All PostsRackspace signs agreement to buy TriCore Solutions

Jeff Cotten, president and interim CEO of Rackspace
Jeff Cotten, president and interim CEO of Rackspace

Rackspace has announced it plans to acquire TriCore Solutions. The deal, if it complete, will be the biggest in the history of Rackspace. Importantly, it will take Rackspace out of its historic comfort zone and open source arena and into enterprise apps. TriCore Solutions specialises in enterprise apps management especially ERP management.

According to Jeff Cotten, president and interim CEO of Rackspace: “Our customers are asking us to move further ‘up the stack’ by expanding our managed application capabilities. 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.”

Why is Rackspace after enterprise apps and ERP management ?

Put simply this is about money and a higher profile inside large enterprises. Managed apps at the enterprise level is big business. As companies have moved to cloud and reduced the size of their IT teams they need help. Much of that help requires specialist knowledge which is expensive and talent is getting harder to attract.

This is where the enterprise managed app market, especially ERP management is booming. The Rackspace blog announcing the deal quotes analyst company Altman Vilandrie & Co as saying companies spend £3 billion per year on ERP, BI and database managed services. Rackspace has a solid history in managed support through its fanatical support teams. It will see this as an extension of what it currently does with a much bigger ROI.

The move will also give Rackspace a greater presence in the Oracle and SAP worlds. It is already an infrastructure partner for both companies but this deal will increase its position in the value chain. Both Oracle and SAP are investing heavily in cloud with differences. SAP is happy to have customers install anywhere while Oracle wants them to use its cloud services. TriCore, meanwhile, has built its reputation on managing Oracle and SAP wherever it is installed including on-premises and multi flavours of cloud.

A new competitor to Rimini Street and Spinnaker?

There is another angle to this deal. Rackspace has a wide global presence while TriCore is mainly US-based. Combine the two companies and it makes Rackspace much more attractive to customers of both companies. What will be interesting is how deep into the customer base Rackspace can now get.

TriCore offers more than just managed services. It’s website says it offers patching and other maintenance support. Rackspace doesn’t seem to go as far as this but is involved in helping customers with app management and some development. Bringing the two skills sets together means that Rackspace should now be considered a potential competitor to Rimini Street and Spinnaker.

There is work to do in order to be a real competitor. They have to show that they are willing to provide support and maintenance of Oracle and SAP installations as well as app management and patching. If they can do this then it raises a serious question as to how much Rackspace can eat into everyone’s share of the market. It will immediately be a global competitor to Oracle and SAP’s services. The company will also offer a global footprint that Rimini Street and Spinnaker do not. So will they take business from Oracle and SAP or Rimini Street and Spinnaker? The answer is likely to be all four but not necessarily in equal proportions.

What does the future hold?

With Rackspace in a mood for acquisitions it may feel that TriCore don’t offer the complete service.  Could they look to acquire Spinnaker or Rimini Street?  Rimini Street is going through a merger and listing on Nasdaq so they would seem unlikely.  However Spinnaker offers a complimentary offering to Tricore. If Rackspace is serious about delivering support for ERP software it might finds it needs further investment to win over enterprises and offer the complete solution. The issue for Rackspace is that selling hosting facilities is very different from offering application consultancy support, they will need to find sales professionals who have experience of having done it.  The issue is that there is such a shortage at the moment it is hard to see where those resources will come from.


This is a good move by Rackspace. Moving up the stack means more money and a higher profile. It will be interesting to see if it runs TriCore as a separate business unit or goes for greater integration. At present, most of TriCore’s employees are based in India and it might seek to merge office space and staff there to cut costs. It will also want to look at how it rolls out its fanatical support mentality across TriCore.

It also projects Rackspace into a global support and maintenance provider for Oracle and SAP. The question is will it stop here? Rackspace and TriCore support other solutions from large IT vendors. What will they announce next as a target application and app environment? More importantly will their backers give them the money to buy market access to other apps? This could be the move that makes Rackspace more than just a cloud company.



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