The Stack Archive

Rackspace bets its future on managed services

Tue 15 Jul 2014

“This is the future of our company” says cloud services provider, Rackspace, as it announces it is returning to its ‘fanatical support’ roots in managed services to secure its uncertain outlook away from the attentions of Amazon and Google.

It is targeting the market for enterprises wanting to take advantage of the cloud without having to manage the infrastructure. It has launched a set of initiatives around what it has called Managed Cloud which include proactive support, flexible pricing, innovative service level agreement guarantees, and specific support for DevOps and developers. [See Rackspace focuses on service as hunt for investor continues]


Nigel Beighton, VP Technology and Products (pictured), said the cloud market was maturing but increasing in complexity. He said there is a growing sector of companies “saying, ‘I want the advantages of cloud such as utility billing, online access, but I don’t want to have to run this 24×7 and I don’t want to have to scale this 24×7’.”

He added: “This is our market and we are going to concentrate on it. I don’t see our future being in the game against Amazon or Google, who are in a race to the bottom in infrastructure. We are a managed cloud business and we are in a race to the best service.”

This is a big throw of the dice for the company which has struggled in toe-to-toe, bare bones, public cloud infrastructure, price-cutting competition with the likes of AWS and realises it needs to be in a space that is big growing and where it can use its “fanatical support” experience.

“If you are going to play in one market you need to be really good at it and that is what we are doing here. And we know this is a massive differentiator,” said Beighton. Of course, this new market move will take it into competition with a different set of giants such as IBM and HP.

Rackspace has been finding it hard going commercially recently and announced in May that it has asked financial services giant, Morgan Stanley, to assess its strategic options following several “approaches” with interests ranging from partnership to acquisition.

Beighton said he didn’t want to be drawn on speculation about those options but added: “This is the future for the whole company – we are not just being aggressive in a new market segment of public cloud. This is fundamentally how we think the whole of this hosting business goes forward in the future.”

Rackspace says that its Managed Cloud service aims to remove the headaches of operations, admin, monitoring and scaling away from the user. Beighton said it was aimed particularly at companies who either don’t see IT as being a strategic differentiator or who lack the skills to make the most of the opportunity.

Rackspace’s service has two levels: managed infrastructure and managed operations – going as far as offering DevOps as a Service (as revealed on The Stack). “There has been a huge amount of interest around this service,” said Beighton.

The company has also introduced cloud-style pricing for its support offering with a pay as you go structure. Beighton said it was more transparent as it highlighted the price of cloud infrastructure as distinct from service and support. “This model allows customers to more accurately compare the true cost of cloud infrastructure from provider to provider,” he said. Rackspace’s Performance Cloud Servers start at 2.75p per hour for 1GB server.

“Customers are not locked into support contracts for managed operations,” said Beighton. “They pay by the hour. They will also have named individuals who they can turn to – somebody who knows who they are and what they are working on.”

He is also promising that the support service can be scaled up in the cloud style as required by the customer. “Customers can tell us when they got a critical piece coming up or they want to out a new release of code and they might be vulnerable and they need special help,” he said. “This is where we become very proactive with them; monitoring it all, giving them the support the need and having extra capability on standby.”

To back up the promise Rackspace has made an innovative commitment in its service level agreement (SLA). “If we fail to deliver when they have notified us of that critical piece, then we do a time ten SLA pay out,” he said.

“It’s our job to scale it up and put our money where our mouth is. I’m throwing the glove out to other support organisations to try and come even close to what we are doing,” he added.

Developers are also being targeted by Rackspace with a support package – free for the first year – as an influential part of the cloud ecosystem. Called Developer+ its aim is to help developers with services to build scalable applications.

“It is designed for developers who want to stay fast and lean and focus their engineering talent on building their app, rather than swelling their payroll with engineers who manage IT operations that don’t differentiate their business,” said Beighton.


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