IBM announced yesterday that it has entered an agreement with Vista Equity Partners to purchase tech spend management company Apptio for US$4.6 billion.
IBM says that the acquisition will help clients around the world optimize their enterprise IT spend and manage the increased complexity of businesses using multi-cloud environments.
“Technology is changing business at a rate and pace we’ve never seen before,” said Arvind Krishna, chief executive officer (CEO) of IBM. “To capitalize on these changes, it is essential to optimize investments which drive better business value, and Apptio does just that.”
Apptio offers financial and operational IT management and optimization (FinOps) software to more than 1,500 clients, including Amazon, Microsoft and Google.
FinOps is “red hot right now,” said Tracy Woo, senior analyst at Forrester. “It’s more than lowering costs, it’s about driving efficiency,” especially as enterprises navigate the economic slowdown. Cloud infrastructure, she added, is also a major part of most enterprise infrastructure strategies. And with that comes the need “to marry the old with the new,” which she deemed to be the main friction point, notably with hybrid cloud.
“This is an area where Apptio very squarely sits on top of,” affirmed Woo. “They have their traditional IT financial management solutions that are looking specifically at a very traditional predictable on-premises IT spend. They also have credibility that is all about dealing with dynamic scalability and the fast changing pricing that is an issue with cloud cost management right now.”
Apptio’s capabilities, along with IBM’s IT automation software like Turbonomic, Instana and AIOps, will provide clients with a “virtual command center” for spend management and optimization, the release said.
“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.
Woo argued that there is a cultural aspect that drives a certain resistance to adopting FinOps today, but this is the kind of “centralized visibility” that businesses need, especially as they deal with a new way of spending on cloud, one that requires them to be responsive and reactive.
With the acquisition, Apptio will also bring to IBM US$450 billion of anonymized IT spend data to unlock new insights for clients and partners, the release noted.
Further, IBM says it aims to drive “significant synergies across several key growth areas for IBM, including automation, Red Hat, IBM’s broader AI portfolio, and IBM Consulting, as well as strong partnerships with other leading systems integrators like Accenture, KPMG, Deloitte and EY.”
Woo argued that if IBM and Apptio continue to build their suite of management solutions, they could be “a real viable alternative” to VMware, whose acquisition by Broadcom remains a worry for clients.
IBM will acquire Apptio with available cash on hand, and the deal is expected to close in the latter half of 2023.
Apptio has three core offerings, delivered as software as a service (SaaS), as follows:
- ApptioOne – Hybrid cloud spend management and optimization capabilities
- Apptio Cloudability – Public cloud spend management visibility and optimization capabilities, connecting multi-cloud and SaaS infrastructure with cloud financial management best practices
- Apptio Targetprocess – Agile investment planning capabilities, aligning development resources to business outcomes