Rackspace Acquires Cloud-Native AWS Specialist Onica

The latest deal for the managed cloud giant further boosts its Amazon firepower with professional services capabilities around IoT, container-tech and other cutting-edge application-layer technologies

Rackspace is looking to supercharge its AWS professional services practice with an agreement to buy Onica, a fast-growing Amazon partner specializing in cloud-native solutions.

The deal revealed Monday for the services provider based in Santa Monica, Calif.—a 2017 spinout from Microsoft partner CorpInfo—will boost Rackspace's Amazon practice with cutting-edge capabilities around the public cloud leader's big data, machine learning, containerization and Internet-of-Things platforms.

San Antonio, Tex.-based Rackspace expects to close the acquisition of Onica -- No. 203 on the 2019 CRN Solution Provider 500 list -- in the fourth quarter. It did not disclose financial terms.

[Related: Rackspace Completes The Hyperscale Public Cloud Trifecta With Google Deal]

Onica's leaders got to know Rackspace well as a competitor, Onica CEO Stephen Gardner told CRN.

In going up against Rackspace for customer engagements, and at times helping migrate enterprises from Rackspace's private cloud to AWS, the potential synergies became evident, he said.

Rackspace has organically built a strong AWS practice around managed services and migration—one that generates similar revenue to Onica's business, according to Gardner.

But where Rackspace excels in migration and management services, Onica has invested heavily in attaining expertise in container-based application modernization, serverless architectures for IoT and edge solutions, and big data technologies for advanced simulations, Gardner said.

Rackspace sees a significant opportunity to deliver those cloud-native technologies as additional services to its existing client base, Gardner told CRN.

The multi-cloud managed serviceservices giant has been steadily moving up the application stack in recent years by acquiring SaaS specialists. That process started when Rackspace acquired TriCore Solutions in May of 2017, and advanced with a deal for Salesforce partner RelationEdge last year.

"We're the next extension of that strategy," Gardner said, with Onica delivering "significant capability around AWS" to develop modern application-level services.

Matt Stoyka, who manages all Rackspace alliances globally as the company's chief relationship officer, joined Rackspace when it bought RelationEdge, the company he founded and led as CEO.

TriCore put Rackspace in the business of managing mission-critical Oracle E-Business Suite and SAP solutions, and RelationEdge laid the foundation for a robust Salesforce practice.

Stoyka saw Onica in the same vein of adding value around professional and consulting services.

"Their cloud-native construct is very complementary," he told CRN. It "balances out our manage and operate businesses."

The integration of Onica will likely make Rackspace one of, if not the largest, AWS solutions partners, he said. And Rackspace can leverage Onica to scale a cloud-native practice beyond AWS.

"We can learn from this and potentially extend that to other hyperscalers," Stoyka told CRN. "If you look at where the market is, it is a multi-cloud and multi-hybrid cloud market, and we believe that is going to continue."

Onica also complements Rackspace geographically, especially with its presence in Canada. At the same time, Rackspace can help Onica's practice grow into other parts of the world, which the company's leadership was eager to do, but aware of the great challenges presented by that kind of expansion.

Onica hasn't been an independent entity for long, but the company has grown at a breakneck pace, partly through its own acquisitions.

Soon after being spun out of CorpInfo with $20 million in funding provided by Sunstone Partners, Onica bought Sturdy Networks and NetBrains, two fellow AWS consultancies that effectively operated as one company within a family structure.

Onica CTO Tolga Tarhan said that Onica's resources under the Rackspace umbrella can yield the "most-dominant professional services company for AWS."

"We get to help customers move up the stack," Tarhan said, by facilitating adoption of machine learning, big data, and IoT.

"The conversations we can have on that front with customers," Tarhan said, are "additive capabilities for Rackspace."

For any solution provider, even one as large as Rackspace, it's necessary to continue layering on components to keep up with the agile world of cloud computing, he said.

"The rate AWS is dropping new products and services, you have to keep evolving and building capabilities very quickly, and that's what we've really specialized in," Tarhan said.