In a couple of years' time there will be three acknowledged global HR players. That's our goal, that we're there and acknowledged as one of three globally — and the other two will remain focused on large enterprise.
We believe this puts us on the path to global leadership and global domination — that means thousands and tens of thousands of customers — I don't see why Sage People shouldn't become the global leader for midmarket organizations.
Hale's confidence is founded on Sage's established global presence combined with Fairsail's own success in signing midmarket companies that operate internationally, he explains:
Sage is in 23 countries already. It has 13,000 people on the ground, in a way that would've taken us a long time to build up. It gives us that immediate distribution capability, but also customer understanding and customer trust that it will take a long time for other people to build.
Hale believes the combination of two UK-headquartered companies brings the advantage of a better understanding of international markets than US-based firms such as Workday and others.
This is the problem the US firms have, they really struggle to understand the complexity of international. One of the benefits of being developed on a small, dark, rainy island is that we had to think about international from day one.
90% of Workday's revenue is from US companies. For these companies the international is a bit of an afterthought. [Whereas] that's what we do.
Confirmation of the acquisition comes less than a year after Sage took a 21% minority stake in Fairsail with an investment of £10 million ($14.5m at pre-Brexit exchange rates). That deal forged a partnership that culminated in the launch late last year of Sage People, which combines Fairsail's Salesforce-hosted cloud HCM suite with Sage payroll. Having achieved this milestone and demonstrated traction with customers, then consummating the full acquisition became more or less inevitable, Hale implies:
It was always a potential outcome if the partnership were successful. That was always likely, given success.
Terms of the deal have not been disclosed.
The Sage midmarket customer base, especially for payroll software, is a good fit for Fairsail's target prospects, which range from 100 to 6,000 employee organizations, says Hale.
Sage pays 53% of people in the UK. There's a lot of payroll customers crying out for the cloud people solution that we've got. There's all kind of opportunities with the kind of customers that we serve ...
We're going to be able to bring together global payroll and global HR, global people, in a way no one's been able to do before.
The acquisition deepens Sage's relationship with cloud CRM giant Salesforce, on whose platform Fairsail and Sage's own Sage Live financials product is built. Fairsail had already built an integration with Sage Live prior to Sage taking its minority stake last year. As one of the earliest companies to start building its software natively on the Salesforce platform, Fairsail has grown to become the largest HCM pureplay on the platform and its acquisition is the largest to date of a Salesforce-native ISV outside of the US.
Hale is keen to emphasize that customers and partners will see no change at Fairsail beyond gaining the backing of Sage. Fairsail customers include Aveva, Armstrong, Paddy Power Betfair, Klarna, Skyscanner, Trainline, Trustpilot and Quest Software. He says that both management teams are determined to preserve Fairsail's cloud ethos as part of Sage.
[Sage management] have said to the team here they want to keep our culture and our spirit and values. They want to build a substantial cloud organization.
The second thing is there's just a level of understanding, knowledge and trust between that leadership of the two organizations that's quite unusual.
Prior to joining Sage, CEO Stephen Kelly had been a director of Fairsail. Hale says there's also a close relationship between Fairsail founder and CTO Colin Cooper and Sage's CTO, Klaus-Michael Vogelberg.
Of course there will be bumps in the road, but we have a mechanism where we have that personal executive trust, understanding, empathy and kind of intimacy where we can call [each other] up and work it through.
I think we've got a serious shot at making it work.
Hale also adds a note of pride that Fairsail, which last year was named 'Scale Up of the Year’ at the WCIT Enterprise Awards and reached its third year as a Deloitte UK Technology Fast 50 company, remains a UK business despite the acquisition.
We're delighted to be doing this from a UK base. This is fantastic to be the UK's fastest scale up, being bought by the UK's largest software firm.
One curious footnote. An early investor in Fairsail was Mike Ettling, who has since become president of SAP SuccessFactors. Says Hale:
We're delighted to have delivered a great outcome to all our investors, including Mike.
So another Salesforce-native ISV becomes part of a larger group. It's not as big of a splash as GE Digital's near $1 billion purchase of ServiceMax last November, but one that could make more long-lasting waves in the market.
While it's a relatively small acquisition for Sage, it significantly bolsters Sage's presence on the Salesforce platform and will give Sage Live more heft in competitive deals. It also brings substantial new distribution resources to the Fairsail (now Sage People) offering.
The burning question now is whether Fairsail's product will continue to thrive as part of a larger group that is still shaking off its client-server legacy. Given the determination of Sage's current leadership to pursue a cloud-first agenda, there's every reason to believe that can happen.
But there's a still quite a delta between that modest (yet so easily thwarted) ambition and the rather grander aspiration outlined by Hale of becoming one of the top global HCM and payroll players. That''s a bit of bluster that, to coin a phrase, will need more than a fair wind in the sails to fulfil.