guy.

[00:10:07] And so he put a video, I'll share that in the description of this podcast as well.

[00:10:12] So definitely recommend that.

[00:10:14] And, you know, it'll be a good one to watch.

[00:10:18] People do also need to remember that SAP is very capable from a workforce management standpoint.

[00:10:24] And as a time vendor overall, right?

[00:10:27] They've been very, very successful in this area with their on-premise solution.

[00:10:30] They still have thousands of customers that use it.

[00:10:33] And they're listening to those customers in terms of their design and requirements.

[00:10:37] So that's why time tracking has more capabilities than what people might think.

[00:10:42] And so they'll know what to build.

[00:10:44] I think the big open question with this whole thing is how will they handle scheduling?

[00:10:49] So I've heard a couple things under NDA as part of the confidant program.

[00:10:53] But I think the strategy is evolving too.

[00:10:55] So I'm really interested to see what's announced in this area at Success Connect and afterwards.

[00:11:01] And whether the strategy is to continue to leverage partners.

[00:11:05] Or if SAP might make an incremental or additional investment, given the change in strategy, for them to build them out themselves and what that will look like.

[00:11:16] So that'll be the interesting thing.

[00:11:18] I have had Franz on my podcast.

[00:11:20] And I know he's spoken and highlighted the capabilities in digital manufacturing and how that actually has scheduling capabilities.

[00:11:27] I know there's a blog on this topic.

[00:11:29] But when I look at it and when I talk to people about this, that's not going to cut it for most industries.

[00:11:36] Definitely not if it's branded that way.

[00:11:38] No one in retail wants to buy software called digital manufacturing.

[00:11:41] I'm sure there's an industry flavor there given the branding and built for that industry.

[00:11:47] Not to say it couldn't be generally applicable or maybe that's your starting point or something like that.

[00:11:51] I don't know.

[00:11:52] But I think there's something there at least.

[00:11:56] Lastly, a huge shout out to the time team.

[00:11:59] So during my time at SAP, I had the great honor of working with them.

[00:12:03] And they really are a shining light at SAP.

[00:12:05] They've delivered so much functionality and innovation over the last few years.

[00:12:09] It's fantastic.

[00:12:10] So shout out to Franz Smulders, Todd Acevedo.

[00:12:14] Both of them have been guests on my podcast.

[00:12:16] But also to others, Daniela Lange, Daniela Gerke.

[00:12:18] Along with Volker, Volker Rooff, who writes some of the best blogs I've ever in my entire career seen from a product management.

[00:12:26] So huge shout out to them.

[00:12:27] And it'll be interesting to see.

[00:12:29] So I would love to get your comments and thoughts on this topic.

[00:12:32] Maybe I'll do another episode on this topic after Success Connect, depending upon what comes out of theirs.

[00:12:37] Anyways, thanks for listening and have a good one.