Surprise, Workday acquired Platfora

Workday (www.workday.com | NYSE:WDAY), the cloud software giant, announced a pending significant technology acquisition with Platfora. Announced on July 21st in a company blog post by Mike Frandsen, EVP Products, Support and Delivery at Workday, the acquisition should be completed during the third fiscal quarter which closes October 31st.

The second and third paragraphs of this blog post are intriguing, trying to justify the Platfora acquisition. In the financial press release issued August 24th, Platfora is mentioned but we didn’t find any dedicated PR for this strategic acquisition only the above mentioned blog post. If you’re proud of this or if an act is important, you should announce it as press coverage was pretty good even with limited push. So is this acquisition strategic or is it a bargain?

This move also opens some questions related to Platfora future product availability and installed base as Workday already announced that on-premise Platfora’s flavor will be no longer available, only the Cloud SaaS offering will integrated into the Workday solution. Wow, what a disastrous message delivered the end-users community. And Workday will obviously limit the capabilities of the product into Workday’s verticals. What about Platfora’s customers, they now have a real internal debate and will be forced to select another product to fill the void left by Platfora’s absence.

Prior to the acquisition, quite a few changes happened at Platfora. The company was founded by Ben Werther in 2011 who stepped down in 2015 and became executive chairman, while Jason Zintak, arrived from SAP in June 2015 as COO and President, was promoted to CEO to replace de facto Ben Werther. Does this move illustrate any genesis in the Platfora destiny initiated by investors ? As Platora was a private company, we didn’t have access to figures and this is just speculation.

One of the most compelling aspects of this acquisition is that Workday had previously invested in Datameer, a direct competitor to Platora, which really adds confusion to this acquisition. As a series D investor in Datameer - round of $19M - since December 2013, Workday’s decision to purchase Platfora rather than a similar company they had already invested in obviously opens the door for questions: why Workday purchased Platfora over Datameer and what does that signal for Datameer’s future. I have to mention that Workday also oemed Datameer since 2012 for their own solutions and this agreement reinforces the previous remark about investment. It seems that Wordkay really needs something having a hole in the product so they chose the technology. So they know Datameer product.

Was this move opportunistic because Platfora could have been in a fuzzy situation explained by the executives changes, confirmed by the low ratio of the acquisition amount versus total money raised (200 / 95.2 = 2.1 !! pretty low)? It could also trigger a potential wave of M&A targeting remaining players, but $200M seems a good bargain, confirming if needed that Workday has jumped into a good opportunity.

At that moment, it’s important also to elaborate on the 2 choices a company could make. In fact, it exists 2 flavors: end-to-end and best of breed approaches. End-to-end could have some advantages but seems to be rigid from sources to results with difficulties to integrate or add a new component in the chain. This is at the opposite of what enterprises expect as they wish agility to react to business changes. On the other hand, selecting a best of breed solution represents the maximum flexibility and the investment protection required for such decision. This market move could also illustrate that shift in favor of best of breed approaches.

To put things in perspective, it’s interesting to understand companies funding situation and manipulate some ratios. I invite you to do that with the the following table listing ClearStory Data, Datameer, Paxata, Platfora and Trifacta.

To conclude, this announcement raises some questions on Workday strategy for sure, Datameer, implicitly on direct competition, on the segment itself and create some doubts for end-users, real doubts...

We hope Workday Rising 2016 conference end of September will help understanding more in details the dots behind this move. Future will be interesting...