Workday responds to workforce changes with Vndly acquisition

Workday adds extended workforce management capability to its HCM platform with its acquisition of Vndly. Increasing use of contingent labor and competition motivated the buy.

Workday is closing out 2021 the same way it began it -- with a significant acquisition to fill a need in its HCM platform. It's acquiring Vndly Inc., which makes a platform to help manage non-employee workers, for $510 million.

Vndly's system covers a range of external workforce needs, from management of outsourced contractors to individual contingent workers. It helps to give a business a complete view of its workforce, both employee and non-employee. 

The broad trend is for vendor management systems (VMSes) to combine contracting systems, which are mainly managed by IT and procurement, with contingent labor, often controlled by HR. 

In August, Vndly achieved integration with Workday's HCM platform. Workday plans to complete the acquisition in its fiscal fourth quarter, which ends Jan. 31, 2022. 

Workday has invested in a similar platform, Utmost Software Inc., which is also deeply integrated in its platform. 

The Vndly acquisition puts Workday in an improved position against its key rival SAP, said Arkadev Basak, vice president at Everest Group, who leads the research firm's talent practice. SAP has an extensive VMS system, Fieldglass.

Some other major competitors in the VMS market include Beeline Inc., in Jacksonville, Fla., and Pro Unlimited Inc., in San Francisco.

Broader workforce trends

"Who wins the race will depend upon a number of factors, especially the level of integration," Basak said. That includes an ability to have a unified system of record to manage a company's entire workforce and spending, he said. 

Who wins the race will depend upon a number of factors, especially the level of integration.
Arkadev BasakVice president, Everest Group

The integration of non-employee workforce management with HCM systems has been underway for a while. In 2018, for instance, ADP acquired WorkMarket, an extended workforce management platform, Holger Mueller, an analyst at Constellation Research, noted.

At last week's third-quarter earnings call with analysts, Aneel Bhusri, co-founder and co-CEO at Workday, said, "One trend that has been accelerated by the demands of the pandemic is the future of work, which requires new ways of thinking about workforce composition and how to manage different types of workers." 

Mueller didn't characterize Workday's planned acquisition of Vndly as a response to the pandemic, but said that he sees it more as a shift to ongoing changes in the market and the rise of interest in VMS tools. 

In January, Workday acquired Peakon ApS, an employee feedback software system. It paid $700 million for the Demark-based firm.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget. He's worked for more than two decades as an enterprise IT reporter.

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