Sage to have its CakeHR and eat it: Scoffs cloudy automated personnel-botherer

Beancounter continues biz services shopping spree

Geordie accounting software provider Sage is continuing its shift to general cloud-based business services by scoffing human resources software company CakeHR.

CakeHR offers small and medium-sized firms the ability to automate common human resources functions via a cloud-based platform. Its software deals with leave allowances, new joiners and leavers and expenses management.

Lee Perkins, chief product officer at Sage, popped about a can to emit this quote: "CakeHR provides easy-to-use cloud-based HR services that help businesses drive productivity and provide great experiences for their people. As with our recent acquisition of AutoEntry, we have been hugely impressed with the people and technology at CakeHR, particularly their ability to enable employees to self-manage, and are delighted to welcome them to Sage."

Dublin-based data entry firm AutoEntry was bought last year.

CakeHR uses open APIs so it can integrate with Sage Payroll and other products, and will be able to offer CakeHR to its customers from next year. It runs HR requirements while ensuring firms say compliant with relevant local employment laws.

Kaspars Upmanis, CEO and co-founder of CakeHR, took to the company blog to assure customers that it was business as usual but with more investment across the board.

Analysts at Megabuyte opined: "While the aim will be to cross-sell this solution into Sage's broader customer base, this could be easier said than done, with CakeHR being very much sub-scale in a competitive and somewhat fragmented market."

It pointed out that IRIS/Octopus HR) and Access Group/PeopleHR) had both acquired cloud-based HR solutions aimed at micro and SME businesses and said a range of smaller vendors and HR solutions were available through Xero and Intuit's partners. Megabuyte added: "Therefore, for Sage to make a success of this move, it will be essential that further acquisitions are made to build critical mass."

It's been a busy few weeks for Sage, which sold off its small biz payments unit, Sage Pay, to Elavon for £230m earlier this month. Sage Pay brought the group revenues of £41m and chunky profits of £15m.

This, along with today's purchase, is in line with its shift to cloud services and the flogging of non-core businesses.

The move has not been without pain – operating profits dropped over 10 per cent to £382m for the year ended 30 September, although revenues grew almost 5 per cent to £1.936bn.

Sage shares are up about 1 per cent on the news.

Given the size of CakeHR, we might expect Sage to snaffle up more business service providers in the months ahead. ®