IBM, the multinational tech corporation headquartered in New York, has recently announced its acquisition of Apptio, a technology spend-management platform, from Vista Equity Partners. The deal was finalized for a cash payment of $4.6 billion.
IBM plans to finance the Apptio acquisition using its available cash reserves. The company expects the transaction to be concluded in the latter half of 2023. In an interview with Reuters, Senior Vice President Rob Thomas revealed that IBM remains opportunistic about potential mergers and acquisitions, particularly in the software and consulting sectors.
About Apptio
Apptio is a company based in Bellevue, Washington, founded in 2007. The company specializes in developing Software-as-a-Service (SaaS) applications for technology business management (TBM). Its founders, Sunny Gupta, Kurt Shintaffer, and Paul McLachlan, continue to hold senior positions within the executive team.
Apptio’s suite of services provides CIOs with tools to effectively manage various aspects of their technology departments, such as storage, applications, energy usage, cybersecurity, and reporting requirements.
Additionally, the company helps clients control costs related to public cloud usage, facilitate migration to the public cloud, manage SaaS portfolios, and implement and scale Agile methodologies across the entire organization.
Over the years, Apptio has experienced substantial growth and now serves a diverse client base spanning multiple industries and jurisdictions, including a significant presence among Fortune 100 companies.
According to analysts at UBS, Apptio’s revenue reached approximately $233 million in 2018. The analysts project that the company’s revenue will experience a compounded annual growth rate of 11%-13% until fiscal year 2022.
In 2019, private equity firm Vista Equity Partners acquired Apptio in a deal worth $2 billion, taking the software company private. This acquisition occurred around three years after Apptio had gone public.
IBM’s acquisition of Apptio comes at a time when technology companies worldwide are focusing on cost reduction by downsizing their workforce and trimming expenses within their offices. Earlier this year, IBM itself implemented job cuts, resulting in approximately 3,900 employees being affected. Furthermore, the company reported minimal year-over-year revenue growth of less than 1% in the March quarter.
IBM’s push for supremacy in AI and ML
In recent years, IBM, as a prominent tech giant, has been directing its attention towards emerging technologies like AI and machine learning. The company recognizes the immense potential these technologies hold for the future and has made efforts to prioritize their development and integration into its offerings.
In 2019, IBM made its largest acquisition to date by purchasing software provider Red Hat for approximately $34 billion. Two years later, the company took the step of spinning off its IT infrastructure and data-centre business, creating Kyndryl Holdings.
Additionally, IBM concluded the sale of certain healthcare-data and analytics assets during the previous year. These strategic moves highlight IBM’s efforts to reshape its portfolio and focus on core areas of growth and innovation.
