IBM Bets Big on Hybrid Cloud Services

Amidst the growing demand from organizations for a hybrid cloud approach that blends SaaS in private and public cloud infrastructures, IBM has made a big acquisition that aligns with its big bets on this innovation. The company paid $4.6 billion in cash to buy Apptio, a company that has built a platform to track how and where data lives in hybrid environments, its use and more specifically how they perform on financial and resource costs.

In a statement, the company said it plans to co-locate Apptio alongside IBM’s existing IT automation software and with the AI platform so that they can develop and sell solutions to enterprises that would manage and optimize speed within their IT stacks. Apptio is owned by PE firm Vista Equity Partners, which paid $1.94 billion to take it private back in 2018. 

Acquisition makes IBM bet big on hybrid cloud

The acquisition, which had been making waves for a while, would be closed in the second half of 2023, pending all the regulatory and other approvals, the company said.  The purchase makes a lot of sense from IBM’s perspective, given that it is currently in the middle of a long-term strategy to get more products and services into the fold. 

By acquiring Apptio, IBM hopes to enhance its services and systems integrations business and more specifically provide customers with a more robust set of tools to set up and manage the hybrid cloud infrastructure that more and more businesses are shifting towards these days. 

With enterprises seeking to move to better updated systems and services on the cloud that are more secure, efficient and expandable, there is also a question about the long-term benefits of such moves. There is a lot of debate around how these migrations could impact bottom lines in the future, given that SaaS is not a fixed cost. 

Arvind Krishna, CEO and Chairman of IBM said, “Technology is changing business at a rate and pace we’ve never seen before. To capitalize on these changes, it is essential to optimize investments which drive better business value, and Apptio does just that. 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.”

What does Apptio bring to the table?

Currently the preferred nomenclature for such activities is FinOps, which expands into financial and operational IT management and optimization. And Apptio’s solutions cover quite a few of these areas. While ApptioOne focuses on spend management and planning within hybrid cloud, Cloudability specializes on managing spend around public cloud deployments. 

Apptio TargetProcess helps model bigger projects to figure out which resources might need to be allocated and to help project manage those efforts. In addition, the company also brings a sizable customer base of 1,500 enterprises that includes more than half of the Fortune 100 club as well as some existing integrations and partnerships. 

These include associations in the enterprise cloud services with Amazon Web Services, Microsoft Assure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP among others. Of course, there is a possibility that the client list could overlap with those of IBM, but the fact remains that possibilities of upsell would be more. 

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