Events

In early March, I attended Workday’s annual Innovation Summit, rebranded to be the AI (artificial intelligence) and ML (machine learning) Innovation Summit, at Cavallo Point Lodge in Sausalito, CA (Twitter hashtag: #WDAYSUMMIT). Between the event and Workday’s recent announcements of FY23 results and executive changes, here is the TL;DR of this event:

• Delivering strong growth: At last year’s summit, Workday stated they would attain 20% YOY growth until they hit $10 billion in revenue. True to its word, Workday hit total 2023 revenue of $6.22 billion, representing 21% YOY growth, with subscription revenues up 22.5%. As part of this, Workday surpassed the 10,000-customer mark and added new HCM customers such as Allstate, Mercedes Benz, and Cracker Barrel. Workday also focused more on the retail industry (and thus frontline workers), with more than 50% of retail organizations in the Fortune 500 selecting Workday.
• Doubling down on AI and ML: Beginning in 2014, Workday began investing in its AI and ML capabilities, and those investments are increasingly coming to fruition. Throughout the last few years, Workday has woven those capabilities throughout its platform, so AI and ML are used naturally throughout its applications (as opposed to being layered on top). This shows up notably in Workday’s Skills Cloud, as well as many of its other solutions, such as Recruiting, Workforce Optimization and Scheduling, VNDLY, and other applications. This focus on innovation will undoubtedly continue, as Sayan Chakraborty, who is an expert in AI and also leads the Product and Technology Organization, was recently announced as co-president.
• Changing leadership and evolving approaches: An unspoken theme of the Summit was the changing leadership and approach at Workday. Right before Christmas 2022, Workday announced the appointment of Carl Eschenbach to Co-CEO. Eschenbach, a 5-year member of Workday’s Board, was a partner at VC-firm Sequoia Capital and an operator at VMWare. Workday has also brought on other external executives in the last ~6 months, such as Angelique de Vries as President of EMEA (from Salesforce) and Rani Johnson as CIO (from Cloud Software Group). Executive changes always make you ask, “why?”. Our hypothesis is that these changes reflect a belief that Workday’s leadership and approach need to change to achieve its audacious growth goals.

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Last week, I had the opportunity to attend Qualtrics’ X4 conference (check out #qualtricsx4 on Twitter for the play-by-play). While the conference was excellent (more on it below), for me much of it was overshadowed by the whispered-about (but not directly addressed) news that Qualtrics is being taken private by Silver Lake and CPP Investments, for $12.5 billion.

For those of you who haven’t followed along, SAP bought Qualtrics in 2019 for $8 billion in cash only to then raise $27.3 billion of Class A stock in an IPO in 2021. The cool thing about that transaction was that SAP maintained financial control by owning all of Qualtrics’ Class B stock, which had 10 votes for every stock, compared to Class A stock, which had only 1 vote. This new Silver Lake / CPP deal, which sells all of Qualtrics’ stock, puts a further $12.5 billion in SAP’s pockets. Talk about a sweet arrangement for SAP.

What this also means is that Qualtrics is no longer owned by SAP. The press release states, “Qualtrics and SAP intend to maintain a go-to-market and technology partnership to both service existing joint customers and target new customer opportunities.” And I’m sure they will, given the incredible customer growth Qualtrics experienced during SAP’s ownership (from ~10,000 customers to ~19,000 customers).

But what this also means is that Qualtrics is now far freer to partner with other large HRIS / ERP / other business-critical firms than it was before (I’m looking at you, Oracle and ServiceNow (Workday already has Peakon, so that’s likely less of an option)). Combining this fact with some of the technology updates announced at the show, you can see how Qualtrics will increasingly be a force to be reckoned with.

With that background, let’s turn to what was discussed at the show…

Held for the first time in 4 years, X4 brought together approximately 10,000 people, around a conference theme of “Let’s Make Work More Human.” This year’s version of X4 included keynoters who are household names, with this year’s line-up including folks like Malala Yousafzi, Mark Rober, Chip & Joanna Gaines, Martha Stewart, and Shaun White.

