Workday and Peakon. My take.
Workday agreed to acquire Peakon yesterday. There is an obvious logic to this deal. Engagement tools are an important part of HRTECH today, and the cycle of larger vendor absorbing edge innovators continues. Cue Disney circle of life music.
Engagement tools have done well under COVID-19, with the move to more remote work etc. Whereas 2 years ago, selling engagement tools involved painting visions of employee harmony and soothing music, even the most cynical CFO today gets that understanding employee sentiment has become critical.
Peakon has developed a remarkable dataset and team to manage this data. They have been super thoughtful with regards to GDPR and to the psychometric rigour in their collection, processing, curation and analytics methods.
Peakon’s D&I product, while at first glance, overlaps with Workday’s D&I efforts, is far better positioned for the needs of European organizations. Phil, Dan and team will bring a new perspective to Workday’s data and product strategy. It brings a welcome geographic diversity to Workday’s HCM and analytics thinking.
The more I think about this, the deal is more about strengthening and differentiating Workday’s analytics efforts than it is about a nifty engagement tool. Workday could have eventually built that themselves, as they did with recruitment. For some time I’ve been arguing that the long term differentiation for HRTECH vendors will hinge on the quality of the aggregate data and the insight they are able to derive from it. Stop me if you think you have heard this before.
How vendors use data (your data, and aggregated other data) in a secure, compliant form, to actually deliver real insights and processes, will be what determines which vendors win or lose. Buyers of software will need to get a lot smarter about evaluating vendor data strategies. Today buyers evaluate transactions and processes, but it is time to start evaluating data, data curation, and data use. Over time data will move to centre of the value proposition. It will mean software will be assessed in very different ways that is today, vendor R&D will shift from just building processes and transactions to acquiring, curating, safeguarding, refining and utilizing data.
Aneel, Workday’s CEO, has been on this data mission for a while, and Peakon plays very well into that. 700 million for the best HR data set in Europe sounds like a smart deal to me.
Workday will have some work to do to square this up with the power of one message, but I’ve felt for a while that has served its purpose.
This a successful exit for the European VCs that backed them, so it will further encourage investment over here, which is goodness. I remember Peakon’s launch at the event called now called Unleash. Time flies.
Disclosure. While I work with both Workday and Peakon, I wasn’t involved in the deal.
I'm a venture capitalist at Acadian Ventures, investing in the future of work.