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What SAP/Fieldglass Deal Means For Procurement.

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The deal for SAP to buy Fieldglass has the potential to streamline contingent workforce spend but concerns remain. 

 

Who’s involved

 

It was announced this week that SAP, the German multinational software business, had agreed a deal to acquire Fieldglass, a cloud-based software supplier that specialises in managing contract workforces.

 

The deal

 

Although no details of the amount that SAP expects to pay for Fieldglass have emerged, in 2010 the company received investment from private equity firm Madison Dearborn Partners, which valued the company at around $220m.

 

14-year old Fieldglass has around 250 corporate clients, which includes the likes of GSK, American Airlines, Johnson & Johnson and Verizon and in 2012 had some $27bn in workforce spend under management, according to a Staffing Industry report.

 

For SAP, this deal compliments some of the other acquisitions it has made in the labour market space, such as SuccessFactors and Ariba. It also continues the company’s string of acquisitions over the last few years as it looks to boost its offerings in the cloud.

 

SAP hopes to complete the deal in the second quarter of this year.

 

What they say

 

Bill McDermott and Jim Hagemann Snabe, co-CEOs and members of SAP’s Executive Board said: "The acquisition of Fieldglass creates a compelling advantage for SAP customers as they access, attract and manage talent via the networked economy.

 

"This move reaffirms SAP as the undisputed leader of integrated human resources and procurement in the cloud for businesses of all sizes and industries. Combining Fieldglass with SAP is a significant milestone in our strategy to help businesses simplify everything."

 

Meanwhile, Jai Shekhawat, CEO and co-founder of Fieldglass said: "Joining with SAP will allow us to dramatically accelerate our global growth plans and pace of innovation at the unique intersection of the human capital and procurement sectors.

 

"SAP’s innovations in cloud, in-memory and mobile technology are transforming workforce management."

 

Over on Spend Matters, Jason Busch and Pierre Mitchell said that the deal would have "significant ramifications in the competitive marketplace for vendor management system (VMS) and broader services procurement applications (including IQNavigator, Beeline/Adecco, Oracle, IBM, Provade and others)."

 

They said that the deal would likely "put pressure on certain competitors to react, while putting others in a new type of driver’s seat". They added that it would also "foster the growth of new business models and investments in the sector".

 

Why it matters for procurement

 

The non-permanent jobs market is expected to grow by nearly 30% over the next three years, according to Ardent Partners, as such it is no surprise that SAP wants to expand its offering in this area.

 

With more business spend going towards contingent labour it will appeal to many that they could streamline labour management into one provider. 

 

As SAP says in its press release, this will allow customers a platform through which a business can manage both temporary and full-time staff right through from initial recruitment all the way through to retirement.

 

The only concern for these businesses is how Fieldglass’ systems are integrated into SAP’s and what kind of additional cost in time and or money this may incur. Outside of this, thoughts will turn to who will be taken over next.

Tim Burt
Posted by Tim Burt