by Nicole Henderson on August 19, 2014

Datapipe is expanding into the government sector with its acquisition of managed hosting and cloud provider Layered Tech on Tuesday. The terms of the acquisition have not been disclosed.

Datapipe said that the acquisition will help grow its expertise in offering compliant managed cloud services and introduce solutions for the government sector with FISMA and FedRAMP compliant cloud offerings.

“This deal is interesting in that it is about adding both capabilities and scale. For Datapipe the deal is primarily about adding a new federal sector competency to round out its security and compliance hosting portfolio, while augmenting existing capabilities in areas such as PCI compliance,” Philbert Shih, Managing Director at Structure Research tells the WHIR. “At the same time, acquiring Layered Tech gives Datapipe a legacy hosting business that scales the company up further. The deal reflects Datapipe’s desire to use M&A in order to add specific capabilities as it did last year with the acquisition of Newvem to enhance its managed AWS capabilities.”

Founded in 2004, Layered Tech has focused on providing compliant hosting solutions, introducing its cloud hosting offerings in 2006. The company recently launched a program where it provides free cloud hosting to startups in the payment processing and healthcare industries. In July, Layered Tech spoke about its new federal cloud platform-as-a-service solution at Microsoft’s Worldwide Partner conference.

As organizations in the healthcare and government sectors are being urged to adopt cloud services to cut costs and improve efficiency, hosting providers that can not only provide compliant services, but also offer a more consultative approach will win big as the healthcare cloud market in particular is expected to reach $6.5 billion by 2018.

“We have seen increased client value in delivering secure and compliant managed cloud solutions that directly connect public cloud platforms, such as AWS, to our own hosted private cloud and traditional hosted infrastructure,” Robb Allen, CEO of Datapipe said. “With the acquisition of Layered Tech we are looking forward to providing this unique combination of security, choice and control to Government clients as they tackle the complexities of leveraging cloud-based services.”

Datapipe said that Layered Tech will help strengthen its Enterprise Cloud Risk Management Solution, and deliver a hybrid cloud solution to federal customers. The acquisition will expand its data center presence through Kansas City, Missouri; Denver, Colorado; and Dallas, Texas.

As part of the acquisition, Datapipe will establish the Datapipe Government Solutions business unit. Former Layered Tech Government Solutions president and general manager Dan Tudahl will serve in the same role in this unit.