IBM has reached an agreement with Vista Equity Partners to purchase Apptio Inc., a leader in financial and operational IT management and optimization (FinOps) software, for $4.6 billion. Apptio will be acquired with available cash on hand. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the latter half of 2023.
This is technology M&A deal number 184 that ChannelE2E and MSSP Alert have covered so far in 2023. See more than 2,000 technology M&A deals for 2023, 2022, 2021, and 2020 listed here.
IBM Buys Apptio for $4.6 Billion
Apptio, headquartered in Bellvue, Washington, has 1,425 employees listed on LinkedIn. Apptio's areas of expertise include Technology Business Management (TBM) Solutions, IT Cost Transparency, IT Service Costing, IT Financial Management, Bill of IT, Budgeting and Forecasting, Agile Investment Management, and Cloud Cost Management.
Apptio was purchased by Vista Equity Partners in late 2018.
Apptio specializes in technology business management and has around 1,500 clients, serving more than half of the Fortune 100. Apptio partners include Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP, according to the company.
Apptio helps enterprises manage their technology spend and direct investments to high-value cloud innovation and digital transformation. The company has three core offerings, all delivered as software as a service (SaaS) – ApptioOne, Apptio Cloudability, and Apptio Targetprocess:
- ApptioOne: Hybrid cloud spend management and optimization capabilities to analyze, optimize and plan IT spend and value. ApptioOne is used to establish repeatable and accurate planning and financial management processes, delivering actionable insights around cost and utilization, while benchmarking against industry peers for continuous optimization.
- Apptio Cloudability: Public cloud spend management visibility and optimization capabilities, connecting multi-cloud and SaaS infrastructure with cloud financial management best practices to maximize the value of clients' cloud strategy.
- Apptio Targetprocess: Agile investment planning capabilities to align development resources to business outcomes, plan and track value delivery for projects or products.
The acquisition of Apptio will accelerate IBM's IT automation capabilities and further IBM's focus and investment in hybrid cloud and AI. There are multiple synergies across several key growth areas for IBM, including automation, Red Hat, IBM's broader AI portfolio, and IBM Consulting, the companies said, as well as strong partnerships with other leading systems integrators like Accenture, KPMG, Deloitte and EY. IBM also plans to augment watsonx with Apptio's anonymized FinOps data. Additionally, Apptio is expected to benefit from IBM's long-established scale and reach, working with clients and partners across more than 175 countries. Apptio also will bring to IBM $450 billion of anonymized IT spend data, unlocking new insights for clients and partners.
IBM to Acquire Apptio: Executive Perspectives
Arvind Krishna, CEO and chairman, IBM, commented on the news:
"Technology is changing business at a rate and pace we've never seen before. To capitalize on these changes, it is essential to optimize investments which drive better business value, and Apptio does just that. Apptio's offerings combined with IBM's IT automation software and watsonx AI platform, gives clients the most comprehensive approach to optimize and manage all of their technology investments."
Sunny Gupta, Apptio co-founder and CEO, added
"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. We are so excited 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."
Robert F. Smith, founder, chairman and CEO of Vista Equity Partners, said:
"We are committed to building resilient enterprise software companies, which has proven to be highly attractive to strategic and financial buyers, as well as public markets. Our investment philosophy, value creation strategy, and industry expertise, enables us to identify and partner with companies that have the potential for long-term success. Apptio has transformed how leading organizations optimize their IT spend and performance for better outcomes. We are proud of these shared accomplishments and look forward to seeing Apptio further evolve with IBM."
IBM’s M&A Activity
Since Arvind Krishna became CEO in April 2020, IBM has acquired more than 30 companies, bolstering its hybrid cloud and artificial intelligence (AI) capabilities. Many of the deals IBM completed in 2022 essentially positioned IBM Consulting against Accenture and perhaps even Kyndryl, the 2021 managed infrastructure services spin-off from IBM.
In addition to the Kyndryl spin-off, IBM sold off some assets in 2022. For instance, Harris acquired IBM’s i2 intelligence analysis product portfolio in January 2022, and private equity firm Francisco Partners acquired the Watson Health business (now rebranded as Merative).