Dell EMC sells Spanning cloud backup business to private equity firm

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Dell Technologies Inc. isn’t done playing chess with its many subsidiaries following last year’s massive acquisition of EMC Corp.

Late last week, Dell EMC parted ways with its subsidiary company Spanning Cloud Apps LLC, selling it to the private equity firm Insight Venture Partners four years after it was first acquired by EMC Corp.

Spanning Cloud Apps is now an independent company based in Austin, Texas. However, Dell EMC will remain a strategic partner of the firm and will continue selling its backup services.

Spanning’s backup services are designed for cloud-based Software as a Service applications such as Google Inc.’s G Suite, Microsoft Corp.’s Office 365 and Salesforce.com’s customer relationship management services. The company reckons its data protection offering is far more comprehensive than that offered by the applications themselves, with a 100 percent restore guarantee for G Suite, for example.

Jeff Erramouspe, who was Spanning’s chief executive officer before it was acquired, will resume his old role. The company’s 56 employees will all remain with the firm.

“As we look towards the future for Spanning, we see an incredible opportunity to bring our solution for SaaS data backup and recovery to organizations around the world,” Erramouspe said in a statement Thursday. “The support from Insight gives us the freedom and fuel to continue to provide the best in SaaS data protection solutions and continue to grow stronger as we enter this new stage in our company’s journey. At the same time, Dell EMC maintains a strategic partner that helps their customers protect critical SaaS data.”

EMC acquired Spanning back in October 2014 for an undisclosed amount thought to be around $50 million. Spanning later became a part of Dell EMC, but the newly combined technology giant has been shedding a number of its assets in the past year. Spanning seems to be the latest, despite seeing more than 70 percent revenue growth over the last year and growing its customer base to more than 7,000.

As to why Dell EMC would want to offload Spanning, the reasons were not disclosed. However, Dell may well want to use the cash to help pay off the debt it took on when it acquired EMC, and the company probably doesn’t fit with Dell’s future strategic plans.

Speaking to CRN.com, Erramouspe said Dell EMC identified some “friction points” that inhibited Spanning’s business, and came to the decision that the two parties would be better off going it alone. “The bottom line is, as we worked with Dell EMC over the last couple years, they saw us as a SaaS-based company with a high-velocity sales model. We really didn’t fit directly with the Dell EMC enterprise model,” Erramouspe said.

Fortune, which broke the story, noted that Spanning’s SaaS model differs from the rest of EMC’s business, which is mainly hardware-based. Insight Venture Partners may well be better fit for Spanning, as it is particularly keen on SaaS companies, having previously invested in Docker Inc., New Relic Inc. and Shopify Inc.

“We’ve seen a marked increase in SaaS adoption in the enterprise, especially in large and mid-market organizations,” Philip Vorobeychik, a vice president at Insight, said in a statement. “With that comes a greater awareness of the fact that companies are responsible for recovery of data lost due to user error or malicious activity. We believe Spanning has all the ingredients for continued success and market leadership.”

Image: Dell EMC