MSP Cloud Direct targets four acquisitions in next six months

Microsoft specialist has already completed double acquisition in 2017

MSP Cloud Direct is set to make four acquisitions over the next six months having made two in January, according to CEO Brett Raynes.

Cloud Direct acquired alwaysON Group last week for an undisclosed sum to bolster its Skype for Business offering.

A second acquisition was also made last week, with an announcement set to be made at this end of this week once details of the deal can be disclosed.

The quick-fire acquisitions follow deals for Datel Business Systems in June 2015; ihotdesk in December 2015; and Redblade in July 2016.

Cloud Direct aims to help UK-based companies migrate to the cloud, with a specific focus on Microsoft's cloud offerings.

Speaking to CRN Raynes said he expects to complete a further four acquisitions over the next six months as the cloud-first MSP looks to continuingly increase its technical capabilities.

"We have over 2,000 UK business customers that we've helped migrate workloads of various sorts to the cloud over last 10 years - since before cloud was called cloud," he said.

"What's driving it is getting the capacity - particularly the engineers, professional services, and technical skills - in order to meet the demand that is out there.

"Moving people's workloads into the cloud is not simple and you need expertise to do that, and getting hold of the expertise is fundamentally what is driving what we're doing. Getting the capabilities and the practices that can move into 365 and Azure."

Raynes said that Cloud Direct has set itself the target of doubling its revenue year on year "for the foreseeable future", driven by the strong growth that the Azure cloud platform is seeing in general.

Having hit revenue of just under £10m in 2016, Cloud Direct is set to double this to just below £20m in 2017; then hit the £40m in 2018.

"The market for Microsoft Azure is growing at 140 per cent a year for the moment," he said. "If a business is only growing at a slow rate then they're going backwards, so we're looking to double our size every year not for the sake of just doubling, but because that's the size at which the market is growing.

"Fundamentally if you're a traditional MSP who is just doing bits and pieces and only growing at a few percentage points you're really way behind the curve and in danger of being less behind."

Raynes said that MSPs not fully embracing the cloud are holding back their customers because of the fear that comes with radically changing their business model.

"What a lot of MSPs are doing is a great job of looking after their customers but I don't think they're doing their customers a great service because they're holding them back," he said.

Future acquisitions

Although Cloud Direct is actively recruiting staff in a number of areas, Rayne said that acquisitions enable the company to achieve that growth more quickly, and also bring with them additional revenues and customer.

The acquisitions are funded by a combination of the firm's own profit and also private equity backer Beechbrook Capital, which recently invested an additional £5m to help fund the acquisitions.

In terms of future acquisitions Cloud Direct is looking for MSPs that can enhance the three key areas of its Microsoft business.

"We're really focused on the Microsoft stack and our three hero areas are around backup and disaster recover in Azure; the front office which is all about Office 365 and Skype for Business; and then there's the infrastructure which is all about moving applications and workloads into the cloud," he said.

"Things that enhance and support that are really what we're all about and that's potentially looking at companies who have teams that are particular good at migrating, and have professional services skills in migrating from one area to another.

"Sometimes you get that neatly in one company and sometimes companies are more general, so you have to see how that integrates into the rest of the business, but it's often about companies that have great customers with great people. The rest of it you can work with."