Pax8 raises $96 million to transform cloud services delivery

Pax8, the provider of a platform that makes it simpler for IT services firms to centralize the provisioning and billing processes across multiple cloud applications, today announced it has raised $96 million in additional equity. At the same time, the company also revealed yesterday it has acquired Wirehive, a cloud consulting firm in the U.K. Terms of the deal were not disclosed.

The overall goal is to reduce the friction that IT services firms encounter when they’re deploying cloud services on behalf of their customers using a platform through which they can manage subscriptions to multiple cloud services and software-as-a-service (SaaS) applications. That approach also serves to make it simpler for IT services firms to manage subscription renewals across a wide range of cloud services.

Wirehive will augment those capabilities by providing IT services firms with a bench of cloud computing experts they can tap to implement a cloud-based IT solution, rather than hiring full-time personnel. The consulting firm currently has 30 employees focused exclusively on complex cloud projects at a time when navigating cloud technologies involving everything from virtual machines to Kubernetes clusters and serverless computing frameworks has become more complex.

Relying on external expertise will make it feasible for smaller IT services providers to cost-effectively compete against larger rivals, said Nick Heddy, chief revenue officer for Pax8.

As that trend gains momentum, the cost of IT services engagements should ultimately decline as the providers of these services become more economically efficient. Relying on outsourcing for professional services expertise is not necessarily a new idea; however, in the wake of the economic downturn brought on by the COVID-19 pandemic, IT services firms are looking to reduce costs in a more flexible fashion. “We see this as a marriage of two disrupters,” said Heddy.

The funding was co-led by Catalyst Investors and Sageview Capital, with additional funds coming from previous investors Blue Cloud Ventures and Liberty Global Ventures. Pax8 also named Todd Clapp, partner at Catalyst Investors, and Scott Stuart, co-founder and managing partner at Sageview, to its board of directors.

At its core, Pax8 is a provider of a platform that makes it simpler for IT services providers to both centralize the management of the provisioning of cloud subscriptions and the ongoing billing process. Rather than having to manage these processes via separate portals provided by each provider of a cloud service, the Pax8 platform makes use of application programming interfaces (APIs) that each cloud service provider exposes to centralize provisioning and billing. The IT services provider can then more easily manage multiple cloud services on behalf of a single customer.

Historically, distributors have provided similar capabilities to IT services firms that resell IT platforms and applications installed in on-premises IT environments. Pax8 is automating the provisioning, billing, and license renewal processes for cloud applications and services in a way that doesn’t require an IT services firm to make any specific purchasing commitments to a distributor.

It’s too early to say how the delivery of IT services will be transformed at a time when merger and acquisition activity among IT services providers is at an all-time high. The biggest issue any IT services firm struggles with is hiring and retaining talent. There is no shortage of IT expertise available, but only a narrow slice of IT professionals have expertise in specific areas such as cloud computing or security. Being able to augment their IT personnel whenever needed provides IT services firms with access to expertise that is available on demand. The challenge now is creating the processes around which IT services firms can profitably tap that external IT expertise that organizations such as Pax8 are investing in on their behalf.