Sage buys its strategic partner Fairsail to push mid-market HCM

Business software vendor Sage has acquired Fairsail, a provider of SaaS solutions for human capital management. Both companies had been strategic partners before. We think that Fairsail as a modern, cloud-based application for HCM fits well into Sage’s portfolio. Fairsail is based on the Salesforce platform, which has become strategic for Sage as well.

The demand for modern HCM solutions remains strong, and as HCM software is moving to the cloud, SaaS-based solutions benefit from that growth. Enterprises have been investing into cloud-based solutions from various vendors such as SuccessFactors (SAP), Workday, Cornerstone, Oracle, Infor HCM and many others. While so far mostly larger corporations have invested in such software, an increasing number of medium-sized businesses are interested in innovative HCM solutions.

Fairsail, a young cloud company based in the US, targets medium-sized companies that need to manage HCM processes internationally. Fairsail’s suite of HCM applications covers talent management, workforce management and compensation. It also provides a number of embedded analytics features. Like other pure cloud players it does not offer its own payroll, but it provides integration into existing payroll solutions.

Sage has entered a partnership with Fairsail. The HCM solution can be integrated e.g. with Sage Live (accounting for SMBs) and Sage X3 (ERP for medium-sized businesses).

With this acquisition, Sage continues its strategy to buy software vendors. Fairsail extends the Sage portfolio with a HCM solution that can be deployed globally – thanks to the cloud. In that sense, the HCM software can become a global product that extends the Sage products for accounting, payroll and payment. So far, Sage has not had a strong and compelling HCM solution in place (one that goes beyond payroll) that can be used internationally.

Fairsail is based on the Salesforce cloud platform. This platform is becoming strategically important for Sage as well. The vendors’ Sage Live accounting solution has also been developed in the Salesforce cloud environment. Software that runs on this platform can be integrated with Salesforce CRM. Also, partners can develop add-ons for this platform (see related post on Sage pushing Salesforce.com as its strategic development platform).

At large, we view this acquisition as a natural step for Sage to invest in global solutions, cloud-based software and the Salesforce platform. There is potential for growing the Fairsail business. Now it is up to Sage to make it a success as well as to convince its customers and partners.