Pax8 raises $96 million to transform cloud services delivery
By Michael Vizard

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

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

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

Wirehive will augment those capabilities by providing IT service firms with a bench of cloud computing experts to tap when they want to implement cloud-based IT solutions, 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, Pax8 chief revenue officer Nick Heddy said.

With this trend gaining momentum, the cost of IT service engagements should ultimately decline as the providers of these services make them more economical. Relying on outsourcing for professional services expertise is not necessarily a new idea, but in the wake of the economic downturn brought on by the COVID-19 pandemic, IT service firms are looking to reduce costs in a more flexible fashion. “We see this as a marriage of two disrupters,” Heddy said.

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

Historically, distributors have provided similar capabilities to IT service 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 service 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 in the field is at an all-time high. The biggest issue any such firm likely 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 service firms with access to expertise on demand. The challenge now is creating the processes around which IT service firms can profitably tap the external IT expertise that organizations such as Pax8 are investing in on their behalf.

The funding round 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 Catalyst Investors partner Todd Clapp and Sageview cofounder and managing partner Scott Stuart to its board of directors.