San Mateo, Calif.-based NetSuite Inc. has acquired Waterloo, Ont.-based human capital management (HCM) software firm TribeHR, the firms announced today.

The merger will create the first complete cloud-based solution to include both an enterprise resource planning (ERP) component and a HCM component that is targeted to SMBs, according to a press release issued by NetSuite. Terms of the deal were not disclosed and the final closing of the acquisition is still pending.

TribeHR will be staying put in its Waterloo office and its staff will remain intact, according to a NetSuite executive. The office could also serve as a point of entry for a larger NetSuite presence in the Waterloo region, known for its density of IT firms and talent, including BlackBerry and OpenText.

The announcement comes after months of collaboration between the two firms. TribeHR joined NetSuite’s SuiteCloud Developer Network earlier this year with its TribeHR SuiteApp. Accessed by 30 NetSuite customers, the app brought TribeHR’s social engagement formula to the NetSuite platform. It allows management of employees from recruitment to departure, tracking time off and work history. It also allows for feedback and public recognition of employees.

In May, the TribeHR team attended NetSuite’s annual Suite World conference. In a telephone interview, TribeHR CEO Joseph Fung describes the experience as “a great show.”

“Everyone is feeling really excited here,” Fung says. “We’ve had a good partnership with NetSuite since the beginning of last year… this is a very familiar match and going to open up a lot of opportunities for both sides.”

TribeHR was founded in Waterloo in 2009 and has 450 customers from 50 different countries around the world. Its software features a social media-style feedback and interaction system for all employees to participate in ongoing evaluation and organizational sharing. Fung credits that aspect of the software for TribeHR’s success.

“It’s not just a chat you jam into an experience,” he says. “The level of employee and manager engagement we have is significantly higher, and that means we deliver more value to our client’s businesses.”

NetSuite is a worldwide company and has a main office in Mississauga, Ont. – just down the highway from TribeHR’s home in Waterloo. It counts more than 16,000 companies and subsidiaries as users of its business process automation software that touches on lines of business such as finance and management. The TribeHR component fits a missing cog for NetSuite, says Gary Wiessinger, senior vice-president of product management at NetSuite.

“We want to help every single employee in the company do their job better,” he says. “We realized the last big process we weren’t helping them automate and transform was the people processes.”

NetSuite has been considering acquisition of an HCM vendor for the past 12 months, Wiessinger says, and considered other vendors. “If you Google ‘HCM software’, short of ADP and other people bigger than us, it was everyone else.” Specifically, NetSuite had “deep discussions” with 20 different companies and did “deep dives” with about a dozen of them.

“TribeHR came out head and shoulders above the others as the best product for us,” he says.

NetSuite was considering opening up a development office in Waterloo even before the acquisition, Wiessinger says. NetSuite is committed to the Waterloo area and “no one from this office and none of the functions of this office will be moving elsewhere.”

NetSuite will be discussing the acquisition during its third quarter 2013 earnings call Thursday at 5 PM ET.




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