Cloud professional services deals target Oracle, ServiceNow

A fresh round of investor deals in the cloud consulting space put a spotlight on Oracle, Twilio and ServiceNow's partner ecosystems; other IT channel news.

Investors continue to focus on cloud professional services firms, with transactions this week featuring partners that have Oracle, Twilio and ServiceNow specializations.

The dollars flowing into the market underscore confidence in the cloud consulting model, which has shown resiliency during the COVID-19 pandemic and is poised for growth this year. Gartner earlier this month forecasted a 23% uptick in public cloud services spending in 2021, growth that should have a knock-on effect for companies that assist customers with cloud migration, implementation, application development and management.

Deals this week shed more light on investors' interest in cloud services firms.

VSS Capital backs Centroid Systems

VSS Capital Partners, a private investment firm based in New York, made what it termed "a significant growth investment" in Centroid Systems Inc., a managed cloud services firm based in Troy, Mich.

Centroid, an Oracle Cloud Service Provider, provides Oracle enterprise workload consulting and managed services across public cloud companies such as AWS, Google, IBM, Microsoft and Oracle. The company also works with private cloud technology.

Trent Hickman, managing director at VSS, said his company was attracted to Centroid because of VSS' prior investment in another MSP, Coretelligent. That company, based in Westwood, Mass., focuses on SMBs in the financial services and life sciences industries. The company has seen an increase in co-managed IT support relationships.

"Managed services companies typically have had high levels of recurring revenue, well above average growth and attractive margins," Hickman said.

In comparison to many of its competitors, Oracle has been slower in migrating its business to the cloud, but therein lies part of the opportunity.
Trent HickmanManaging director, VSS Capital Partners

Centroid is similar in that regard but focuses on Oracle workloads with enterprise clients, he said. While Oracle lags behind other cloud providers, that status could prove to be a virtue.

"In comparison to many of its competitors, Oracle has been slower in migrating its business to the cloud, but therein lies part of the opportunity," Hickman said. "We believe that we're still in the early innings of cloud migration, in general, and it's probably an inning or two earlier for Oracle."

Oracle's public cloud platform grew about 100% in 2020, Hickman said, citing Oracle. Gartner estimated Oracle's cloud market share doubled, but from a smaller base than the other major players, he added.

Hickman said he expects Centroid to "grow nicely on its own" but sees opportunities for add-on acquisitions. Such deals will generally aim to add clients and depth to Centroid's current expertise in the Oracle ecosystem, gain further expertise with other public cloud ecosystems, and develop credentials with SaaS applications such as Salesforce and Snowflake.

Tercera leads Terazo investment

Tercera, a Boston investment and business advisory firm that specializes in cloud professional services, invested in Terazo, a software development company and MSP based in Richmond, Va.

Tercera led the $10 million-plus funding round with participation from cloud communications platform company Twilio. Terazo, a Twilio partner, focuses on APIs and platform integration, a Tercera blog post noted. The investment will bolster Terazo's hiring efforts, as well as acquisitions and partnerships. Terazo said it aims to scale its integration and automation services business and expand nationally.

Tercera's investment is its second since its January 2021 launch. The company in February invested in BeyondID, an MSP and systems integrator based in San Francisco. Tercera's goal is to cultivate third-wave cloud consultancies, companies characterized by a multi-cloud scope, DevOps, verticalized IP and productized offerings.

Mark Wensell, CEO at TerazoMark Wensell

Terazo CEO Mark Wensell said the majority of his company's team and clients have been based in the east coast. However, the company has already begun to expand in the Midwest and expects to have a nationwide presence over the next 12 months, he noted.

Overall, Terazo will look to hire talent in locations that align with clients' time zones, rather than focused on specific cities, Wensell noted. "Even before the pandemic, we were already working with many clients in other cities that we never met face-to-face, and we expect that trend to continue," he said.

As for potential acquisitions, Terazo will likely seek companies that complement the automation and integration services it already offers, Wensell said. In addition, the company will look for partnerships with platform technology companies where it can build a mutually beneficial channel relationship.

"The nice thing about the API-first and integration-focused work we do is that one client engagement could involve as many as a half-dozen partners, so the opportunities can often cross-pollinate across partnerships," Wensell said.

Gryphon acquires Highmetric unit, MajorKey emerges

Gryphon Investors, a private equity firm in San Francisco, acquired the ServiceNow business unit and brand name of Highmetric, based in Chicago.

The acquisition will provide the basis for a ServiceNow platform. Highmetric's remaining business has rebranded as MajorKey Technologies and will focus on cloud-based digital transformation. MajorKey is backed by The Acacia Group, a technology investor based in Tysons, Va.

Gavin Long, co-founder and partner at The Acacia Group, said Highmetric wasn't looking to sell but had multiple unsolicited approaches. "Gryphon presented a compelling vision for their ServiceNow pure-play, and we saw a great opportunity for Highmetric's ServiceNow team to bring their expertise to new customers on a global scale," he said.

The Acacia Group has a minority investment in Highmetric, which lets the investment company stay involved, Long noted. MajorKey and Highmetric intend to forge a long-term relationship, he added.

MajorKey, meanwhile, plans to grow its technical consulting, identity and access management, cloud, and DevOps practices. It will also expand its blended onshore/nearshore delivery offering and "increase the focus on managed services," Long noted.

