Workday bets big on federal HR overhaul

For just over two years, Lynn Martin has been preparing Workday’s public sector business for what she calls a “pivotal” moment in the federal market.

"In my 20-some years of experience in the government working across some great technology companies, you have great product and then the government's not ready for it, or you have policy and then they don't have the technology,” Martin said.

But this time around, things feel different. The Trump administration has put an emphasis on personnel through several executive orders.

Artificial intelligence has grown in power and acceptance. Cloud-native companies like Workday are also pushing their human capital management capabilities.

Led by the executive orders, the Office of Personnel Management and Office of Management and Budget are pushing agencies to replace a patchwork of legacy HR systems with a single and more standardized approach.

One major opportunity on the horizon is OMB's Federal HR 2.0 procurement, a 10-year effort to standardize human capital applications across the government. Workday is one of several bidders with a final award anticipated with an award expected later this year. There is one protest pending at the Government Accountability Office with a decision due in June. OPM cannot make the award while the protest is pending.

Federal HR 2.0 is the kind of opportunity that Martin has been working toward since overseeing the launch Workday’s federal business in 2024, when she took on the title of general manager for Workday Government.

The unit had about seven employees and now is on its way to around 400. The company opened a facility in Reston, Virginia that houses 250 engineers focused on the federal market.

Workday also has invested in qualifications, such as a facility clearance. It is building out multiple security tiers such as a FedRAMP environment, IL-4 accreditation with DISA, and an air-gapped environment to take on top secret and SCI-level workloads for the Defense Intelligence Agency.

The DIA effort, which is in its second and final phase, has driven much of that build-out. Martin called the partnership a co-investment with a national security customer and compared it to the CIA's cloud contract awarded to Amazon in 2013.

Across the board, government agencies are looking to sunset legacy HR systems. Many of them have been highly-customized and agencies want to replace them with cloud-based commercial solutions.

The watchword is configuration, not customization. Configuration plays into a Workday differentiator, Martin said.

The traditional way of installing an HR system was to buy the software and then a systems integrator would customize it to meet the agency’s needs. This approach also includes a long and expensive tail of maintenance and more customization as new requirements emerge, she said.

“In the Workday platform, all of our customers run on one version of code,” she said.

With its emphasis on configuration, Workday believes it can quickly adapt.

“If you have to write code, you can’t do that on the fly,” Martin said.

Workday continually rolls new capabilities into the code and then customers can turn those features on or off depending on their needs. But in the end, everyone – commercial and non-commercial – runs off the same base code.

“We’ve been able to build the infrastructure to support that and get ready for the opportunities in the market,” Martin said.

Part of Workday's infrastructure now includes an AI agent for the personnel action records process called PAR.

A record is needed for everyone HR event – promotions, payroll changes, benefits, transfers, etc. The process can take 40 days and is managed differently at every agency, Martin said.

Built on its Sana AI foundation, Workday created PAR Agent that uses AI to automate significant portions of the process. The agent both shortens the time by 60% and standardizes the information.

“We focused on PARS first because it is something that everyone has to do,” she said.

With the AI agent taking on the mundane but time-consuming work, HR personnel can focus on higher-value work. Martin said that includes skills-based hiring, training, refreshing technology and managing the workforce.

The appetite from the administration side is real, she said, noting that several officials came in already familiar with Workday from their private sector careers.

The convergence of policy, technology, and the emergence of cloud-first providers such as Workday have created a rare opportunity set.

“The timing of all that at once doesn't happen often,” Martin said.