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An irony of enterprise technology is that solutions designed to simplify business tasks and processes can result in new, often unexpected complexities. Cloud computing arose as a means to provide individuals and groups quick access to IT tools and resources. But as public clouds proliferated, organizations faced challenges in ensuring that cloud usage was aligned with company budgets, policies and strategies.
IBM’s announced agreement with Vista Equity Partners to purchase Apptio Inc., a leader in financial and operational IT management and optimization (FinOps) software, for $4.6 billion aims to help enterprise customers address those issues and enhance the value of their substantial technology investments.
Cloud Challenges Meet Automated FinOps Solutions
Automation has been central to business computing for decades, from replacing manual calculators with digital transaction solutions to monitoring and maintaining vital data center assets and applications. However, robust FinOps solutions are just as important as healthy systems and software to business success.
Why is that the case? Consider that modern enterprises have long embraced heterogeneous hardware and software. Working with multiple IT vendors can help ensure that the tools best suited for specific processes and tasks are being used. However, it can also pose challenges for the staff members tasked with ensuring that those solutions meet operational and budgetary guidelines.
The rise of cloud computing has effectively shifted that equation with what might be called heterogeneous services: substantial new complexities related to managing processes and data in various public and private clouds and dealing with multiple cloud service providers (CSPs). The results of poor service management are highlighted fairly regularly in the media in stories of companies dunned with unneeded services, unnecessary licenses and misunderstood fees.
Clouds, it seems, can obscure more than clear skies. Apptio’s solutions are designed to offer greater transparency into hybrid cloud environments and address the challenges cloud customers face.
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Why Apptio?
IBM has been a leader in IT automation and management for decades, a point that should come as no surprise given the company’s central position in enterprise IT solutions and services. However, Apptio should add valuable resources to IBM’s portfolio and help the company build out offerings for new and emerging IT use cases.
Apptio’s offerings focus on three essential FinOps issues:
- Planning – ApptioOne is designed to help companies analyze, optimize, plan and realize their investments in hybrid cloud. Enterprises can use it to develop repeatable and accurate financial planning and management processes that deliver cost and utilization insights. ApptioOne is also benchmarked against industry peers, so it is continuously upgraded and improved.
- Management – Apptio Cloudability offers companies a clear view into how hybrid cloud budgets are being spent. By connecting multi-cloud and SaaS infrastructure costs with financial management best practices, customers can maximize the value of their cloud services and strategies.
- Alignment – Apptio Targetprocess is an investment planning tool that enables companies to align cloud development resources with business needs and outcomes. Plus, it can be used to plan and monitor the cost of cloud-related projects and products, ensuring that they stay on track.
Apptio is an established and profitable business with over 1,500 clients, including more than half of Fortune 100 companies. IBM pointed out that Apptio’s partnerships and integration with cloud-focused companies such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle and SAP are consistent with its longstanding commitment to an open partner ecosystem.
In addition, the company said that combining Apptio technologies with its Watsonx AI platform and solutions, including Turbonomic and Instana will accelerate its IT automation efforts and portfolio and offer enterprise customers a “virtual command center” for IT spend management and optimization. Apptio will also bring $450 billion of anonymized IT spend data to IBM, potentially unlocking additional new insights for clients and partners.
Finally, IBM believes that Apptio will help drive significant synergies across several key growth areas, including IT automation, Red Hat, IBM’s broader AI portfolio, and IBM Consulting, and help strengthen its partnerships with other systems integrators like Accenture, Deloitte, EY and KPMG.
Also see: 100+ Top AI Companies 2023
Final Analysis
IT vendor acquisitions are generally both accretive and transformative, though not usually in equal measure. The former offers the acquiring vendor a means of further developing existing strategies and solutions while the latter provides rapid access or significant assets to enter and effectively compete in new markets.
By most measures, the Apptio deal fits largely into the former category since it should enhance IBM’s already robust IT automation solutions and data center management services. Additionally, acquisition is clearly well-aligned with IBM’s hybrid cloud strategy and solutions, and most of Apptio’s strategic cloud relationships are with vendors that also partner with IBM.
One of the more interesting points to consider is how fully and effectively IBM will integrate Apptio’s solutions with its Watsonx AI platform. The company is certainly promoting Watsonx as central to its AI ambitions. Delivering reliable AI-enabled and enhanced tools for FinOps would provide IBM a means of setting itself apart from and ahead of other cloud transparency solution providers, like BMC, ServiceNow and VMware.
In essence, the acquisition of Apptio should significantly expand IBM’s existing hybrid cloud management solutions and provide leverage points that benefit the Watsonx AI platform build-out. Apptio should also prosper from access to IBM’s deep relationships with global enterprises, as well as the company’s operations in 175 countries. Overall, the deal is likely to provide ample benefits to both companies, along with their customers and partners.