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Workday acquires Peakon for $700 million
Workday is acquiring employee feedback software vendor Peakon. Experts described the timing as a proverbial shot across SAP's bow.
Workday Inc. is acquiring Peakon ApS, an employee feedback software vendor, for $700 million. The HCM darling made the announcement Thursday with dramatic timing.
Peakon, based in Copenhagen, Denmark, competes with Qualtrics International Inc. in the employee feedback software market. On Thursday, Qualtrics made news of its own -- announcing the pricing of its initial public offering of 51 million shares of its stock at $30 per share.
Workday didn't mention Qualtrics in its announcement, but Josh Bersin, an independent analyst and head of the Josh Bersin Academy, immediately noted the timing, saying the acquisition has "massive implications" for the employee feedback software market.
Once the deal with Peakon closes, Bersin expects Workday will introduce its own set of embedded tools based on Peakon technology.
"That means 3,500-plus Workday customers will be reluctant to buy third-party tools, closing that market to other vendors over time," Bersin said.
This market covers engagement or employee experience, as well as employee voice. Broadly, the tools attempt to discover what employees are thinking as well as how they feel and turn the data into something that managers can act on.
A clear message
The timing of the announcement was a clear message to Qualtrics, said Nucleus Research analyst Evelyn McMullen. In effect, Workday is saying: "We're here, too -- and we are going to continue to build out and stay on SAP's toes."
SAP acquired Qualtrics for $8 billion in 2018 but, two years later, announced that it would spin out the employee feedback software vendor in an IPO. The two firms said they would continue a tight product development relationship and SAP plans to remain Qualtrics' majority shareholder.
In the announcement, Workday said it will combine some of its capabilities with Peakon.
"The combination will merge intelligent technology from Peakon that determines and distributes surveys and information to the right person at the right time, with the comprehensive employee insight in Workday, to help leaders continually discover and respond to evolving employee feelings, needs, and behaviors," Workday said in a statement.
"Peakon is on the cutting edge of helping organizations turn employee insights into more connected teams and stronger organizations," Aneel Bhusri, Workday's co-CEO, said in the announcement.
Workday cited the pandemic as one reason why employee feedback tools are becoming more critical, something Nucleus' McMullen believes as well. With so many people working from home, "you can't get that temperature check that you would get in the office, so you're going to need to have solutions to do that for you," she said.