Philbert Shih on HOSTING acquisition of Stelligent

• March 21, 2017

Source: Denver Post

Hosting.com dives into Amazon Web Services, buys Stelligent Systems

Denver internet firm’s strategic purchase hopes to answer customer questions on what’s the big deal about Amazon’s cloud?

With the hotness that is Amazon Web Services, Denver’s Hosting.com jumped on the chance to acquire Stelligent Systems, a Reston, Va., consulting firm offering help with software services in Amazon’s cloud since 2009.

Hosting, which plans to announce the acquisition on Tuesday, already offers numerous internet cloud services. But it a discovered a disconnect among customers who shifted business online to Amazon’s cloud. They weren’t quite sure what was different, Hosting.com cofounder and CEO Joel Daly said.

Stelligent helps clients figure out where to automate the software development process so the process is much faster and more efficient than the old manual-testing method.

“Customers who say ‘I’m not saving any money really,’ they rushed into it. They didn’t plan how to optimize,” Daly said. “We have a consulting arm, but it’s not as large and as specific as Stelligent. It was a hole for us.”

Financial terms were not shared.

Amazon Web Services provides the tools for companies to make their for-sale stuff and services available online from any device — so, for example, travelers can book a room onAirbnb, a long-time AWS customer. AWS’s growth has been tremendouswith fourth quarter revenues in 2016 increasing 47 percent over a year to $3.5 billion. Full 2016 year revenues hit $12.2 billion, up 55 percent from the prior year’s $7.9 billion.

Companies are obviously spending more money to move to the cloud, said  Philbert Shih, founder of Structure Research, which tracks the hosting and the cloud market.

Structure Research estimated that companies spent $18 billion on the cloud last year. That is projected to grow to $119 billion by 2021. Amazon dominates with about 70 percent of the market. Other competitors include Microsoft Azure, Rackspace Cloud and IBM Cloud.

But moving to the cloud doesn’t mean it’s easy for corporations to figure out, Shih said.

“The best way to think about this is AWS is a great platform and a great tool front,” Shih said. “But as it continues to evolve and companies rely more and more on Amazon, it produces a certain complexity. And that can be quite strenuous for companies.”

Hosting and other competitors are finding they must transform their own business to offer IT support for customers that move to the cloud, he said. Hosting’s acquisition of Stelligent is one of the largest in terms of service providers buying up a focused consultant.

“This gives them a leg up on the competition by immediately bringing in roughly 35 to 40 engineers on the AWS platform,” Shih said. “Building from the ground up would be so time-consuming.”

Hosting declined to share how much it’s paying for Stelligent. But the 35-person team — including founders Paul Duvall and Rob Daly — will join Hosting’s workforce of 425 people. Most of Stelligent’s staff work remotely so they won’t be moving to Denver, where Hosting employs 80 people at its 900 S. Broadway headquarters.

Duvall becomes Hosting.com’s chief technology officer while cofounder Rob Daly — “No, we’re not related but the more I work with him, the more I think I might have to do DNA testing,” Joel Daly joked — takes the gig of executive vice president of public-cloud consulting.