IBM to acquire software firm Apptio
NEW YORK, UNITED STATES — Information Technology (IT) and consulting firm IBM announced it will acquire software company Apptio from Vista Equity Partners for $4.6 billion in cash.
This move is an effort to enhance IBM’s cloud, automation, and artificial intelligence (AI) services. The transaction is expected to conclude in the latter half of 2023.
This acquisition follows the century-old IBM’s strategic shift towards AI and cloud-based offerings, highlighted by the purchase of software provider Red Hat in 2019 for about $34 billion.
“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,” said Arvind Krishna, CEO and chairman of IBM.
Apptio partners and integrates with leading companies such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP, consistent with IBM’s commitment to an open partner ecosystem.
The acquisition comes at a time when businesses are trimming their technology budgets due to macroeconomic difficulties. Earlier this year, IBM reduced its workforce by approximately 3,900.
IBM had also announced it will slow the hiring of around 26,000 non-customer-facing workers — including those in human resources — as these jobs can be replaced by artificial intelligence (AI) in the next few years.
Seattle-based Apptio assists businesses in managing and comprehending their cloud spending, providing IT budgeting, forecasting, and financial analyses. Apptio serves over 1,500 customers and maintains partnerships with prominent cloud companies, including Amazon’s AWS and Salesforce.
Reuters reported that Apptio’s revenue stood at about $233 million in 2018 and has grown at a compounded annual rate of 11%-13% through the fiscal year 2022. In 2019, Apptio was taken by private equity firm Vista Equity Partners in a $2 billion deal, three years after the software firm had gone public.
In 2022, IBM generated approximately $60.5 billion in revenue and $9.3 billion of free cash flow.
