IBM buys Apptio from Vista for $4.6B cash to expand hybrid cloud services

As cloud architecture becomes more widespread, many organizations are adopting a hybrid approach, combining SaaS in private and public clouds with on-premises products. IBM bought Apptio, a hybrid data tracking platform, for $4.6 billion in cash today, doubling down on the hybrid concept.

IBM plans to use Apptio alongside its IT automation software and AI platform to develop and sell solutions to help businesses manage and optimize IT spend.

Vista Equity Partners bought Apptio privately in 2018 for $1.94 billion. The deal was rumored over the weekend.

IBM said the acquisition should close in the second half of 2023, pending regulatory and other approvals.

IBM is wise to buy.

“Big Blue,” one of the oldest tech companies, has been working on a long-term strategy to add more modern products and services. The company’s services and systems integration businesses will benefit from Apptio, which gives them better tools to address one of modern companies’ biggest concerns.

Organizations may want to migrate to newer, cloud-based systems and services that are more secure, efficient, and extensible, but that raises questions about the long-term cost benefits and how they affect the bottom line. SaaS is not a fixed cost, which can be good and bad for budgeting.

“Technology is changing business faster than ever.” Apptio optimizes investments that drive better business value to capitalize on these changes,” said IBM CEO and chairman Arvind Krishna. “Apptio’s offerings combined with IBM’s IT automation software and Watsonx AI platform give clients the most comprehensive approach to optimizing and managing all their technology investments.”

“FinOps” is the general term for financial and operational IT management and optimization. Apptio’s products cover several areas. ApptioOne manages and plans hybrid cloud spending. Apptio Cloudability manages public cloud spending specifically. Apptio Targetprocess models larger projects to determine resource allocation and project management.

Apptio said it would bring 1,500 enterprises, including more than half of the Fortune 100, to IBM, along with key integrations and partnerships that are essential to enterprise cloud services today with Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle, and SAP. IBM will likely upsell more services because its client list overlaps.

“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,” said Sunny Gupta, Apptio co-founder and CEO. “We’re thrilled to join IBM and combine our industry-leading offerings with IBM’s global presence and strong portfolio across AIOps, automation, and hybrid cloud.”

This deal addresses two other intriguing topics besides giving businesses more control over their cloud spend.

It emphasizes cloud deployment management service consolidation. Apptio acquired Cloudability in 2019, TargetProcess in 2021, and Cloudwiry in 2022 to grow.

Second, PE’s future is worth watching. Vista will get a nice sum to make more acquisitions at a time when the IPO window is mostly closed, VC funding has tightened, and deal funnels for businesses have tightened.

PE may become more active in other cases.