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Dell EMC's Sale Of Spanning Cloud Apps Improves Prospects For The Newly Independent SaaS Data Protection Vendor

EMC wanted to fill the SaaS hole in its data protection business by acquiring Spanning Cloud Apps in 2014, but it became an under-utilized asset under Dell EMC, according to a Spanning exec and a channel partner.

The sale of Dell EMC's Spanning Cloud Apps to a private equity company gives will give Spanning a better opportunity to develop its SaaS data protection business, according to Spanning's CEO Jeff Erramouspe.

"The bottom line is, as we worked with Dell EMC over the last couple years, they saw us as a SaaS-based company with a high-velocity sales model," Erramouspe told CRN. "We really didn't fit directly with the Dell EMC enterprise model."

As Dell EMC evaluated how to work with Spanning after Dell acquired EMC, it saw some friction points that inhibited how Spanning did business, Erramouspe said. "That's not a bad thing," he said. "But Dell EMC figured it could do better on its own."

Related: [Spanning, Acquired By EMC, Unveils Office 365 Data Protection Solution]

Dell EMC on Thursday said it had sold the Spanning business to Insight Venture Partners for an undisclosed sum. The organization will revert to its old name, Spanning Cloud Apps, and will be based in Austin, Texas, as a Dell strategic partner.

Spanning Cloud Apps was originally acquired by EMC in October of 2014 as part of a push by EMC to develop its hybrid cloud capabilities. EMC that same month unveiled two other similar acquisitions: OpenStack IaaS solution developer Cloudscaling, and global namespace provider Maginatics.

When EMC acquired Spanning in 2014, it wanted to plug a hole in its broader data protection portfolio that stemmed from the growth of SaaS applications, Erramouspe said.

"EMC was selling Data Domain and Avamar into Exchange environments," he said. "But they also saw Exchange moving to Office 365, and realized they had a hole in their product offerings." He added: "It was a good decision by EMC in the first place. But with the market changes, we feel there are better opportunities for us on our own."

"EMC's timing when it bought Spanning was about one year too late," said Jamie Shepard, senior vice president for healthcare and strategy at Lumenate, a Dallas-based solution provider and long-time Dell EMC channel partner. "EMC never did much with Spanning. The majority of SaaS customers were doing Office 365, but for them, it wasn't always important to have a third-party data protection application. Microsoft's data protection is usually good enough."

Shepard said customers are more likely to look for a single data protection platform for all their data. "The cloud creates another siloed approach, and customers want to get away from silos," he said.

Customers looking beyond Microsoft's own data protection tools more often look to a vendor like Veeam, Shepard said.

"I'm a Veeam advocate in this respect," he said. "Veeam handles replication and failovers and handles on-site and cloud environments. It can back up Office 365 to cloud or on-premises, and handles unstructured data."

Spanning does have a better chance to develop its business as a stand-alone company than it did under Dell EMC, Shepard said. "It got lost inside Dell EMC, and became more of a small part of one slide in a data protection presentation."

Spanning Cloud Apps is currently focused on protecting data in Google's G Suite, but is seeing its Office 365 business growing much faster, Erramouspe said. He expects that, within a year, about 40 percent of revenue will come from G Suite data, 40 percent from Office 365 data, and 20 percent from Salesforce.com data.

While SaaS applications do a good job of protecting data, businesses really need a dedicated data protection application like Spanning, Erramouspe said.

"The SaaS do a really good job protecting your data from their errors," he said. "But they don't understand the users. If you tell them to delete data, it's deleted. If a hacker comes in and causes data to be deleted or corrupted, it's done. When the data's gone, you might as well go out of business. We provide the ultimate backstop in the event data goes away. It's all about recovery."

Spanning said it has experienced a 70-plus-percent year-over-year revenue growth serving over 7,000 customers who have over 1.5 billion items protected by Spanning's technology.

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