After reports of getting close to closing the deal, IBM announced today (Monday) that it will acquire the cloud software company that provides a platform for FinOps, according to media the deal will strengthen the blue giant’s capabilities in the cloud and automation.

IBM announced this morning (Mon) that after being in advanced talks with Apptio, which is under the control of the Vista Equity Partners fund, it was agreed that it would purchase the technology expense management software provider, for $4.6 billion in cash . The huge deal when completed will be another final step in IBM’s plan to focus on the hybrid cloud industry.

When the two companies tried to reach the hoped-for agreement on the purchase, the two talked about a cost of 5 billion dollars, a price that does not include Apatio’s debt, but the deal was finally closed for a slightly lower amount.

Founded in 2007, Aptio helps companies manage and understand their spending on cloud services, offering services such as IT budgeting, forecasting and financial analysis. The company, as mentioned, was purchased in 2018 for $1.94 billion by the private equity fund Vista. The company’s clients include companies such as Chevron, Bank of Ireland or EDF Energy, as can be learned from the website.

On the website, the acquired company describes itself with the words: “Apatio is the leading provider of cloud-based IT software for financial management. Our applications connect technology investments to business priorities, engage business stakeholders to drive cross-functional accountability and improve the efficiency of hybrid IT resources.” In addition, the company emphasizes that its Cloudability platform is “the original solution for FinOps”.

Why is IBM willing to pay so much for Aptio?

In 2018, when the Vista Foundation acquired it, Apatio recorded annual revenues of $188 million, and the significant amount, much more than its value at the time, that IBM is willing to pay for its control – which is also much more than the original price that Vista paid for it – hints at the growth that the company has experienced during the five years the last ones, and this despite the fact that Aftio does not publish information about its revenues since it was acquired.

According to analysts, the transaction, which is the last step in IBM’s transition to focus on the hybrid cloud industry, will strengthen its capabilities in this market.

“IBM is focused on the trillion-dollar hybrid cloud medium,” the blue giant’s CEO Arvind Krishna said in 2020, when the company announced plans to spin off its traditional infrastructure business and create a new managed services provider called Kyndryl. The company also closed Its Watson Health division, which provided data and analytics services to healthcare providers.These strategic changes left IBM free to focus on the cloud industry and other new technologies, such as AI and quantum computing.

In the last quarterly results published by IBM in April, it was already possible to see the first benefits of this new strategy – despite the difficult market conditions in the current period, IBM reported revenues for the first quarter worth $14.3 billion – which is a slight increase compared to the previous year. Revenues from software stood at $5.9 billion – a 2.6% increase from year to year.

Krishna, the CEO for three years, is also focused on using technology to save costs at IBM and said last month that about 7,800 positions in the company’s offices will be replaced by artificial intelligence capabilities in the future.

IBM is probably relying on the recent acquisition of Aptio to continue its path in the hybrid cloud market and is ready to invest a lot of money in it in an attempt to maximize its revenues in this market.