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Rackspace Jump-starts its Salesforce Services Business with RelationEdge

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NelsonHall recently caught up with managed cloud and hosting vendor Rackspace. We discussed Rackspace’s May 2018 acquisition of a Salesforce consulting and systems integration partner, RelationEdge, and how the acquisition fits into its plans.

Who is RelationEdge?

RelationEdge (RE) was founded in 2013, in San Diego, CA. The company is positioned as a business process reengineering and Salesforce systems integration services vendor. RE has a background in Service Cloud, and in the migration from Desk to Service Cloud. RE also provides services around Salesforce’s main Clouds, including Community, Marketing, and Sales Clouds.

Alongside Salesforce services, the company also provides digital marketing agency services such as email campaign management, content management, social media PR, conversion rate optimization, and SEO.

RE is profitable and has been on a growth path: the company is present in 12 locations in the U.S., and has expanded through an entrepreneurship approach, with each regional office having its own go-to-market and delivery capabilities. Currently, RE has 125 personnel, onshore.

How do Salesforce capabilities fit into Rackspace?

Rackspace wants to rapidly expand its application services capabilities to complement its cloud-centric IT infrastructure service capabilities. The company has an Application Services unit, which has developed application operations, application maintenance and support services.

Rackspace is also driving this service expansion through acquisitions. The backing of its owner since 2016, PE firm Apollo Global Management, is helping. Rackspace has made two application service-centric M&As since it was taken over.

In June 2017, the company acquired TriCore Solutions, a systems integration firm specializing in ERP, BI, analytics, and data warehousing, with core capabilities around SAP and Oracle. TriCore jumpstarted the C&SI capabilities of Rackspace and brought ~500 personnel. TriCore also brought a presence in India with 355 employees in Hyderabad and Gurgaon.

The RE acquisition brings further benefits to Application Services by positioning the unit more firmly in the digital space. Now, Application Services has not only Salesforce capabilities, but also commerce and UX experience around Oracle Commerce and SAP Hybris, Sitecore Experience Management and Experience Commerce, and Adobe Experience Manager. In addition, Rackspace also provides Java and .NET development services.

What is the application services future for Rackspace?

Rackspace continues to be a cloud-centric IT infrastructure service vendor. And to that purpose, it made its largest ever acquisition with Datapipe in November 2017. Datapipe had a similar business to Rackspace, and brought managed hosting and cloud service expertise. It had 825 employees and a 29-datacenter presence in nine countries.

Nevertheless, in spite of its IT infrastructure centricity, Rackspace has ambitions in the application services space with a focus on digital. In the short- to mid-term, the Application Services unit will be focusing on cross-fertilization, with the expansion of the RE delivery model to India (relying on TriCore’s Indian presence), and will also be deploying the business process reengineering expertise of RE.

Application Services will also be expanding and focusing its service portfolio, with several priorities in professional services:

  • SaaS applications (e.g. Salesforce, Workday, ServiceNow, SAP HANA, and Oracle Cloud)
  • Growing professional services
  • Business intelligence and analytics
  • Application migration to the cloud
  • On-premise applications and software, with a focus on ERPs and collaboration applications
  • Databases (e.g. RDBMS, NoSQL, and MangoDB).

Finally, IP creation is also on the agenda, to shorten implementation times, with Application Services looking to create technology accelerators.

In the context of Salesforce services, NelsonHall believes that RelationEdge represents a first step for Rackspace’s Salesforce portfolio. With the Salesforce ecosystem rapidly expanding, notably through acquisitions, and Salesforce’s Cloud expanding from specific applications (e.g. CRM) to becoming platforms for development of further functionality, RE’s move into IP creation and the expansion of its delivery model to India are a mid-term necessity. Hence, we believe that Rackspace is going in the right direction.

 

NelsonHall will be publishing a major global market analysis report on Salesforce Services in October 2018.

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