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Cornerstone takes next steps in Saba acquisition

Following its acquisition of Saba Software, Cornerstone OnDemand is appointing Saba's CEO, Phil Saunders, as its new leader. Product integrations are planned.

Cornerstone OnDemand Inc. took over its direct rival, Saba Software, closing the deal late last month. Its next move came Monday, appointing Saba CEO Phil Saunders as CEO of the combined firm. He will take over next month. Analysts see this as an effort to keep Saba customers from defecting.

On Tuesday, Cornerstone sketched out its goals for the combined products, including some in-the-works integrations. The Cornerstone and Saba learning management systems (LMS) are broadly similar, providing employee educational and training programs, and the company said it will continue to support both platforms.

The acquisition is a big change for Saba users, but it may be a major change for Cornerstone customers as well.

Cornerstone CEO Adam Miller founded the firm in 1999 in his apartment and grew it to a $567 million enterprise with about 2,000 employees. Saba was owned by private equity firm Vector Capital. Miller will become co-chairman of Cornerstone's board of directors.

Cornerstone paid $1.3 billion for Saba. The deal, announced in February, was initially set at $1.4 billion but adjusted "in light of current market conditions," the firm said in a statement. Both firms began operating as a single company about two weeks ago.

Adam Miller, founder, outgoing CEO, Cornerstone OnDemandAdam Miller

With the Saba acquisition complete, Cornerstone said it will continue to support learning management users of both product lines.

"By no means are we encouraging or trying to push [Saba users] to migrate from Saba Cloud to Cornerstone Learning," said Heidi Spirgi, Cornerstone's chief marketing and strategy officer. She said that there is no reason to prompt migrations "because the products are so similar." 

No reason to move platforms

There is no real reason for Saba users to move to Cornerstone, said John Leh, CEO and lead analyst at Talented Learning LLC, a research firm and consultancy in Bloomsburg, Pa. "It's pretty much a one-for-one conversion -- there's nothing in the Cornerstone product that would make you say, 'This is worth all the effort,'" he said.

John Leh, CEO and lead analyst of Talented Learning LLCJohn Leh

"The way I look at it is all these Saba customers are just inconvenienced by this whole process," Leh said. The customers "already voted against Cornerstone for one reason or another for their organizations," he said.

What Cornerstone appears to be counting on with the Saba acquisition is its ability to innovate post-merger.

Spirgi said Cornerstone is accelerating innovation with the talent they gained from Saba. The combined R&D team alone will be greater than the entire Saba employee base, she said.

Heidi Spirgi, chief marketing and strategy officer, Cornerstone OnDemand Inc.Heidi Spirgi

The firm has cited "cost synergy" savings aimed at operations other than research, analysts have said.

Cornerstone will be the lead product, but the firm already has plans to cross-integrate capabilities from both firms.

In Cornerstone, it will embed two Saba features, its Meeting function, which is used to create virtual events, and its Classroom function. Saba will get Cornerstone's Content Anytime, its content on-demand feature. The latter product may be available as early as this month.

Innovations are planned

The broader product direction calls for more personalization and the use of AI technologies. The "hyperpersonalized" capability will present training based on an individual's skills, preferences and other attributes.

There will also be investments in digital coaching tools, such as chatbots.

Phil Saunders, named CEO, Cornerstone OnDemandPhil Saunders

More certain for Saba users is a promised delivery of a scheduled software update, 47, on Aug. 3. The last update, 46, was in March, the firm said.

Saba users may also benefit from seeing a familiar face at the helm of the newly combined company. Saunders will start his new job as CEO June 15.

The appointment of Saunders "will install a dose of confidence in former Saba customers," said Holger Mueller, vice president and principal analyst at Constellation Research.

"Saunders now needs to lead the new Cornerstone in difficult times with a COVID pandemic out there," Mueller said.

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