After EMC, Dell Buyouts, Spanning Focused on Data Backup, Ransomware

Austin — The broad-stroke reasoning behind the Dell and EMC merger has been discussed for months: Dell is hoping to benefit from being able to simultaneously offer its computers, servers, and other hardware alongside EMC’s data storage, virtualization, security, and various other computing and data-focused services.

But there are other parts of Hopkinton, MA-based EMC (NYSE: EMC) that may have some added benefit to Dell, too—that is, according to one EMC subsidiary that’s located in the backyard of Round Rock, TX-based Dell.

Spanning is an Austin, TX-based data protection and backup company that was acquired by EMC in October of 2014. Known now as Spanning by EMC, the company targets small and medium-sized businesses that use one of three software-as-a-service (SaaS) products for running their operations: Google Apps, Salesforce, or Office 365, according to vice president and general manager Jeff Erramouspe.

Spanning offers those businesses extra backup in addition to anything provided by the SaaS companies, marketing its tool as a fail-safe that would protect a user in the event of a hacker locking up or destroying documents (and backups created by the SaaS provider). If that happens, and employees can’t access something like a business’s customer info, Spanning has backed up that data on a separate server, so that the original can be replaced with the unfettered backup, Erramouspe says.

The company operates as a part of EMC’s data protection cloud group, along with another online backup protection service, Seattle-based Mozy. For both companies, the Dell acquisition presents an opportunity for the computer manufacturer to sell the Spanning and Mozy services directly alongside Dell’s physical products and apps that run on Dell desktops, such as Office 365, Microsoft’s software and services platform for businesses.

“It increases the average sale, it increases the margin because this is the product that is wholly owned by the organization,” Erramouspe says.

If all goes as planned, Spanning hopes that Dell’s strength in larger commercial enterprises will help Spanning’s sales expand beyond its midmarket customers, Erramouspe says. Spanning has already grown from the 5,000 customers it had before EMC required it, completing its largest deal in company history during the first quarter of 2016, he says. (He declined to say exactly how large the deal was.)

Founded in 2010 by Austin entrepreneur Charlie Wood, Spanning took on its first venture funding that year from Boulder, CO-based Foundry Group, a $3 million Series A round. Erramouspe joined in 2012, and became CEO of the company in 2013, shortly after EMC first became involved by leading a $6 million Series B round (in which Foundry Group also participated). EMC started moving forward with the acquisition of Spanning in mid-2014.

One other thing that could spur growth at Spanning is the emergence of what is now known as ransomware, Erramouspe says. It’s a tactic used by hackers who have evolved past trying to sell stolen data on the black market; instead, they ransom the data back to the original owner so they can have access to it again, he says.

Organizations such as Hollywood Presbyterian Hospital in Los Angeles, a school district in Houston, and the town of Tewksbury, MA, have recently paid ransomware fees.

“The data they hold ransom is most valuable to the people they’re holding it ransom from,” Erramouspe says. While Spanning doesn’t have tools to prevent a company’s data from being hacked, it can help by making data held at ransom available again. “When the data is compromised, that’s where we step in,” he says.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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