Analyst Lisa Rowan at market research company IDC estimated that the ERP market in 2011 was a roughly $39 billion market, divided very roughly into Human Capital Management and Financial Accounting umbrellas, with other functions like Payroll Accounting, Procurement, Order Management, Project Management and so on dovetails off of these.
Workday is focused primarily on the HCM and Financial Accounting markets, which are estimated to be worth about $26 billion in combined revenue opportunity in 2013 (with about $9 billion for HCM). SAP and Oracle are the established players in the market, with an estimated combined 39% share of HCM and 23% of the Financial Accounting markets, and smaller players like Kronos,Ultimate (Nasdaq:ULTI), Sage Group (Nasdaq:SGPYY), and Intuit (Nasdaq:INTU) factoring into the markets as well. At present, Workday holds somewhere around 1% share in these combined markets, but the 61% revenue growth and 31% billings growth Workday reported for its fiscal first quarter are well ahead of the underlying market growth rates, and the company is quickly gaining share.
Longer term, there are plenty of adjacent markets for Workday to address – areas like Payroll Accounting (where Oracle has less of a presence), Procurement, and Project/Portfolio Management (a market worth an estimated $4 billion (2013) and where Microsoft (Nasdaq:MSFT) holds sizable share). Were Workday to grab 5% of the ERP market over the next five years, it would likely translate into around $3 billion of annual revenue (versus $274 million in the last fiscal year).
