IBM to Acquire IT Automation Software Provider Apptio for $4.6 Billion

IBM has agreed to acquire IT automation software provider Apptio from private equity firm Vista Equity Partners for $4.6 billion. According to IBM, which announced the agreement on Monday, Apptio will advance IBM’s IT automation hybrid cloud management and AIOps software portfolio.

Founded in 2007 and based in Bellevue, Washington, Apptio is regarded as a leading technology business management (TBM) and FinOps provider with more than 1,500 clients, about half of which serve Fortune 100 companies. Besides cloud management, observability and AIOps, Apptio provides cloud cost tracking and optimization tools.

Apptio has integration alliances with the three large cloud providers — AWS, Microsoft and Google Cloud. Additional integration alliance partners include Salesforce, ServiceNow, Oracle and SAP. Apptio’s integration partnerships are based on alliances that IBM said are consistent with its “commitment to an open partner ecosystem.”

Among Apptio’s significant system integrator partners are Accenture, KPMG, Deloitte and EY. IBM said it sees the reach of Apptio’s AIOps and cost management software expanding through its partners. Apptio’s website lists an ecosystem of partners, including resellers and MSPs who provide TBM and FinOps configuration, implementation and management services, including Agile Rising, ICON Agility Services, Maryville Consulting Group and Rego Consulting.

IBM’s Arvind Krishna

“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,” IBM chairman and CEO Arvind Krishna said.

Expanding AIOps Portfolio

The Apptio agreement is the latest move in IBM’s effort in recent years to expand its capabilities in hybrid cloud management, observability and AIOps. IBM acquired Turbonomic and myInvenio two years ago, building on numerous moves in 2020, including its acquisition of Instana, an application performance monitoring (APM) provider; and robotic process automation (RPA) provider WDG Automation. Also, at the time, IBM launched its own AI automation tools, IBM Watson AIOps and IBM Watson Orchestrate.

Gartner Peer Insights lists some of those alliance partners and IBM’s Turbonomic as competitive providers — notably, ServiceNow’s IT Operations Management offering. But other alternatives to Apptio include CloudBolt, Cisco Workload Optimization Manager, Flexera Cloud Management Platform, Morpheus Data, Platform9 VMware Aria.

Apptio has three primary products, which include ApptioOne, a hybrid cloud cost management and optimization tool; Apptio Targetprocess, which provides investment planning and asset management; and Cloudability, a public cloud cost management, visibility and optimization tool that Apptio acquired in 2019.

IT Automation Software Company Founder’s Return to IBM

Sunny Gupta, Apptio’s co-founder and CEO, indicated he intends to join IBM closes the deal, which the company estimates will happen in the second half of this year.

Apptio’s Sunny Gupta

“With IBM, we will be able to bring even more resources to bear to drive value for our customers,” Gupta wrote on LinkedIn. “My leadership team and I remain committed to continuing our roles now and with IBM in the future.”

For Gupta, he added that the deal brings him to the company where he started.\

“My career started with working for IBM as an OS/2 engineer in 1992,” Gupta added. “Today, I am so proud for the opportunity to be part of IBM again, one of the most iconic companies.”

Gupta noted that Apptio started 16 years ago in his basement and at the Bellevue library.

“I came up with this idea by talking with technology leadership team at Goldman Sachs,” he said. “The incredible journey then started by achieving a strong product market fit.”

IPO to Exit Journey

Since starting in Gupta’s basement, the IT automation software company has had the eyes of investors. Gupta noted that Apptio received venture capital and guidance from Madrona Venture Group, Andreessen Horowitz. Greylock and Shasta Ventures.

An initial public offering (IPO) in September 2016 raised $96 million and gave the company a value of roughly $853 million. Two years later, Vista Equity acquired Apptio for $1.94 billion.