One of the entry barriers of Workday software is the high switching cost. Some of the difficulties that the companies can face due to the switch from current software provider to workday software would be high expenditure, setup and training, time consumption and the ability to use the software effectively and efficiently. Customer’s loyalty to the current providers tends to increase the customers switching cost.
Another entry barrier is the product differentiation based on the perceived brand Oracle or SAP; the entry to introduction with differentiated product is tough. Given the high product differentiation in industries such as Oracle and SAP software, the consumers tend to show more loyalty to their old products or brands, “[T]here’s little to be gained- other than demotion-from trying a daring new technology from an upstart” (Vance’12). Thus, substitute product provides less threat to the industry.
The third barrier would be capital requirement. In order to gain solidity and compete with the other established industries in the market the new entrants are required to invest large financial resources. It would be hard for a company like Workday to put in large investment and expect good results right way, unless until it manages to take some of the market shares from the companies like Oracle.
An industry with small firms and high switching costs has low internal rivalry. In case of software industry, all the firms are in effort to increase their market