IBM to buy Apptio for $4.6 bn to strengthen its cloud offerings

Technology major IBM has announced its acquisition of cloud software company Apptio from private equity (PE) firm Vista Equity Partners for $4.6 billion. The acquisition is part of IBM’s increasing efforts to improve its machine learning and hybrid cloud offerings. 

The company said in a press release  that Apptio will help IBM advance its application management, optimisation and observability offerings. The company also said that the acquisition is expected to close in the second half of 2023, pending regulatory approvals. 

“Apptio’s offerings combined with IBM’s IT automation software and watsonx AI platform gives clients the most comprehensive approach to optimise and manage all of their technology investments,” said Arvind Krishna, CEO and chairman of IBM. 

“This deal will follow IBM’s 2021 purchase of software provider Turbonomic for over $1.5 billion and its 2019 acquisition of software company Red Hat for $34 billion,” the company added. 

Sunny Gupta, co-founder and chief executive of Apptio is an India-born serial entrepreneur who moved to the Silicon Valley and has four startups under his belt. Notably, in 1992, Gupta started his career as a software developer in IBM itself, but left his job to start his own ventures. 

By 2007 when he started Apptio, he already founded and sold three tech startups. The company got listed on NASDAQ in 2018. A year later, the company was acquired by Vista Equity Partners, which paid $1.94 billion to take it private. 

Today, Apptio has a customer base of 1,500 enterprises, which includes over half of the Fortune 100 companies. It also has key integrations and partnerships with major cloud providers such as with Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP. Given that IBM also has an overlap with its client list, the acquisition allows the Big Blue to expand its services and upsell to existing clients. 

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

“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.” 

That said, the acquisition of Apptio will enhance IBM’s IT automation capabilities, enabling their enterprise clients to optimise their IT spending and gain better insights into their technology investments. 

In a report published by IT company Flexera in March this year, over 72% of global enterprises have adopted a hybrid cloud approach, combining both public and private clouds to enhance decision-making speed.