Analyst insight: Aptum’s acquisition of CloudOps shows the future of cloud growth will be driven by managed services

Toronto-based managed service provider (MSP) Aptum announced the acquisition of Montreal-based cloud consultancy CloudOps on Jan. 12, in a deal valued somewhere between $100 million and $500 million, providing it “the final pieces of the jigsaw” puzzle, says Aptum president and CEO Susan Bowen. Aptum would not be more specific on the price of the acquisition.

The two Canadian firms already collaborated on providing managed DevOps services over the past two years. During that time, Bowen determined an acquisition would make sense from a talent, capability, and customer base point of view. “Our ambition to grow in the same direction is what allowed us to make this work.”

Aptum, formerly Cogeco Peer 1, has long been in the business of helping customers manage their infrastructure. The made-in-Canada acquisition illustrates how sophisticated the cloud computing market has become, with appetite growing for managed services rather than just raw resources. Enterprises are hard-pressed to hire the talent they need to manage a complex infrastructure that straddles on-premises and several cloud vendors. Many aren’t interested in trying to manage such a feat and prefer to focus on their core business.

So Aptum is hoping to be hired not only by those organizations, but also to provide services to the managed service provider (MSP) market too. “Aptum is truly the MSP of MSPs,” with this acquisition, Bowen says.

The strategy is similar to the master MSP business model established a bit more than a decade ago, according to Fred Chagnon, an analyst that focuses on managed services at Info-Tech. “With its acquisition of CloudOps, Aptum is poised to go head to head with vendors like Ingram Micro, Pax8, AppRiver, and SherWeb, who are big names in this MSP software distribution space. Aptum seems to be ready to go head to head with them.”

CloudOps’ business is built on managed services and hybrid market cloud solutions. It also provides consulting and advisory services to help customers find their way in the cloud. “You can’t let the customer fend for themselves in terms of operations,” says CloudOps CEO Ian Rae. “We need to provide an end-to-end solution.”

The two firms also colour in the empty spaces for each other when it comes to infrastructure capabilities. CloudOps lacked the ability to offer infrastructure beyond a certain scale, and Aptum brings that capability.

CloudOps offers MSPs a way to sell cloud services through its proprietary tooling. Its software facilitates a way to organize multi-tenant cloud services. It also straddles multiple hyper-scale cloud providers, in Amazon Web Services, Microsoft Azure, and Google Cloud. Aptum has also been working to bring its customers a similar solution to simplify complex cloud management, but with off-the-shelf tools rather than its own code.

“We both learned a lot from those different paths and that can drive the next evolution of our software,” Rae explains. “The puzzle pieces aren’t being forced together or overlapping, they elegantly come together.”

Next on the roadmap for the combined firm will be to release an in-production private multi-tenant cloud that can manage any environment, anywhere in the world, Bowen says. It’s already available in Canada and will soon be available in the U.K. The selling point to global organizations is they can operate infrastructure in any jurisdiction and be compliant with data hosting and exchange regulations without paying the high price of operating a private cloud there.

A former iteration of Aptum, which has 25 years of cloud operations behind it, provided infrastructure as a service to the music-identifying app Shazam. The app promised to identify a song within seconds after recording a brief clip of it, and fast, responsive infrastructure was key to that. But as a technology company with development talent, Shazam didn’t need as much hand-holding as today’s cloud-adopting enterprises that are operating in legacy industries like finance, healthcare, or retail.

Aptum is still ready to help startups, and with the acquisition of CloudOps, it is looking to expand its set of services to enterprise clients and MSPs that still have a lot of cloud adoption ahead of them.

CloudOps will maintain its operations in Montreal, and Rae will remain on board to lead the software business. Aptum will take on its employees to become a 300-person company.

During the brief economic downturn at the beginning of the pandemic, the value of cloud computing showed itself in its flexibility. Businesses in sectors that were negatively affected, like tourism, could scale down their cloud operations and control expenses. Firms that were scaling up digital operations because of restrictions on indoor gatherings, like e-commerce, were able to grow to meet demand. The key is to be able to manage infrastructure resources effectively to respond to change.

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Brian Jackson
Brian Jackson
As a Research Director in the CIO practice at Info-Tech Research Group, Brian focuses on emerging trends, executive leadership strategy, and digital strategy.

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