Dive Brief:
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Rackspace announced Thursday it plans to purchase enterprise applications management company TriCore. Rackspace has purchased just eight companies since its foundation in 1998, but this is the first since 2013, according to TechCrunch.
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It's a big week for Rackspace, as earlier this week it announced Joe Eazor will become the company’s new CEO effective June 12. Rackspace President Jeff Cotten has served as interim CEO since the company's previous chief executive, Taylor Rhodes, departed in early May.
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With TriCore, Rackspace is expanding into a new area. Companies spend $3 billion per year on ERP, business intelligence and analytics, and database managed services, according to industry analysts. Tricore focuses on the hosted segments of those markets, an area that’s expected to grow double digits a year going forward.
Dive Insight:
It's definitely a time of transition for Rackspace. The company has struggled in recent years to compete in the expanding market. Last year, the company was acquired by Apollo Global Management for $4.3 billion, which Rackspace leaders framed as a chance to grow and innovate while remaining outside of the public eye.
Rhodes’ departure may have been an indication the board was looking to take the company in a different direction, which it can now do with Eazor.
Purchasing TriCore is a strategic move for Rackspace. The company now needs to further differentiate itself and establish footing in an area other than public cloud, where competition is simply too steep. With TriCore, Rackspace will be able to help companies manage mission-critical enterprise applications like ERP solutions from Oracle and SAP, an area where Rackspace is seeing strong demand.
