"There's a narrative out there that AI is eating the software world, and specifically the SaaS world. And I will tell you that's completely overblown and it's false." This definitive statement from Workday CEO Carl Eschenbach, delivered during his recent interview with Jim Cramer on CNBC's *Mad Money*, cut directly to the heart of a pervasive anxiety within the tech sector. Eschenbach spoke with Cramer about Workday's strategic approach to artificial intelligence, its recent acquisition of enterprise AI tool company Sana for $1.1 billion, and the company's robust quarterly results, aiming to clarify the true impact of AI on established software platforms.
For Workday, AI is not a threat but a formidable advantage, a "tailwind" rather than a "headwind." This perspective challenges the widespread concern that burgeoning AI capabilities will render existing software solutions obsolete. Instead, Eschenbach posits that companies with deep, proprietary data sets and extensive user engagement are uniquely positioned to leverage AI for enhanced value, not disruption. The foundational principle, as Eschenbach explained, is that "to have good outcome of AI... you need good data to train off of." This emphasis on data quality and relevance is a critical insight for any enterprise navigating the AI landscape.
Workday's strategic advantage lies in its vast operational footprint and the inherent value of its data. With 75 million users actively engaging with its platform, Workday possesses what Eschenbach describes as "one of the most highly curated sets of data in the industry." This isn't merely a large volume of data; it's data enriched with business context, derived from human capital management and financial operations across 11,000 customers. Such a rich, clean, and contextually relevant data reservoir is invaluable for training sophisticated AI models that can deliver precise, actionable business outcomes. The difference between raw data and curated data, particularly in enterprise applications, is profound, directly influencing the efficacy and trustworthiness of AI outputs.
The acquisition of Sana, an enterprise AI tool company, for $1.1 billion, further underscores Workday's commitment to embedding advanced AI capabilities deeply within its ecosystem. This move is not merely about acquiring technology; it's about integrating specialized AI expertise to augment Workday's existing platform, allowing it to build more intelligent applications that can automate tasks, provide predictive insights, and personalize user experiences. The transaction, expected to close at the end of fiscal year 2026, signals a deliberate, long-term strategy to ensure Workday remains at the forefront of enterprise software innovation.
Workday's platform exhibits remarkable stickiness, evidenced by a gross retention rate exceeding 97%. This high retention rate, coupled with its extensive user base, creates a virtuous cycle: more users generate more data, which in turn improves AI models, leading to better product experiences and further user retention. The company's partnerships with industry giants like Databricks, Salesforce, and Snowflake for its data cloud further solidify its position, creating an interconnected ecosystem where data can flow securely and intelligently, enhancing the overall value proposition for customers. These collaborations highlight a nuanced approach to AI integration, recognizing that a closed system may not always be the most effective.
Eschenbach's conviction that the narrative of AI "eating" software is "false" and "overblown" stems from this robust foundation. He argues that rather than replacing core enterprise functions, AI will serve as an accelerant, making existing software more powerful, intuitive, and efficient. For founders and VCs evaluating the long-term viability of SaaS companies, Workday’s model suggests that deep domain expertise, a loyal customer base, and proprietary, high-quality data are critical bulwarks against potential AI disruption. These elements create significant moats that pure-play AI startups may struggle to replicate.
Ultimately, Eschenbach concludes with a strong message to the market: "Workday is way underappreciated and we're way undervalued." This assertion reflects a belief that the market has yet to fully grasp the profound competitive advantages Workday has cultivated through its strategic AI investments and its unparalleled data assets. The company's approach to AI integration, centered on leveraging its unique data and platform stickiness, positions it not as a victim of AI’s ascent, but as a prime beneficiary and an enduring leader in the enterprise software domain.
