It has been almost 18 months since we invested in Workato and first wrote about our thinking behind the business. With the announcement of their next round of financing, I thought I would revisit some of our thinking on what has worked, what has changed and what we see as the future. The pressures that enterprise organizations face is intense. The pace has accelerated – the rate of change has increased. Workato transforms business through intelligent automation and application integration – with an easy to use and quick time-to-value solution. The need for speed in the enterprise is real.
It’s only been 18 months, so it won’t be any major surprise that the ideas we believed in then continue to be true today. In fact – the trends are clearer. Obviously – this isn’t always the case when investing early but when it works, it works. There are some aspects of the business that are different as well – probably the biggest being a sharper focus on larger enterprise IT customers as compared to a singular focus on business users.
We are building our GTM strategy with customers now that we have found some market success. GTM strategy is not easy and is part of every enterprise journey. We focus a lot of our energy as a firm at this stage. My partner Tae Hea wrote a book on the subject which captures a lot of Storm’s perspective. Workato’s customers come from many different backgrounds from individuals empowered to make change to CIOs of F500 companies. Our focus on CIOs has increased as we have seen a tremendous amount of interest driven by senior IT executives looking to provide a digital transformation path for business units.
So what evolving role does Workato play in digital transformation? Applications need to have better integrations so that work can be automated. Vertical siloed enterprise applications are not the future. Success in the future is leveraging data. Box, Slack, Workday, ServiceNow, Salesforce – basically every major application has to be thinking strategically about integration and how they can fit into a company’s process automations. In some respects – how an application intelligently integrates into existing workflows is fundamental to an initial purchase decision. And it is probably a requirement for any expansion or upsell opportunity as it is a major value and productivity driver. This is why it makes a lot of sense that the three of the largest SaaS applications – Salesforce, ServiceNow and Workday have all invested in Workato along with the stellar venture team at Battery Ventures.
Workato has just released several features to help increase the speed of this digital transformation. Workato created Automation Editions which packages common solutions together leveraging the work of the community so that everything is not done from scratch and making it even easier and faster to find value. The company has also extended the AI/ML functionality of the product platform with RecipieIQ. There is no question that adding intelligence to applications is one of the hottest trends in enterprise SaaS as organizations look to software to not only improve workflow and drive efficiency but also to deliver business insight with data. RecipeIQ suggests and recommends actions, fields, and mapping based on the natural workflows of enterprises. This takes the guesswork out of understanding and implementing the right solutions and doing it in an automated way. Long gone are the days of hiring consultants and spending weeks (and months) scoping workflows and projects and then spending more months (and lots of dollars) trying get software to deliver on what was promised. This is the old professional service integration paradigm that is dying and gave technology such a bad name for many years – and putting technology out of reach for all but the richest companies. Workato has a great solution for large enterprises but as a result also works well for smaller companies that historically couldn’t afford the expense integrations that Mulesoft provided. We see this trend broadly across our portfolio where many technical solutions are now accessible to a broader range of users and different price points as these solutions become easier to deliver and stand up in real world environments. Everyone wants to be in control of their own destiny – Workato is part of this new generation of products and solutions that gives the power back to the people that actually are responsible for results.
Business accountability for their own IT is a trend that continues to grow as technology gets easier to implement and individuals are able to execute even what were once would have been complex IT projects. The role of IT and the CIO are critical still within the enterprise – the roles are just evolving. It seems that more and more, the role of the CIO is to help provide a complete solution for the enterprise – and part of that means enabling data to be accessible to everyone in the enterprise that needs access – not just one workgroup. It is more clear to us now that Workato helps to bridge this business/IT divide.
This post would not be complete without a comment on the Salesforce/Mulesoft acquisition. The acquisition is the biggest change at least in the market landscape since we invested. Salesforce closed the Mulesoft deal for $6.5B last May and was the largest acquisition in Salesforce’s history. Clearly – Salesforce sees integration as strategic and will likely use Mulesoft to further press into the enterprise – both on premise and the cloud. Mulesoft is an excellent company and there is a lot of logic to the combination. While Mulesoft has many similarities to Workato and the companies compete in accounts, the products are actually very different. Mulesoft says that connecting systems is the largest unsolved problem in IT. Companies spend $400B/year connecting systems. We couldn’t agree more – but would add that connecting systems is now just part of the solution. Intelligent automation is where we think the market is headed. In fact – Alison Close from IDC said automation of easily repeatable tasks is just table stakes. However – what has not changed with the acquisition is that the Mulesoft solution does not easily bridge the IT / business divide. In order for businesses to deliver on fast and smooth experiences for customers and employees, the focus has to be on speed, intelligence and ease of use. But Salesforce / Mulesoft will be a formidable competitor – they have unlimited capital and an enormous customer base.
The need for speed in digital transformation is our opportunity. Workato will need to operate at significant speed as well to maximize the opportunity in this enormous market that I think is even more interesting today as compared to when we invested. If you are part of an organization that is looking to leverage its applications and data in an easier, faster more intelligent way – I feel even more confident today you should put Workato on your list of potential solutions.