IBM to Acquire Apptio for $4.6 Billion, Boosting Hybrid Cloud and ML Services

The ApptioOne, Apptio Cloudability and Apptio Targetprocess services will join the portfolio of IBM acquisitions later this year.

IBM will put down $4.6 billion in cash to acquire the business management and FinOps software company Apptio from Vista Equity Partners. Assuming all regulatory processes go smoothly, IBM expects the deal to close later this year.

Jump to:

Apptio will integrate with IBM IT finance operations services

The acquisition is part of IBM’s increasing efforts to bolster its machine learning and hybrid cloud offerings. Along with Apptio’s products and people, IBM will now be able to find uses for $450 billion of anonymized IT spend data from Apptio’s backlog. Apptio also has relationships with 60% of the Fortune 100, according to the company’s website.

IBM’s IT automation software, such as Turbonomic, Instana and AIOps, will be able to integrate with Apptio data and services after the acquisition. This will enable IT teams to combine services into one “virtual command center” that can keep track of spending across a company’s entire tech stack, IBM said in a press release.

IBM also plans to use Apptio services and data to bolster other services Big Blue has acquired over the years, including Red Hat and IBM Consulting, and its automation and AI portfolio in general. IBM’s watsonx AI training model will specifically benefit from Apptio’s anonymized FinOps data. Apptio has used machine learning since 2018 when ML was added to the Apptio Technology Business Management Unified Model.

“The acquisition of Apptio is a continuation of IBM’s deep focus and investment in hybrid cloud and AI and is expected to drive significant synergies across several key growth areas for IBM, including FinOps,” Kareem Yusuf, senior vice president, product management and growth, IBM Software, told TechRepublic in an email.

“Apptio has transformed how leading organizations optimize their IT spend and performance for better outcomes,” said Robert F. Smith, founder, chairman and CEO of Vista Equity Partners, in a press release. “We are proud of these shared accomplishments and look forward to seeing Apptio further evolve with IBM.”

What is Apptio?

Apptio makes finance operations and business management software-as-a-service applications. It gives CTOs and/or CFOs better visibility into their spending across different parts of their work, including hybrid and multicloud environments and labor. IT budget holders can then make decisions based on the data Apptio produces in order to improve operations and budgeting.

Apptio was founded in 2007 and acquired by Vista Equity Partners in 2018. It has more than 1,300 employees. Its three core services are:

• ApptioOne, which can be used to analyze, optimize and plan IT spending.
• Apptio Cloudability, which provides financial management best practices to multicloud and SaaS infrastructure.
• Apptio Targetprocess, which offers investment planning.

Apptio services already integrate with Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP.

Three recent acquisitions by Apptio also add more tools to IBM’s tool belt: Apptio acquired Cloudability, Cloudwiry and TargetProcess within the last five years.

What does the acquisition mean for enterprise IT?

IBM’s acquisition of Apptio comes partially in response to a growing need for technology companies to keep tighter leashes on budgets. IBM saw an under 1% year-over-year increase in revenue in Q1, Reuters reported. Apptio’s services to help IT departments optimize how they spend money could be a smart investment in a time when economic uncertainty and slowing growth are on many business decision-makers’ minds.

SEE: IBM snatched up cloud data security management firm Polar Security in May. (TechRepublic)

In addition, the acquisition goes hand-in-hand with the increasing use of hybrid cloud environments, for which it can be difficult to find unified data.

“Our customers are evolving to a complex digital-first, hybrid world where technology investments are distributed and decentralized, but all innovation must be aligned with clear business outcomes,” explained Sunny Gupta, Apptio co-founder and CEO, in a press release.