IBM to acquire Apptio for $4.6 billion to bolster its cloud and automation capabilities

IBM announced on Monday it will acquire technology spend-management platform Apptio from Vista Equity Partners in a deal valued at $4.6 billion. The acquisition will strengthen IBM’s IT automation and cloud capabilities while providing enterprises with the means to maximize their business value through technology investments.

The news of the acquisition comes just a few months after IBM cut about 3,900 jobs and also at a time when tech companies are cutting their budgets amid a challenging global economic slowdown. IBM said the all-cash deal is expected to close in the latter half of 2023.

With the acquisition of Apptio, IBM gains access to a valuable resource: $450 billion worth of anonymized IT spend data. This data treasure trove holds immense potential to uncover new insights for both IBM’s clients and partners. By leveraging this extensive dataset, IBM can offer enhanced solutions and services that empower businesses to make more informed decisions about their IT investments. The wealth of information provided by Apptio’s IT spend data opens up a world of possibilities for IBM and its stakeholders, fueling innovation and driving strategic growth.

IBM added that the acquisition of Apptio, a prominent SaaS with over 1,500 customers and partnerships with cloud companies from Amazon.com’s AWS to Salesforce, will benefit IBM’s Red Hat business, AI portfolio, and consulting business.

“Going forward, we are opportunistic (on M&A) and looking for opportunities in the software and consulting space,” Senior Vice President Rob Thomas told Reuters in an interview.

As an established company with a long history, IBM is actively shifting its focus towards emerging technologies such as AI and cloud-based solutions. This strategic shift has been evident in recent initiatives, including the significant acquisition of software provider Red Hat in 2019 for approximately $34 billion. Additionally, IBM recently spun off its IT infrastructure and data-center business as Kyndryl Holdings and divested certain healthcare data and analytics assets.

Apptio, headquartered in Seattle and founded in 2007, helps organizations manage and gain insights into their cloud services spending. Its offerings encompass essential functionalities like IT budgeting, forecasting, and financial analyses. By incorporating Apptio’s expertise and technologies, IBM aims to strengthen its position in the market and provide comprehensive solutions to its clients in the ever-evolving landscape of IT management and financial planning.