Many organizations today feel the pressure to reduce IT expenses, optimize IT operations, and avoid upfront infrastructure costs. Cloud computing, in some shape or form, is rapidly emerging as a viable solution to not only meet these challenges but also boost valuations. Here is a look at three ways cloud computing can improve your organization.
First: What is cloud computing?
Cloud computing is the practice of using a network of remote servers hosted on the internet, rather than on a local server or personal computer, to store, manage, and process data. When implemented, this means organizations share a pool of configurable resources (e.g., networks, servers) and thus have fewer devices to manage, support, and maintain.
What can cloud computing do?
On the simplest terms, this sharing can save organizations time, resources, and money. On a high level, it can also create broad and diverse opportunities in the marketplace:
- Cloud-based mobility. Cloud computing allows service providers to pursue enterprise and small- to medium-size business clients by being technology agnostic and carrier neutral.
- Cloud-based SaaS. Cloud computing also allows service providers to scale their recurring revenue base and ultimately enhance their valuation to potential acquirers. Continuum, which was acquired by Thoma Bravo as described here, has the ability to provide its 5,800 – and growing – partners a SaaS-based platform as a solution to maintain, support, and monitor IT infrastructure and other intelligent devices. With 5,800 partners in a highly fragmented industry, it’s clear to see the potential before them.
- Cloud-based supply. Cloud computing opens up capabilities for businesses in asset tracking, including inventory, returns, and expense management; synergy and sharing; and education, which are top priorities for businesses, small, medium, and large. Other markets include cloud-based telephony, software, and call centers, which are critical points of concern for companies as these are a huge part of their IT support for their core business.
Cloud computing in action
Two recent transactions illustrate what cloud computing can do for organizations.
- Platform 9 uses cloud computing to provide an open-source service-as-a-service platform to help companies manage their cloud software deployments. How critical is this? In June 2017, the company raised $22 million, totaling $36.5 million, of series C funding. Key funds included Canvas Ventures, Redpoint Ventures, and Menlo Ventures. Of important note in the technology space, Hewlett Packard Enterprise invested. The company now has a pre-money valuation of $55 million, which is not too bad for a startup.
- Cloudyn Software is a developer of a SaaS cloud tool for management, monitoring, and optimization, providing multi-cloud analytics for enterprises, resellers, integrators, and managed service providers. In June 2017, Cloudyn was acquired by Microsoft for $60 million. Previously, the company had raised $20 million in funding. That’s $80 million in fundraising – again not bad at all! Some could even say Microsoft got a good deal at a $60 million purchase price.
There are dozens and dozens of companies like these that – through the cloud or SaaS or both – are raising tens of millions of dollars, whether as startups or as revenue generators. The valuations are off the charts.
If your company is looking to get in on the action, contact us. Big Change Advisors can help you explore the potential of cloud computing, as well as devise strategies for growth, corporate repositioning, capital sourcing, cost reductions, and going to market.
Next month, we’ll continue our look at cloud computing by discussing its role in a SaaS business model.
Steve Pomeroy is the founder of Big Change Advisors, a Los Angeles M&A advisory firm of business advisors and capital sourcing advisors for startups and middle-market companies. Since 1992, Steve has completed over 38 transactions including M&A, Capital Sourcing, and Public Offerings representing over $800 million in total transaction value. Through Big Change Advisors, Steve donates a percentage of all fees – or invites clients to donate a portion of Big Change Advisors fees – to help serve the homeless through the Los Angeles Mission. To request a free consultant, contact Steve here.