Rackspace CEO: Why We’re Buying Datapipe

When Rackspace went private late last year, we did so mainly because, at this point in our history, we need to make major, long-term investments in the capabilities our customers are demanding. And that’s just what we’re doing.

datapipe logo

Today, we announced that we’ve reached agreement to purchase Datapipe, a leading provider of managed services across public and private clouds, managed hosting and colocation.

Based in Jersey City, New Jersey. Datapipe has 825 employees who work at 11 offices in the U.S., U.K., and Asia. It has 29 data centers in nine countries across the U.S., U.K., continental Europe, Asia, the Pacific and Latin America.

We expect to obtain financing and regulatory approvals for this transaction by the fourth quarter of 2017. Once that happens, this will be the biggest acquisition, by far, in Rackspace history. And it will have a big impact on our ability to deliver the multi-cloud services that today’s customers are demanding. They want us to give them expert, unbiased advice, and manage their applications on whichever clouds will best meet their unique needs. They want us to serve them at scale, from data centers and offices across the globe. And they want the world’s best customer experience, across digital tools and results-obsessed customer service. Our mission is to meet those needs — today and as they evolve.

While this transaction will make Rackspace larger, we will retain the nimbleness, accessibility, and responsiveness that customers of both Rackspace and Datapipe cite when they explain why they choose us over the giant systems integrators and divisions of telephone companies.

When this transaction closes, it will make Rackspace:

  • The world’s leading provider of multi-cloud managed services.
  • The world’s leading provider of managed public cloud services: across all the hyper-scale infrastructure providers: the Alibaba Cloud, Amazon Web Services, Google Cloud Platform, and Microsoft Azure.
  • The world’s leading provider — now by a wider margin — of the managed hosting and private cloud solutions that more companies are using as they move out of their corporate data centers, in search of better performance, agility, and cost efficiency.

As we’ve learned more about one another, leaders of Rackspace and Datapipe have been struck by how similar our two companies are. Both are known for engaged employee cultures, technical expertise, exceptional customer service and profitable growth. Both are leaders in the Gartner Magic Quadrant assessments of providers of managed cloud services, and in industry rankings by Forrester and other leading analyst firms. Rackspace intends to build on the industry leadership the two companies have established in reliability and support, to create a new level of end-to-end customer experience.

For all these similarities, Datapipe brings new capabilities that will help us serve customers in new ways. Those capabilities include:

  • Experience serving public sector customers, including the U.S. Departments of Defense, Energy and Treasury, and the U.K. Cabinet Office, Ministry of Justice and Department of Transport. Datapipe has achieved coveted FedRAMP and FISMA certifications.
  • Data centers and offices in key markets, including the West Coast of the U.S., Brazil, mainland China and Russia, where Rackspace today has little or no presence — and where our multinational customers want us to serve them.
  • Software and tooling that will help us better serve enterprise customers: e.g., ServiceNow orchestration and automation, e-bonding with customer ticketing systems.
  • More robust professional services for customers that want to migrate to managed public cloud.
  • Traditional colocation services across four continents, to reduce cost and risk for customers moving applications out of their corporate data centers.
  • Managed services on the Alibaba Cloud (the largest in China).
  • Deep experience in managed multiple major workloads for large enterprises. While Rackspace today serves a majority of the global giants in the Fortune 100, our acquisition of Datapipe will enable us to serve even more of the needs of enterprise and midmarket customers. Datapipe manages multiple major workloads for big customers including Johnson & Johnson, McDonald’s and Rubbermaid.

By the same token, Rackspace brings new capabilities that we can deliver to Datapipe customers, including:

  • Managed services for enterprise applications, including those in the Oracle and SAP ecosystems, which we added with our recent acquisition of TriCore Solutions.
  • Managed services for applications used in digital marketing, ecommerce and web content management.
  • Managed Google Cloud Platform.
  • Deep experience in Microsoft, VMware and OpenStack private clouds, including new service offerings for Azure Stack and VMware Cloud on AWS.

Rackspace will lead a thoughtful and thorough integration process, working with leaders from both companies. Throughout this process, we will take special care to maintain and enhance the customer experience that has differentiated both Rackspace and Datapipe from our competitors.

Like most transactions of this size, ours will require multiple regulatory approvals in the U.S. and abroad. We expect it to close sometime in the fourth quarter of this year. We’ll keep you posted on our progress, and look forward to delivering the best service yet to the customers of both companies.

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Joe Eazor is CEO of Rackspace, responsible for the company’s strategy and operations. He has deep experience running everything from startups to huge divisions of global enterprises, and has a strong track record of delivering value to customers, employees and investors. Joe comes to Rackspace from EarthLink where he served as CEO from 2014 until he led the sale of the company in 2017. Under his leadership, EarthLink was transformed from a pioneer of early dial-up Internet service into a profitable cloud networking business, investing in new products and exceptional customer service. In 2016, Forbes named EarthLink one of the 100 Most Trustworthy Companies in America. Prior to leading EarthLink, Joe served as a top executive at EMC, HP and EDS, where he gained leadership experience across strategy, customer support, product development, international operations, global sales and marketing, M&A and business process outsourcing. He earned his bachelor's degree in petroleum engineering at the Colorado School of Mines and holds an MBA from the University of Chicago's Booth School of Business.

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