While Salesforce and Workday tried to focus their recent partnership on their new AI employee service agent, their ultimate goal is to enhance their competitive positions against SAP and Oracle in the new world of data-intensive digital business requiring full access to end-to-end enterprise data.
No doubt lots of Workday’s customers and Salesforce’s customers will evaluate and adopt their jointly developed AI-powered agent for employees, which ties the two companies together in a number of strategic ways.
“By integrating our platforms, datasets, and powerful AI capabilities,” said Workday CEO Carl Eschenbach in a joint press release, “Salesforce and Workday are empowering our customers to deliver unmatched AI-powered employee experiences that ultimately lead to happier customers and drive unprecedented business value.” (To get a clear and quick overview of the new employee agent from the two enterprise-apps powerhouses, please watch this recent Cloud Wars analysis by my colleague Kieron Allen.)
Now, who in his or her right mind would be against, as Eschenbach put it, “unmatched AI-powered employee experiences that ultimately lead to happier customers and drive unprecedented business value”? Certainly not your humble correspondent — I’m all for it.
But.
It we step back and look at the strategic thinking Salesforce and Workday have undertaken, and the carefully crafted two-way collaborations they have forged, I think it becomes very clear that Eschenbach and Salesforce CEO Marc Benioff are aiming at something much, much bigger than an employee-service agent.
And the way I see it, that larger aim is centered squarely on giving each company access to the other’s data and AI capabilities extending well beyond what each can currently deliver on its own. Because while both Salesforce and Workday have huge footprints in their respective market segments — CRM for Salesforce, and HCM and Financials for Workday — neither can match the breadth and/or depth of what both SAP and Oracle have with their end-to-end portfolios spanning CX, HCM, and ERP including Financials.
That competitive dynamic has been in place for a number of years — but it’s strategic import has become a top priority for Benioff and Eschenbach because, as business leaders map out their AI strategies for the next several years, access to end-to-end enterprise data is essential for driving optimal business outcomes.
On their own, neither Salesforce nor Workday can address that breadth — but in partnership, they’re able to cover much more ground than either could individually.
Ask Cloud Wars AI Agent about this analysis
The Workday-Salesforce alliance also underscores a fundamental shift taking place across the enterprise-applications business as that surging demand for data — the raw-material brainpower of AI — is driving the evolution of traditional apps suppliers to data companies and platform providers.
Two months ago, I dug into this profound evolution in an analysis headlined “SAP vs. Salesforce: Battle for Supremacy Shifts from Apps and AI to Data.” Here’s an excerpt from that piece that frames this powerful shift:
As the world’s two largest enterprise-applications companies invest tens of billions of dollars to lead the AI Revolution, the primary factors are shaping up to be not just apps and AI but the data in SAP and Salesforce systems that’s indispensable for great customer outcomes.
Yes, brilliant AI-powered applications are and will be essential; yes, highly intelligent and elegantly deployed copilots are and will be essential; yes, the right blend of organic models and partners models is and will be essential; and yes, new pricing and packaging approaches are and will be essential.
But the more I hear about the power and potential of the AI Revolution, and the more I hear about the ingredients required to create not just dazzling AI capabilities but also — and more importantly — superb business outcomes for customers, the more I believe that while AI has become the new royalty, data is the indispensable power behind the throne.
And so it has come to pass that for the past few quarters Marc Benioff has been spinning a new perspective on his company that makes Salesforce sound like it is and has always been and always will be a data company, and a data company that just so happens to have some applicatio —WHOOPS! — I mean “platforms” (Benioff now calls his iconic apps clouds “platforms”).
Not coincidentally, Workday has also adopted the “platform” description of itself, despite the fact that its applications and related solutions certainly account for at least 90% of its roughly $8 billion in annual revenue and probably more than 95%.
Here’s how Workday describes itself in the joint press release issued by the two companies about their partnership and the launch of the AI employee-service agent — and you’ll see that in explaining what Workday does and the value it imparts to customers and partners, it never uses the word “applications” but it does use the word “platform” twice:
Workday is a leading enterprise platform that helps organizations manage their most important assets — their people and money. The Workday platform is built with AI at the core to help customers elevate people, supercharge work, and move their business forever forward. Workday is used by more than 10,500 organizations around the world and across industries — from medium-sized businesses to more than 60% of the Fortune 500.
The Oracle Perspective
To gain some outside perspective on the Workday/Salesforce partnership, I asked Steve Miranda, Oracle executive vice president of applications development, what he thinks the alliance means.
“We see this news as a significant validation of our strategy,” Miranda said via email. “The data requirements of AI are well-suited to a suite of applications on a common data model, as opposed to a patchwork of disparate apps that require numerous integrations.”
To extract the full value from their AI investments, Miranda said, customers must be able to create “connected workflows that span the entire business.” That is why, Miranda said, Oracle has very purposefully built its Oracle Fusion Applications Suite to span the entire range of customer operations, enabling them to “enhance reporting, insights, and business processes.”
Miranda emphasized repeatedly the power and value of “end-to-end solutions” in providing essential data that fuels modern AI initiatives.
“Oracle has always believed in providing customers with end-to-end solutions and the most comprehensive suite of cloud applications and analytics for every facet of enterprise, including finance, HR, supply chain, and manufacturing, as well as sales, marketing, and service,” Miranda said.
“For decades, we’ve been helping customers manage all their business data in one place.”
Final Thought
Nobody wants to get caught bringing a knife to a gunfight, and no Cloud Wars Top 10 CEO wants to be caught bringing “traditional” products and services to the GenAI Revolution.
Recall that Workday CEO Eschenbach described the partnership as going far beyond joint-development efforts and extending all the way to “integrating our platforms, datasets, and powerful AI capabilities” — that’s a pretty deeply entangled alliance and shows a deep-seated desire to exploit those integrations in a variety of ways.
So I would bet a whole lot of money that the new Salesforce/Workday partnership will have far less to do with employee-service agents than it does with new collaborative efforts to try to convince customers that the Salesforce/Workday partnership can provide those customers with the same breadth and depth of end-to-end data as SAP and Oracle can offer.
Which means we can chalk this up as yet another big victory for customers, demonstrating yet again that the biggest winners in the Cloud Wars are always — always — the customers who reap the prodigious fruits of intense and world-class competition.
