Rackspace Continues Pivot to Managed Services With TriCore Acquisition

TriCore Solutions fills a big need in Rackspace's pivot from its original internet hosting business to a managed services provider.

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Cloud-based services provider Rackspace revealed May 25 that it is acquiring enterprise application management software maker TriCore Solutions, which owns particular expertise in enterprise resource planning (ERP) solutions from Oracle and SAP.

Financial details were not disclosed, although San Antonio-based Rackspace said the transaction is the largest in its history.

The deal comes less than a year after Rackspace itself was bought for $4.3 billion by Apollo Global Management, a New York-based private equity firm that took Rackspace private.

TriCore Solutions fills a big need in Rackspace's pivot from its original internet hosting business to a managed services provider. TriCore brings application management capabilities used to control core enterprise functions that include manufacturing, logistics, purchasing, supply chain, customer service, HR and financial operations.

Customers Had Been Asking Rackspace to Go 'Up the Stack'

Rackspace said its enterprise and midmarket customers had asked it to include the kind of enterprise capabilities that TriCore offers at scale across ERP, business intelligence and analytics, data warehousing and integration. These applications are complex and expensive to run, and businesses are looking for ways to help manage and optimize these applications to deliver the most value.

These functions are parallelto what companies such as Quest Software and Rimini Street have done in assisting their customers to administer Oracle databases and other products.

The enterprise application hosting and services business market totals about $3 billion per year, particularly in ERP, business intelligence and analytics and database-managed services, and is growing at a double-digit clip this year.

“Our customers are asking us to move further ‘up the stack’ by expanding our managed application capabilities,” Rackspace President and interim CEO Jeff Cotton said. “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.”

The TriCore management team, fronted by CEO Mark Clayman, has built a 513-person organization that has delivered complex IT solutions and expertise since 1999. Clayman and other key members of the TriCore management team will join Rackspace as part of the acquisition. 

TriCore Services Provided in Choice of Infrastructures

Most of TriCore’s 158 U.S.-based employees work in at its headquarters in Norwell, Mass. TriCore also has offices in Berwyn, Pa., and Milwaukee. Another 355 workers are based in Gurgaon and Hyderabad, India.

TriCore delivers its services on infrastructure in any location the customer chooses: the customer's data center, a TriCore data center, a colocation facility, or a data center run by a hyperscale cloud provider, such as Amazon Web Services or Microsoft Azure.

The company currently serves about 275 managed service customers across a range of industries, including Arby’s Restaurant Group and Kelly-Moore Paints.

Rackspace offers specialized expertise, easy-to-use tools and support for AWS, Google, Microsoft, OpenStack and VMware. The company serves customers in 150 countries, including more than half of the Fortune 100.

Chris Preimesberger

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he has...