IBM acquires Apptio for $4.6 billion for hybrid cloud services.
As cloud architecture becomes more common among enterprises, it is becoming clear that many are using a hybrid approach, combining SaaS in private and public clouds with some on-premises products. IBM made a big acquisition today, doubling down on the hybrid concept: it will pay $4.6 billion in cash for Apptio, which has built a platform to track how and where data lives in hybrid environments, as well as how it's used, particularly in terms of financial and resource costs.
IBM plans to integrate Apptio with IBM's IT automation tools and AI platform for business spend management and optimization. Apptio was acquired by Vista Equity Partners in 2018.IBM said in its announcement that the acquisition is expected to close in the second half of 2023, pending regulatory and other approvals.
The acquisition made perfect sense for IBM. As one of the oldest, heritage enterprises in technology, "Big Blue" has been in the midst of a long-term strategy to bring more current products and services into the fold. Apptio is a clear step forward for the company's services and system integration businesses, providing it with a much stronger set of capabilities to focus on one of the larger challenges that modern enterprises face today.
Organizations are increasingly adopting cloud-based systems and services for security, efficiency, and extensibility, but this raises questions about long-term cost benefits and their impact on the bottom line. SaaS is not a fixed cost, but it can be a challenge in budget management. IBM CEO Arvind Krishna emphasizes the importance of optimizing investments for better business value, using Apptio's offerings, IT automation software, and Watsonx AI platform.
FinOps, or financial and operational IT management and optimization, is a field that includes Apptio's products. Apptio One focuses on spend management in hybrid cloud environments, while Cloudability manages public cloud deployments. Target helps model projects and allocate resources. IBM will benefit from Apptio's existing integrations and partnerships with Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle, and SAP, potentially increasing upsell to more services.
"Our customers are transitioning to a complex digital-first, hybrid world where technology investments are distributed and decentralized, but all innovation must be aligned with clear business outcomes," said Sunny Gupta, co-founder and CEO of Apptio. "We are thrilled to be joining IBM and combining our industry-leading offerings with IBM's global presence and strong portfolio across AIOps, automation, and hybrid cloud offerings."
Along with the desire to give businesses more control over their cloud spending, this transaction touches on two other relevant subjects.
Apptio's acquisition of Cloud ability and Target Process highlights consolidation in cloud deployment services. The deal provides Vista with funds for acquisitions during a closed IPO window, stringent external funding, and tightened deal funnels, potentially making PE a more active route.
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