IBM to Pay $4.6 Billion to Acquire Software Company Apptio

According to Reuters, US-based technology behemoth IBM said that it had signed a binding contract with Vista Equity Partners to buy Apptio for $4.6 billion. Apptio, based in Washington, offers software for financial and operational IT administration and optimisation. The agreement represents IBM's most recent step as the century-old IT industry giant realigns itself to concentrate on more modern AI and Cloud-based solutions. The report said the acquisition would improve IBM's IT automation capabilities. 

Apptio will be able to assist organisations in optimising their IT spending and gaining real financial benefit as well as operational improvement in conjunction with the tech giant's IT automation tools and Watsonx AI platform. According to IBM, the company will be purchased using available capital. 

About Apptio 

Before being delisted and bought by Vista Equity Partner in 2019 for $1.94 billion, Apptio was listed on NASDAQ in 2016. In 2007, Sunny Gupta and Kurt Shintaffer launched the business. It is a successful IT company management solution that serves over half of the Fortune 100 firms and has over 1,500 clients. In addition to its skills to optimise IT spending, it will contribute $450 billion in anonymized IT spend data to IBM, providing new insights for clients and partners.

Organisations may be eager to migrate to more modern systems and services, frequently cloud-based, that are more secure, efficient, and extensible. However, this raises more serious concerns about the long-term costs and benefits, mainly how those migrations affect the bottom line. SaaS costs are variable, which may be both a blessing and a problem in controlling how budgets are planned and spent. IBM's client base probably overlaps, which makes it easier to upsell more services. 

Along with some significant existing integrations and partnerships that are essential to working in enterprise cloud services today with Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle, and SAP, Apptio is bringing a sizable book of customers to IBM — 1,500 businesses, including more than half of the Fortune 100, it said. This transaction will come after IBM's 2019 $34 billion acquisition of software business Red Hat and its over $1.5 billion acquisition of software vendor Turbonomic in 2021.

Conclusion

This agreement touches on two additional intriguing topics and the drive to give businesses more control over their cloud spending. The first of these emphasises how cloud deployment services continue to be consolidated. With its acquisitions over the past few years, especially Cloudability in 2019, TargetProcess in 2021, and Cloudwiry in 2022, Apptio has expanded.

The second is that it's interesting to keep an eye on what will occur in the PE industry in the future. The proceeds from this deal will provide Vista with a convenient sum to go out and make other acquisitions at a time when the IPO window is still fully closed, external VC capital has frequently gotten substantially more difficult to obtain, and deal funnels have become more restrictive for the companies themselves.