Ensono Embiggens With Wipro Data Center Deal
March 19, 2018 Alex Woodie
Ensono isn’t the most well-known datacenter operator in the world, either in the open systems or mainframe/IBM i space where it currently operates. But thanks to its recently announced deal with Wipro to buy eight Wipro data centers for nearly half a billion dollars, the Chicago-based company is putting itself on the map.
If the name Ensono is news to you, you are not alone. The company was formed just two years ago when Arkansas-based Acxiom spun out its IT Outsourcing (ITO) division to create a standalone entity with four data centers in the US, three in Europe, and $300 million in revenue. While the bulk of its managed services business runs on X86 servers, it has its share of other gear, including Power Systems servers hosting more than a hundred IBM i LPARs, double that amount of AIX environments, and mainframes too.
Under the deal with Bangalore, India-based Wipro, which was announced last Thursday, Ensono will almost double the size of its private cloud hosting business. In exchange for $405 million, Ensono gets eight data centers that run the servers used by more than 60 companies. More than 900 Wipro employees, including some based in India, will now get their paychecks from Ensono.
When the deal is closed, which is expected by the end of June, Ensono will run more than 30,000 servers across 14 datacenters in the United States, United Kingdom, and Germany. The company will have annual revenue of $550 million, and its total worth will be right around $1 billion.
In an interview with IT Jungle, Ensono CEO Jeff VonDeylen says the Wipro datacenters and workers will be a good fit with Ensono’ business. “It was really very complementary to what we do,” he says. “Whether it’s traditional mainframe or AS/400 environments all the way to classic dedicate distributed environments – those are all things that they supported for their group of clients that will be joining Ensono.”
Wipro owns the ground and the buildings for two of the data centers, and for the other six is the lease holder, but did all the work to convert the buildings into data centers. Ensono likes to control its own data centers, as opposed to leasing space from other data center operators. The fact that one of Wipro’s data centers is in Germany also provides Ensono an entry into that country, where it previously had no presence.
Like Ensono, Wipros’ data centers are primarily stocked with X86 server running Linux and Windows. But the slice of IBM i servers will grow relative to the whole pie when the deal is completed this summer, VonDeylen says. “Wipro’s business on the IBM i side is slightly larger,” he says, “so we’re optimistic that it will continue to provide a great capability at maybe a little bit more scale than we had previously.”
As part of the deal, Wipro will take a $50 million stake in Ensono. That financial tie will help ensure that Ensono and Wipro continue to work together on client accounts into the future, VonDeylen says. “As an organization, Wipro really services Fortune 100 kinds of companies,” he says. “As they go after those clients with a broader set of IT services, we will be the infrastructure partner. That’s another segment in terms of the way it’s structured that was really important.”
Spending on cloud services is currently exploding, with spending levels on cloud coming in even higher than projections.
Back in 2016, IDC projected that spending on public cloud services would increase from $67 billion in 2015 to $162 billion in 2020, which corresponds with a 19 percent compound annual growth rate (CAGR). Private cloud spending, meanwhile, was projected to grow at a 13 percent CAGR – less than public cloud, but still taking share from traditional on-premise deployments.
This January, IDC calculated that spending in 2017 was on pace to exceed those figures, with cloud spending on servers, storage, and switches accounting for $46.5 billion last year, a year-over-year growth rate of 21 percent. The public cloud portion of that spending grew at a 26 percent clip, while private cloud spending came in right at 13 percent.
With enterprise objections to the cloud melting, private cloud operators like Ensono are hoping to get in on the action. “People are dipping their toe in it,” VonDeylen says. “That’s why I love it. I think it’s a tremendously large market, and it’s still growing. The growth is driven by companies who weren’t outsourcing yesterday and are going to outsource tomorrow.”
Ensono hopes to differentiate itself in several ways. For starters, it offers hooks into public cloud platforms at Amazon Web Services and Microsoft. That lets it position itself as a one-stop-shop for customers to get scalable public cloud services for X86 workloads as well as a place to house IBM i, AIX, and mainframe workloads that can’t run on the public cloud.
On the flip side, Ensono is positioning itself as a place to park business applications that are critical to the business, but not necessarily providing as much top-line revenue growth as other endeavors could provide. ERP applications that don’t change much from year to year are an easy target for reposting on the private cloud, especially when big data analytics and IoT are calling.
VonDeylen shared a story of one of his clients in the manufacturing industry that pays Ensono to house mainframe and X86 workloads for them. The company had outsourced the servers that run its ERP environment.
“The CIO’s point to me is ‘I’ve got to be relevant to the business,'” VonDeylen says. “‘Now that you guys have SAP on managed services, now help me manage this problem I’ve got capturing millions of pieces of data that exist on the manufacturing floor. We’re going to use that to boost the business.’
“If they take that and scale the operations and capabilities using analytics and data, that’s where he becomes more relevant the CEO and the board,” he continues. “If that means optimizing their legacy environment so they can get there and put money into these newer applicant and capabilities, that’s part of what we want to have them do.”