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German Tech Giant Buys HPM Networks To Launch U.S. Midmarket Cloud Offensive

One of Germany's top IT integrators has acquired one of the crown jewel Silicon Valley solution providers.

Cancom Group, one of the top German technology integrators, has acquired one of the solution provider crown jewels of Silicon Valley, HPM Networks, as the foundation for a U.S. midmarket cloud computing offensive

The Pleasanton, Calif. based HPM, started 20 years ago by Romi Randhawa, has provided infrastructure and services for some of the top Silicon Valley companies, including Facebook and Twitter.

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HPM is one of Hewlett-Packard's largest enterprise partners on the West Coast and a top VMware enterprise partner. It was No. 87 on the 2013 Solution Provider 500 with $270 million in annual sales.

Cancom, an $800 million IT services power with more than 2,400 employees, plans to leverage the cloud talent at HPM to bring its Cancom AHP (Application Hosting Platform) virtual desktop cloud to the U.S. market with a sharp focus on midmarket companies with anywhere from 500 to 5,000 employees, said Cancom Group CEO Klaus Weinmann.

Randhawa will continue to lead the HPM business in the U.S. as a separate subsidiary with a focus on driving the cloud computing business first in Silicon Valley and then throughout the country, potentially through partnerships with other solution providers.

"We do a fantastic job today of laying the infrastructure layer for any private cloud," said Randhawa. "What we were lacking was the ability to provide the software and applications and manage that private cloud for our customers. This allows us to continue selling the infrastructure layer but adds the application layer and allows us to create an entire offering on a private cloud and manage it for our customers with a multi-year recurring revenue contract."

Randhawa, widely respected among his solution provider peers, said he felt the time was right to merge with a larger company given just how radically cloud computing is transforming the business. "VARs in the infrastructure space have to get to the next level, adding the software layer to the private cloud," he said. "That is where we are going with Cancom."

Cancom, which already does $100 million a year in recurring cloud revenue with its virtual desktop cloud platform, was looking for a hot Silicon Valley tech company to help bring the Cancom AHP cloud virtual desktop to the U.S. market and found it in HPM, said Weinmann.

"This gets us into the U.S. market," said Weinmann. "With HPM we think we can grow the cloud business fast in the U.S. This is the most important place in the world for cloud computing. We had to be in Silicon Valley."

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The Cancom AHP virtual desktop cloud solution goes up against Amazon WorkSpaces, a cloud virtual desktop as a service offering, and VMware's Desktone desktop as a service offering.

The Cancom AHP cloud virtual desktop, however, is customized for midmarket companies and can be either provided on-premise or as a public cloud service, said Weinmann.

The customized applications and service provided by Cancom to midmarket customers is far different than the standardized offering of an Amazon or VMware, said Weinmann. "If you have 100 applications you want to get on the virtual desktop, we'll do it for you," he said. "This is not a standardized virtual desktop. We have an offering that changes the game."

Weinmann expects to grow the HPM Cancom team as the company ramps up its U.S. business, adding VMware and Citrix talent to the team.

Randhawa said he couldn't be more excited about the cloud computing midmarket offensive that HPM will launch in conjunction with Cancom. "We want to be the No. 1 company to bring cloud solutions to midmarket customers," he said. "This changes the game and opens the door for HPM to bring a robust private cloud virtual desktop solution to the market that is disruptive. We will start in the Bay Area and then take it throughout the U.S."

Randhawa said he is considering building a channel program and looking for key partners to team with to grow Cancom AHP throughout the U.S. Of course, he said, that will take some time. He expects to pull together such a program in the second half of the year.

The global capabilities of a company like Cancom will be one of the keys to success in the cloud era, said Randhawa. "Customers are getting more demanding and are looking for partners with the financial strength and global capabilities that can scale and grow with them," he said.

Randhawa, a former U.S. Marine who built HPM Networks with a mission to educate customers on technology rather than "sell" something to them, said he is anxious to start a new chapter for HPM. "This is a new chapter full of lots of opportunities and growth for customers and our employees," he said. "It is an opportunity for our customers who we can provide with more solutions and for our employees who will be working for a bigger company. It's a win-win situation for all of us."

PUBLISHED MARCH 2, 2014

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