Red Hat Acquires Cloud Services Provider eNovance

Red Hat Wednesday said it plans to acquire eNovance, a Paris-based cloud services provider and major contributor to the OpenStack community championed by Red Hat.

Red Hat agreed to purchase eNovance for 50 million Euros cash and another 20 million Euros in Red Hat common shares, according to the Raleigh, N.C.-based company.

Red Hat CEO James Whitehurst told CRN that despite some North American managed services business that eNovance maintains through its Montreal office, Red Hat has no intention of competing with its channel partners after the acquisition goes through. Instead, Red Hat wants to "work with our partners to build a broader capability."

"There’s not much capability out there around building and managing OpenStack clouds," said Whitehurst, adding that Red Hat needed a service component to better disseminate the open-source technology.

The French hosting and managed services provider was founded in 2008 and is the seventh largest contributor to the OpenStack community.

’What we're finding right now [is] there is not enough capability within Red Hat nor within our partners to be able to implement the number of requests we get in OpenStack and serve our customer base. This is all about how we build an internal capability to be able to meet the demand that’s out there today," Whitehurst said.

There’s been no final decision as to whether Red Hat’s channel partners will be asked to resell eNovance solutions, or even whether the company will maintain the managed services component of its newest business. That determination will be made after Red Hat executives better assess eNovance's resources and review the company’s book of business, Whitehurst told CRN, adding more details will come when the deal closes.

John Barnes, vice president of sales at Groupware Technology, a cloud solution provider and Red Hat partner based in the San Francisco Bay area, told CRN the eNovance acquisition actually ’presents a lot of opportunity for resellers" due to the nuances of OpenStack.

OpenStack solutions follow many of the same guidelines that dictate the business practices of the traditional VAR model. But the difference with OpenStack is that many resellers ’are not staffed appropriately to consistently close business’ while maintaining their traditional areas of strength, said Barnes.

Working with Red Hat "potentially allows the reseller/VAR to figure out how to staff the practice if they choose to venture into it," he said.

Whitehurst compared the eNovance deal to Red Hat’s 2008 acquisition of Amentra, a middleware provider.

’Our desire has never been, and is still not to be, a significant services company. We are a subscription company. We’re a software company that needs enough services to enable our products and help enable our partners,’ he told CRN.

PUBLISHED JUNE 19, 2014