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Rackspace Steps Up Apps Offensive With Acquisition Of Salesforce Platinum Consulting Partner

The deal for RelationEdge, a Platinum Salesforce consultancy, will form the foundation for a larger SaaS practice at the managed cloud giant, with more cloud software alliances to come

Rackspace has taken a major dive into the Salesforce ecosystem, revealing on Thursday its acquisition of a consulting partner that will form the foundation for a new Software-as-a-Service practice.

The managed cloud giant has closed a deal for RelationEdge, a Salesforce Platinum Consulting Partner headquartered in San Diego, Calif. that has expanded into a dozen U.S. cities since its founding in 2013.

The buy, at an undisclosed price, is the latest step in an evolution toward delivering scalable application services—one that got going in earnest one year ago, when Rackspace bought Boston-based TriCore Solutions, Gerard Brossard, executive vice president of Rackspace Application Services, told CRN.

[Related: Rackspace To Acquire Datapipe In A Blockbuster Deal For Global Cloud Services]

The San Antonio, Tex.-based company has been eyeing a move toward SaaS since the TriCore acquisition, at the time the most expensive in its history, which put Rackspace in the business of managing mission-critical Oracle E-Business Suite and SAP solutions, Brossard told CRN.

Salesforce was a natural place to start, he said.

But "this is more than about the Salesforce space," Brossard emphasized. "It's our whole application strategy."

That application strategy aims to encompass delivery of three types of apps: custom, packaged, and now SaaS.

Other than an Office 365 resale business, Rackspace had never before partnered with a SaaS vendor.

Moving into managed SaaS was necessary, Brossard said, because Rackspace is committed to meeting customers wherever they are in their digital transformation process.

While RelationEdge's only technology alliance is with Salesforce, the company's expertise is around business processes. That skillset it has nurtured among its 125 employees can, and will be extended, to other cloud software ecosystems, Brossard said.

"They first talk to customers at the business process level. They discuss business outcomes," he said of the solution provider.

"It becomes a foundation for us to build on," he said, by adding SaaS capabilities beyond the CRM leader.

The RelationEdge branding will be maintained within Rackspace, and the organization will remain entirely intact. The solution provider's founder and CEO, Matt Stoyka, will join Rackspace and report directly to Brossard.

Once RelationEdge is operating as a division of Rackspace, Brossard said the "selection of technology opportunities will expand."

Brossard wouldn't say what other SaaS vendors Rackspace hopes to join forces with.

There were discussions with Salesforce during negotiations to buy RelationEdge to ensure the cloud software giant supported Rackspace's entry into its ecosystem, Matt Bradley, Rackspace's chief strategy officer, told CRN.

The embrace of SaaS is part of a larger transformation that started in 2015 with a managed services alliance with Microsoft Azure, at the time seen entirely as a competitor to Rackspace in the Infrastructure-as-a-Service market. Major deals of that sort followed with Amazon Web Services, and later Google Cloud Platform.

The strategic shift from cloud infrastructure provider to multi-cloud managed services partner accelerated when Rackspace was privatized in 2016.

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