Cornerstone ONDemand announced its acquisition of Saba. Two of the leading talent management vendors known for core offerings in learning, both providing platform capabilities that range from recruiting through learning and development are coming together and it’s a big deal for any learning-focused enterprise.
Combining Resources and Marketshare
Product Development
A big part of the message Cornerstone put out about this acquisition was about the talent coming together. You might think that would be de rigeur when two talent-focused tech vendors come together, but it isn’t. Cornerstone CEO Adam Miller focused on the acquisition of developers coming together and delivering increased innovation and differentiation saying, ” …our product development team is expected to significantly expand, giving us the ability to develop faster, further increase competitive differentiation, and help millions of people around the world to overcome the skills divide.”
Sales Reach
The name of the game in enterprise tech is “scale.” And, by bringing together the global reach of both Cornerstone and Saba, the new combined entity stands to achieve more reach in their go-to-market across both existing and new market segments and geographies.
Market Share
Looking at a combined user base of 75 million users and annual recurring revenue (ARR) of $818 million, this puts Cornerstone in contention for the market leadership position. I don’t have data to suggest their actual marketshare, but Jason Corsello of Acadia Ventures, and a former Cornerstone executive puts the new marketshare at 32%. (Sounds a little high to us, but anything over 20% is massive. And, Jason knows this segment better than most.)
Seizing A Market Opportunity
Internal Mobility
HR leaders are looking inward to provide a path for existing employees in ways that they haven’t before. Taking inventory of a company’s existing skills, mapping that to existing or planned jobs internally, then matching based on an algorithm, sprinkling in some machine learning or AI… factoring in data from a workforce planning initiative – then using the same data to look at candidates externally… This, or some variation of it, is the trend of the moment in addressing the challenges in finding talent when faced with decades low unemployment.
Merging the Product Roadmap To Deliver the Vision
Cornerstone has its own vision for this internal mobility model, based on their acquisition of Clustree last year, and with the merge of both Cornerstone and Saba roadmaps, Miller positioned “leveraging the world’s leading skills engine” as a focused six word slide in his presentation. While the market and existing customers will have to wait and see what gets delivered, the timing is good to offer this kind of innovation somewhere on the heels of the companies coming together. Cornerstone can provide a future path that Saba customers may be motivated to stick around and experience.
Taking On A Big Challenge
The Financial Terms Was The Easy Part
Announcements like these get discussed as if they happen at the end of a long process. In reality this is where the work begins. Bringing two companies together – formerly direct competitors – brings its own set of unique challenges. It’s hard enough to retain good people when everything is steady. People generally don’t like change and employees in both firms are starting to ask themselves “what about me?” The same question will be asked by customers. Especially those on the Saba side that might have been waiting on that next release or delivery of the next big thing in the product roadmap. “What about us?” Both vendors have partner ecosystems that come with their own overhead to manage. Integrations have been built for shared customers with partner revenue expectations in the balance. “What about my business?”
Heavy Lifting on the Product
Combining world class development resources and innovating faster sure does sound good, but these things take time. Cornerstone’s competitors, who range from large HCM platforms to agile fast-growing startups and scale-ups, they won’t be waiting around.
While Cornerstone and Saba Consolidate, the Market Keeps Growing
One last point to make: I’ve been waiting for the market to consolidate since 1999. When these deals happen it’s popular to exclaim, “market consolidation!” Market consolidation, beyond the topic of current market share is a 1990s on-premise tech conversation. Since the advent of SaaS and the consistently lowering costs of bringing a product to market, every time a major acquisition or merger happens, while it shores up that vendor’s current position it also makes room for emerging startups and scale-ups to move in and get traction. We see the market growing.
