HFS Highlight: Cognizant enters Workday services market by acquiring Collaborative Solutions

Despite the COVID crisis, Cognizant continues to make significant investments in 2020 – with a bold move to gain a stronger talent base in the high growth Workday Services marketplace.  

At the start of May Cognizant agreed to acquire Workday’s longest-tenured partner, Collaborative Solutions.  The transaction is expected to close in the second quarter of 2020. This acquisition underlines Cognizant’s commitment to invest in high growth cloud–enabled services. This comes hot on the heels of acquisitions in the Salesforce services market, which we outlined here and here, Cognizant is pursuing the SaaS services market by acquiring Collaborative Solutions, a very reputable Workday services partner. As Cognizant CEO, Brian Humphries pointed out, Cognizant is “executing our strategy to win in several strategic digital battlegrounds, one of which is cloud.” 

Collaborative Solutions: Cognizant has bought one of the best in the market 

Collaborative Solutions is a privately-held consultancy, headquartered in the US. It operates in North America, Europe, Australia, and New Zealand, and has more than 1,000 employees worldwide. Clients include Fortune 500 companies, medium-sized businesses, and education and government institutions, ranging in size from 1,000 to 200,000 employees. 

HFS has been tracking Collaborative Solutions since 2015. Don’t make the mistake of thinking that this is a small, tuck-in acquisition of a niche provider just starting in the industry. Working with Workday since 2007, Collaborative Solutions is Workday’s oldest tenured services partner that has unashamedly been positioning itself as “the undisputed  alternative to the Big 4.” As you would expect, it has extensive experience in delivering the full range of services for Workday Human Capital Management (HCM), Financial Management (FM), and Student applications. It is known for its strong culture that has led to strong retention rates, as well as many ‘Best place to work’ industry awards. One of the company’s differentiators is its Workday- focused Change Management practice (where 100% of its consultants are Workday-certified), its high-growth, flexible, post-go-live support called Continuous Value Services (CVS), and its Strategic Planning Services which helps maximize its clients’ deployment success. It, therefore, understands the importance of consulting and post go-live services, both of which are often over-looked by enterprises. And it does it all very well, boasting a 98% customer satisfaction rate.  Clients tell us that the company is collaborative both in name and nature.

Cognizant: good investment to support its cloud services strategy

As mentioned, this fits neatly with Cognizant’s focus on cloud services investments. The HFS COVID survey in April 2020 showed that the two biggest areas service providers and enterprise clients expect to invest are the cloud and cybersecurity services. Some of the SaaS investments may be temporary to rapidly facilitate work from home environments in the current COVID crisis, but some will decide to re-platform their businesses and finally take cloud seriously. Either way, Cognizant seems to focus on being prepared to support these initiatives, both with its Salesforce focused acquisitions and this Workday investment. Collaborative Solutions also strengthens Cognizant’s position in the HR services market, with a clear opportunity to leverage the thought leadership work it has been conducting in its Future of Work initiative.  

Clients: Nothing to see yet but keep an eye on resource availability 

The deal closes in the second quarter of 2020, but we don’t expect there will be any significant changes to the end of the year. You could potentially have access to additional HR and digital transformation thought leadership from Cognizant as well as broader delivery capabilities. Most of Collaborative Solutions’ Workday services business is in North America. Therefore, make sure that the resources exist to deliver the services you require, where you require them.  

Challenges will need to be overcome to gain permission to play in Workday services marketplace 

Of course, this brings the standard M&A challenges, including technology integrations and staff retention.  Add to that the fact that Cognizant is not currently a Workday services partner. Workday curates a closed partner ecosystem where service providers must be invited to participate. There have been several acquisitions in this market in recent years, but consolidation has always been among the partners. For example, IBM bought Meteorix in 2015, and Accenture bought DayNine Consulting in 2016. Both IBM and Accenture were already Workday partners. Wipro did buy Appirio in 2016, but it sold Appirio’s Workday practice to Workday partner, Alight in 2019. Cognizant has not worked with Workday before, so it will need to tread carefully to understand the expectations and requirements that the SaaS ISV sets for all its service partners. Enabling Collaborative Solutions to continue to operate as a separate entity to continue to run the relationship with Workday would be advantageous.  

Bottom Line: Making the whole greater than the sum of its parts is never easy 

This is a great investment by Cognizant in a high-growth market. Acquiring an established Workday services provider with strong skills and a loyal customer base brings Cognizant capability and credibility in one fell swoop. That said, Cognizant must tread carefully with Workday and preserve Collaborative’s culture and retention rate to maximize this investment. During all the consolidation in the Workday services market in recent years, Collaborative Solutions CEO, Carroll Ross regularly assured HFS that his company was not for sale. Time will tell whether this was the right move at the right time.  

The goal of any serious acquisition needs to be beyond mere scale or permission to play. The real trick is driving additional value for the whole of Cognizant – where the new organization is greater than the sum of its parts. This acquisition passes the first test – as it plays into Cognizant’s overall strategic aims.