IBM Acquires Apptio for AI & Cloud Expansion
$IBM Corp (IBM.US)$ plans to buy the software company Apptio for $4.6 billion, their 7th purchase this year as they continue to transform the company to focus on hybrid-cloud and artificial intelligence (AI) technologies. The goal is to combine Apptio's platform with IBM's existing IT automation software and AI capabilities to create business solutions for managing and optimizing IT spending.
This acquisition aligns with IBM's long-term strategy to modernize its products and services. With the growing trend towards cloud-based solutions, many businesses face challenges in managing costs. SaaS, while beneficial, can lead to complex budget planning due to its variable costs.
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The purchase will be paid for with cash that IBM currently has available, and the deal is expected to close in the second half of 2023. Apptio, a company that provides online services to help businesses manage their IT budgets, was bought by private equity firm Vista Equity Partners in 2019 for $1.9 billion.
Apptio is considered a good fit for IBM's hybrid cloud strategy, and FYI today, majority of Fortune 100 companies, including Bank of America, Cargill, and Chevron, use Apptio's products. The deal will bring IBM a significant number of new clients, including over half of the Fortune 100, along with key integrations with major players in the cloud services sector such as AWS, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle, and SAP.
Finally, this acquisition signals consolidation in the cloud management services sector, with Apptio itself having grown through acquisitions of Cloudability in 2019, TargetProcess in 2021, and Cloudwiry in 2022. The deal also indicates that private equity might play a more active role in the tech landscape in the future.
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