UPDATED 22:05 EDT / MAY 25 2017

CLOUD

Rackspace buys TriCore Solutions for its application management smarts

Rackspace Inc. has bought its way into the enterprise resource planning market with the acquisition of application management software company TriCore Solutions Inc.

Financial details of the transaction were not disclosed, but Rackspace said the deal is the largest in its history.

Rackspace completed the acquisition less than six months after it too was acquired by the private equity firm Apollo Global Management in a $4.3 billion deal that took the company out of the public eye. The company began doubling down on its customer support service offerings last year after struggling to compete against major public cloud companies such as Amazon Web Services Inc., Google Inc., and Microsoft Corp. It’s now one of the top managed service providers for AWS, with hundreds of engineers certified as experts on the AWS platform.

By taking itself private, Rackspace is able to reorganize itself as a managed services provider away from the public glare of shareholders, who are always demanding short-term profits.

TriCore plugs a big hole in Rackspace’s portfolio that will help it to complete that transition, the company said. TriCore specializes in application management capabilities that can be used to control core enterprise functions such manufacturing, logistics, purchasing, supply chain, customer service, human resources and financial operations.

These applications are complex and expensive to run, and organizations are keen to find ways to manage and optimize them. Indeed, Rackspace said one of the motivations for the acquisition was that its customers had been asking for the kinds of capabilities TriCore offers at scale across ERP, business intelligence and analytics, data warehousing and integration.

Enterprise application hosting and services is now a $3 billion annual business growing at a double-digit clip in 2017, with ERP, business intelligence and analytics and database managed services making up the lion’s share of that market, Rackspace said.

“Our customers are asking us to move further ‘up the stack’ by expanding our managed application capabilities,” said Rackspace President and interim Chief Executive Jeff Cotton in a statement. “TriCore’s services are among the best in that space and are highly complementary to ours. They will help enable us to deliver more of the services that our existing customers need, while opening the door to new opportunities across the globe.”

TriCore’s management team, led by CEO Mark Clayman, will join Rackspace as part of the acquisition. The company’s 158 U.S.-based staff will continue working from TriCore’s headquarters in Norwell, Massachusetts. An additional 355 workers will continue working out of the company’s officers in Gurgaon and Hyderabad, India.

The acquisition comes as Rackspace prepares to welcome new CEO Joe Eazor, who will assume leadership of the company on June 12.

Image: Sylvain Kalache/Flickr

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