SAP is beefing up its HCM arsenal by snapping up San Francisco-based software vendor SmartRecruiters.
The ERP giant expects to integrate SmartRecruiters' talent acquisition applications and technology into the SAP SuccessFactors HCM platform.
The transaction is expected to close by the end of the year, pending regulatory approval. Terms were not disclosed.
SmartRecruiters' flagship product is SmartRecruit, a SaaS platform for automating the enterprise recruitment process from job posting to onboarding. The platform now includes the Winston AI assistant that's intended to improve hiring efficiency.
Founded in 2010 by Jerome Ternynck, SmartRecruiters has approximately 700 employees worldwide and serves more than 4,000 customers, including Amazon, Visa and McDonald's.
The SmartRecruiters acquisition will further SAP's ambition to be the No. 1 business application vendor and business AI vendor in the world, strengthen the SAP SuccessFactors suite, and provide SAP customers with a better way to attract and retain top talent, according to Dan Beck, president and chief product officer at SAP SuccessFactors, in a virtual press conference Friday.
"This is an important space for our customers because bringing in talent isn't just an HR priority, it's a business priority," Beck said. "SmartRecruiters' portfolio with its advanced capabilities allows us to move more quickly to serve our customers."
Details of how SmartRecruiters' platform will be integrated into SuccessFactors are still to come, but the companies will begin joint activities after the deal meets regulatory approvals, he said.
"There are opportunities to accelerate AI with SAP's business AI combined with Winston, as well as our investment in data with SAP Business Data Cloud," Beck said.
SmartRecruiters will work with the SuccessFactors team "to offer a deep and robust connectivity to the SAP ecosystem," SmartRecruiters CEO Rebecca Carr said in the press conference.
"We'll make deeper R&D investments and share a commitment to reinventing how companies attract, select and hire great talent," she said.
SmartRecruiters will continue to operate as an agnostic vendor for the foreseeable future, and the company's leadership team and support structure will continue as they are today, Carr said.
SAP stepping up its HCM game
The acquisition should help SAP bolster the SuccessFactors platform at a time when it faces significant competition in the HCM market, according to industry analysts.
SAP's HCM efforts with SuccessFactors had taken somewhat of a back seat to other priorities like S/4HANA Cloud upgrade plans, so restarting that with investment in talent acquisition in the AI era is a good first step, said Holger Mueller, vice president and principal analyst at Constellation Research.
"SmartRecruiters is a good fit, as it has focused on larger customers -- many of them SAP customers -- and has the scale to be the talent acquisition platform for SAP customers," Mueller said.
However, it remains to be seen how long SmartRecruiters will be regarded as a talent acquisition platform of choice for enterprises that do not run SAP systems, he said.
"SAP's key ERP competitors Oracle and Workday opted for in-house build of talent acquisition," Mueller said. "This is good news for HR leaders, as there will be options, and may the best talent acquisition offering win."
This certainly helps SAP step up their HR AI game and compete down-market with [HCM vendors like] UKG Ready, Isolved, ADP and similar players.
Predrag JakovljevicPrincipal industry analyst, Technology Evaluation Centers
SAP has been losing out to Workday in the HCM space, so it's betting on the SmartRecruiters move to stop the bleeding, said Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers.
"This certainly helps SAP step up their HR AI game and compete down-market with [HCM vendors like] UKG Ready, Isolved, ADP and similar players," Jakovljevic said.
He added that it also improves SAP's standing in applicant tracking systems versus those from ICIMS, Oracle, Workday and Dayforce.
In general, the deal tracks with a trend of larger companies bolstering their AI functionality and talent across the board, and also bolstering functionality within areas like finance and HR, said Jon Reed, co-founder of Diginomica, an enterprise industry analysis firm.
Having end-to-end process flows makes sense in the agentic AI era, particularly given SAP's intention with the acquisition to enable its customers to manage their candidate lifecycles -- from sourcing to interviewing to onboarding -- within a single system, Reed said. This will raise the stakes for SAP to provide its customers with a much-improved HCM platform.
"Clearly, it will bolster SAP's existing recruitment applications, but customers will expect a deeper level of integration as well," Reed said.
Jim O'Donnell is a news director for Informa TechTarget who covers ERP and other enterprise applications.