Some of the major announcements from the conference included:

• Customer growth: Qualtrics now counts more than 19,000 brands as customers, compared to 7,000 in 2017 (when it launched the concept of “XM”, Experience Management)
• Clearer customer types and product suites: Qualtrics is now offering purpose-built suites for three customer segments. These suites are designed to be easy to use, easy to deploy, and provide quick time to value. This allows Qualtrics to have a much cleaner go-to-market motion, with a single price for each suite. The primary customer segments and XM products are: :
  • Research strategists | Products: Brand, UX, Research
  • People teams | Products: Engage, Analytics, Lifecycle
  • Customer-facing frontline leaders | Products: Digital, Care, Locations
• Cross product-suites: In addition, these suites allow Qualtrics to introduce the concept of Cross XM, which is the combination of the employee experience (EX) and customer experience (CX) suites. The power of this combination is the ability to connect better EX to improved CX, which tends to result in better business outcomes.

Throughout the event, the Qualtrics teams shared a variety of case studies that illustrated the connection between EX and CX (see Figure 1 and Figure 2). In addition, on the main stage, they shared a case study from Adidas, where they found that, in their stores, when employees indicated they had good training, regular feedback, and clear expectations, the store experienced 2x the revenue per transaction.

Figure 1: Qualtrics’ Customer Case Studies, page 1 | Source: Qualtrics, 2023.

Figure 2: Qualtrics’ Customer Case Studies, page 2 | Source: Qualtrics, 2023.

One of the most interesting presentations for the analysts and press was on how Qualtrics is approaching AI, which was led by Ellen Loeshelle, Director of Product Management. When discussing AI at Qualtrics, she mentioned that what she and her team are attempting to do is to bring together data, domain expertise, and data science pragmatism.

That last phrase – data science pragmatism – is the one that jumped out at me. We are hearing a lot about AI as a bright and shiny object, but she was very clear on what they want AI to do:

• “To streamline development: Tools which make it easier to develop new capabilities.
• To understand deeper: Tools which help to understand data more humanly
• To accelerate insights: Tools which decrease time to insights.
• To strengthen decision-making: Tools which give more confidence in making the right decision
• To monetize data assets: Tools which help us create value from our overall data assets”

Anyone can take these principles and use them to help guide their own AI product development.

In our analyst session, Brad Anderson, President of Product and Engineering, spent a fair amount of time talking about the implications of the 2021 acquisition of the conversational analytics company Clarabridge, which specialized in “indirect sources such as social media, emails, support calls, chats and product reviews.” Specifically, he called out that this capability is being built into the entire XM suite of products, which obviously includes XM for people leaders. Between that discussion and the announcement of “A new feature within Manager Assist gives managers weekly insights to improve employees’ experiences, without having to rely on annual or quarterly engagement surveys alone,” it is clear that Qualtrics will be going much deeper into “continuous” listening in the future.

Finally, to wrap us up… for those of you who read this blog in the hope of some reflection on all those household name keynoters, I thought I’d do a quick lightning round of questions (a la our podcast):

• Biggest surprise: A toss-up between Martha Stewart (that woman knows a thing or two about brand! And is waaaay funnier than you’d expect!) and Mark Rober (who knew he wasn’t just a bro pranking Amazon package stealers?!)
• Biggest takeaway for my own development: “Lean into who you are,” as said by Olympian Shaun White, when talking about his hair and style
• Most inspirational: Malala (no explanation needed)
• Most fun moment: Dancing with Mr. Dance or sitting in a new Fisker Ocean
• Best quote: Malala: "Always take a pause and think about how you are influencing and impacting the world around you. Make sure to make every decision with full responsibility and ensure it benefits and serves everyone fairly and equally. Do not take the role you have for granted. Take the opportunity you have to bring fairness and equity into the world."