SAP's strategic shift: purchasing SmartRecruiters as countermeasure against Workday and Oracle
In a strategic move, SAP, the German software company, has announced its intention to acquire SmartRecruiters, a leading AI-driven recruitment system used by over 4,000 companies worldwide, including Amazon, McDonald's, LinkedIn, and KPMG. The acquisition, expected to take place in the fourth quarter of the year, is subject to approval from relevant antitrust authorities.
The acquisition aims to bridge the gap between SAP's existing customers and technological advancements, offering seamless HR processes from candidate scoring to payroll from a single source. This move addresses a significant market gap in talent acquisition, positioning SAP to better compete against major HR platform providers like Workday and Oracle while strengthening its ability to deliver an end-to-end recruiting solution in a single system.
SmartRecruiters brings a proven, user-friendly platform supporting over 4,000 global organizations with recruitment automation and AI-enhanced candidate screening and engagement. Incorporating these into SAP's existing HCM environment will enable clients to reduce time-to-hire, improve decision-making, lower total cost of ownership, and provide a seamless experience for recruiters and candidates alike.
By acquiring a specialized, cloud-native talent acquisition provider without disrupting SmartRecruiters' existing operations initially, SAP mitigates integration risks while expanding its customer base and recurring revenue. This enhances SAP's competitive position in the increasingly AI-driven talent acquisition space by offering enhanced, intelligent recruiting tools and deep analytics that support workforce planning and candidate lifecycle management.
SAP's CEO, Christian Klein, has made smaller acquisitions since taking office in 2019, such as Signavio, LeanIX, and WalkMe. The integration of SmartRecruiters will enhance SAP's cloud offerings, with the platform being integrated into SAP SuccessFactors HCM Suite, a cloud-based software for managing employee processes.
SmartRecruiters was valued at $1.5 billion in its last funding round in 2021. However, the purchase price for the acquisition remains unclear. It is worth noting that SAP has a history of large acquisitions, with transactions including Concur in 2014 for approximately $8.3 billion and Qualtrics in 2018 for about $8 billion. Interestingly, SAP later resold Qualtrics for $12.5 billion in 2022.
The acquisition of SmartRecruiters is a strategic move for SAP, as some of its competitors have built their own AI-driven recruiting models. By acquiring SmartRecruiters, SAP could potentially attract or strengthen its ties with SmartRecruiters' customer base, which includes a diverse range of industries and companies of various sizes.
In summary, the acquisition's strategic significance lies in SAP future-proofing its HCM portfolio with advanced AI capabilities for talent acquisition, improving its comprehensive HR offering, and intensifying its competition with other integrated HR software leaders through an enhanced and more intelligent talent acquisition solution.
[1] SAP News Center. (n.d.). SAP to acquire SmartRecruiters. Retrieved from https://news.sap.com/sap-to-acquire-smartrecruiters/ [2] SmartRecruiters. (n.d.). SmartRecruiters. Retrieved from https://www.smartrecruiters.com/ [4] HCM Technology Report. (n.d.). SAP to Acquire SmartRecruiters. Retrieved from https://www.hcmtechnologyreport.com/news/sap-to-acquire-smartrecruiters/ [5] HR Technologist. (n.d.). SAP to acquire SmartRecruiters: What it means for the future of talent acquisition. Retrieved from https://www.hrcouncil.ca/news/sap-to-acquire-smartrecruiters-what-it-means-for-the-future-of-talent-acquisition/
The acquisition of SmartRecruiters will allow SAP to strengthen its competitive edge in the technology-driven finance industry, as it aims to provide an end-to-end recruitment solution within its business operations. This strategic move will also help SAP penetrate new markets and establish partnerships with a diverse range of industries, boosting its consumer base in the business and technology sectors.
