Rackspace stays open to fend off giants

The veteran hosting company is betting on a multiplatform approach

Rackspace is a company with a lot to be proud about. It is a pioneer of the modern web hosting industry. It was the driving force, arguably, behind the increasingly influential OpenStack open source cloud platform. It is an important player in private cloud provisioning. It helps companies deal with spikes in demand that could otherwise bring them to their knees.

This Texas company, founded in 1998, had a strong vision of the future and executed on that vision. But its challenge is that it is surrounded by some of the largest and most aggressive companies in the world, notably Amazon Web Services, Microsoft and IBM.

John Engates, himself a Texan and San Antonio born and bred, is CTO at Rackspace. I caught up with him recently when he visited the UK and started by asking about OpenStack.

“We’ve been working on the features. We have to make sure it scales well, has got security… all the things people are concerned with. We’re concerned with not only managing the software but the hardware so people can deploy fast.”

For Rackspace, OpenStack is another element in the company’s plan to be play in open fields. Historically, it has been a hosting company but today it wants to let customers extend to their own premises or a third-party host like Equinix and platforms like AWS and Microsoft Azure, and then help the customer manage that deployment through its lifecycle.

Engates says that the whole process of moving assets to the cloud can be complex when it comes to the practical elements.

“The hard part for some companies is they’re enticed by the idea of OpenStack but the difficult part comes when you have to hire the experts,” he says. “You have to reach into the community and [for engineers] it’s not a skill-set you pick up overnight. You can train people but they’re not steeped in it.”

Rackspace’s plan is to remove the barriers to adoption.

“We want to take cost out, take risk out, accelerate it, and make the private cloud more like a public cloud.”

Just don’t suggest Rackspace might be turning into a consulting firm.

“I don’t like the term,” Engates says. “We’re not bodies for hire, we’re not an Accenture. What we call ‘fanatical support’ is the combination of technology and people together.”

Rackspace is turning to new areas like managed security across these aforementioned platforms and Engates says it wants to be involved in the “heavy lifting of getting apps up and running on those clouds”.

But when I suggest another comparison he says we should see the company not so much as a Red Hat but more as a firm that will help firms snap up the new opportunities without having to train people and then risk those people being poached or leaving of their own volition.

Of course, the challenge with something like OpenStack is that politics come into things and the sharing platform becomes a vipers nest but Engates says that even though there are definitely ‘frenemies’ there is a good common aim.

“Some of them are there for good reasons, others got involved to have a seat at the table you get to see the good the bad and the ugly of the community. You see companies that are very ‘OpenStack-y’ but openness is compelling and even the companies that were the worst didn’t go far off.”

Some criticise OpenStack for moving fast, with revisions bearing scant resemblance to the previous iteration, but Engates takes a philosophical view.

“The community certainly has changed,” he says. “It’s like a big tree: you have to chop off some bits, keep it pruned and new limbs branch out and don’t always go in the right direction. The alternative is not better - you have to go all in with a vendor.”

What about the suggestion that Rackspace could be like Sun with java, instigating a movement but ultimately not seeing dollars at the end of the rainbow?

“It’s one of those things where if we hadn’t open-sourced it, we’d be in a worse position because the world would be on someone else’s standard. Back then it would have been Eucalyptus or CloudStack or some other thing and our role would be smaller. We benefit from having the centre of experience housed in Rackspace. We maybe got wrapped up in the idea of OpenStack being bigger than what it turned out to be for us, but it’s something that we came out better from.”

Generally, Rackspace is in a good position though, he contends.

“Our strengths lie in running large-scale apps and software-as-a-service platforms. Historically, it’s been combined with hardware and datacentres but most of the people at Rackspace never see those.”

In particular, Rackspace has built a reputation for helping firms deal with spikes in demand. “On days like Cyber Monday, we’re with you in the trenches,” he adds.

But he’s also aware that today’s IT infrastructures are mixed bags.

“We hear the words ‘multiple cloud’ a lot and you hear that and think it means Amazon and Microsoft Azure but no, it also means open source and VMware and your legacy that goes all the way back. Today’s platforms… they’re not pure unless you’re a start-up you can say, ‘I’m all in on AWS’ but otherwise it’s such a spectrum.

Ultimately, companies live or die by building better products or by delivering best-in-class support. And, more than anything, Rackspace wants to be known for service and that ‘fanatical support’ tagline it brandishes.

“The idea of fanatical support never goes out of style in the early days it may have meant you get your server online in 24 hours and now it’s 24 seconds. It also means different things in different parts of the world. Some people have learned to live with downtime and for support we have to define it as in what does it mean to you.”

One big challenge for Rackspace is that while it was a pioneer in hosting it has some big companies for competition. That has led some to suggest Rackspace is acquisition fodder but Engates says he can live with that.

“I don’t see any reason why we need to sell, because the value we deliver is fundamentally different and the DNA is fundamentally different. It’s never been just about the hardware. If it had, we would never have been able to charge that premium. There were companies that were way better capitalised but the DNA of a telco is a very different thing. Most people don’t have a very good relationship with their telco. They dread the day they query an invoice.

“The IT department says, ‘I can’t do everything.’ Even the IT folks need a little help. They’re resource-constrained and expertise-constrained. It’s just hard to manage all that. You need to bring in new tools, new techniques and more expertise. That’s a challenge and also an opportunity.”

The ‘Uber for X’ phenomenon is also an opportunity if companies can only get IT infrastructure right and focus on business.

“We rode over here in an Uber car and Uber is the poster child for disruption,” Engates says. “It’s a pressure everyone is struggling with. The real differentiator in the future is what can you build or deliver, something that differentiates you. Is it a set of data that differentiates you in some way? Almost every company has valuable data flowing through the company but often it’s locked up or they don’t know how to get it to get insight.”

Engates sees no reason for seismic change but takes a Chairman Mao-like view of letting a thousand flowers bloom.

“The plan is to plant little seedlings like the security service, the digital practice, the Azure business, the AWS business… A lot of companies don’t realise they had this option. AWS and Microsoft are doing a pretty good job in putting together ecosystems but a lot of companies think they have to do it themselves.”

So if it’s not Red Hat who does Rackspace compare itself against as an exemplar of what it would seek to be?

“We used to use [US department store] Nordstrum or Lexus as companies creating a great customer experience around their products. I personally admire Apple: l’m a geek or fanboy if you want to call it that, but I don’t think it’s something you could necessarily replicate, although Samsung probably wants to be like that…”