The company plans to boost its technical capabilities through acquisitions. "Currently, we have a pipeline of opportunities that could potentially add value to MajorKey's capabilities in areas like cloud operations, process automation and data analytics," he said.

This week's cloud professional services deals follow a similar investment wave last month, which included New York-based KKR & Co. Inc.'s agreement to acquire cloud and hybrid IT services firm Ensono, based in Downers Grove, Ill.

Partner roster update

  • KnowledgeLake, a content management platform provider based in St. Louis, added four partners to its channel program: Advantage Points Solutions, Covenant Technology Partners, First Digital and Sparkhound. Advantage Point Solutions is a professional services organization that specializes in telecommunications, healthcare, financial services and insurance. Covenant Technology Partners is a Microsoft Gold Partner with clients in manufacturing, finance, construction and retail. First Digital is an IT consulting firm based in South Africa that focuses on business process management, application development and cloud. Sparkhound provides cloud services, custom applications, analytics and managed enterprise services.
  • Cloudflare, a web performance and security company based in San Francisco, launched a security operations center (SOC) as a service offering. The company will initially partner with four managed security services providers. Those global SOC-as-a-service partners are Wipro, GlobalDots, Insightz Technology and BeyondID. Cloudflare has been looking to expand its channel roster.
  • Pax8, a cloud distributor based in Denver, inked global agreements with Axcient, BitTitan, NovaSOC, Nuvolex and Proofpoint. European partners can now purchase products from those vendors. Pax8 UK launched earlier this year in Bristol, U.K.
  • Treefrog Inc., a digital transformation agency based in Newmarket, Ont., partnered with Codeless Platforms. Under the partnership, Treefrog will use Codeless Platforms' Business Process Automation Platform on e-commerce, CRM, product information management and ERP integration projects.
  • Levtech Consulting, an RIB Group company based in Dubai, United Arab Emirates, earned certified Power Apps Partner status, extending its partnership with Microsoft. Levtech said it will use Power Apps in conjunction with Microsoft business applications such as Dynamics 365 and SharePoint.

Tools for MSPs

  • Panzura rolled out a global file system as a service (GFSaaS) offering for MSPs. CCL, based in New Zealand, is the first MSP to offer Panzura's GFSaaS to its clients. Panzura, based in San Jose, Calif., said its GFaaS provides outsourced management of unstructured data across hybrid and public clouds.
  • Augmentt, based in Ottawa, launched a SaaS management product for MSPs. The offering, Augmentt Engage, identifies, centrally manages and secures SaaS use in distributed environments, according to the company. The product integrates with professional services automation and remote monitoring and management platforms such as ConnectWise and N-able.

Other news

  • SADA Systems, a business and technology consultancy based in Los Angeles, unveiled a FinOps group and hired Rich Hoyer to run the operation as director of customer FinOps. Hoyer was previously with cloud consulting firm Onica, where he founded the company's FinOps professional services practice. SADA's FinOps group aims to deliver services for monitoring and measuring client's Google Cloud usage. In addition, SADA joined the FinOps Foundation as a premier member.
  • Accenture acquired Industrie&Co, a technology consultancy based in Sydney. Industrie&Co focuses on cloud-native offerings for emerging born-in-the-cloud companies and enterprises. The deal expands Accenture Cloud First, which has grown through a series of acquisitions.
  • Upstack, a web platform that sells cloud services through cloud sales agents, acquired M2 Enterprise Group Inc., a telecommunications consulting firm that specializes in unified communications and contact center services. In April 2021, Berkshire Partners invested $50 million in New York-based Upstack, which has acquired 12 independent agencies.
  • Accenture and software consultancy ThoughtWorks, along with GitHub and Microsoft, launched The Green Software Foundation. The nonprofit organization, established with the Linux Foundation and Joint Development Foundation Projects LLC, aims to create an ecosystem for building green software. The Green Software Foundation will publish green software standards and practices, cultivate open source and open data projects that support green software development, and encourage adoption of green software across the industry, according to the group.
  • Tech Data, a distributor based in Clearwater, Fla., debuted a captive finance company, Tech Data Capital. Schneider Electric has begun to use the finance arm to offer partners a subscription-based uninterruptible power supply as a service offering.
  • American Virtual Cloud Technologies Inc., a cloud communications and IT service provider based in Atlanta, added security features to its collaboration and communications tools. The company said its Smart Office suite, offered on its Kandy Cloud Platform, now provides optional single sign-on authentication on all Smart Office UC desktop and mobile clients using corporate credentials. The latest Smart Office update also includes an improved user interface, the company said.
  • Zix Corp., a Dallas cloud email security, productivity and compliance solutions provider, expanded its partner program in Germany and the U.K. The updated program lets German partners access localized product offerings such as advanced threat protection and secure file share, as well as a partner portal. U.K partners can add data archive residency to their product portfolios, according to Zix.

Executive appointments

Lightbits Labs Inc., an NVMe-over-TCP software-defined storage company based in San Jose, appointed Carol Platz as vice president of global marketing. Platz' responsibilities will include channel marketing. Platz joins Lightbits Labs from WekaIO.

Market Share is a news roundup published every Friday.

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