Apptio Acquires Cloudability, Its Third Company In Two Years

Morning Markets: Apptio picks up Cloudability, making its 2018 acquisition pace seem less like a fluke.

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Apptio, a SaaS company focused on helping companies manage their IT life, announced today that it is buying Cloudability, a smaller firm that helps clients manage their cloud spend. Seems like a simple enough match.

The terms of the deal were not disclosed.

What makes the acquisition interesting is that Apptio appears to be picking up the pace of its startup purchases. Indeed, the Cloudability deal marks Apptio’s third buy since the start of 2018, but just its fourth known acquisition since its first back in 2012:

The increase isn’t too surprising. Apptio went public in 2016, a deal that valued the company at around $872 million according to Crunchbase data. However, unlike many companies from that period, Apptio did not stay a public company. Instead, it was snapped up by private-equity shop Vista Equity Partners for $1.94 billion in November of 2018.

So, Apptio has been on our minds recently.

Turning to Cloudability, the Portland, Oregon-based company was rounded in 2011, raising just under $40 million during its life as a private shop. The exit could be a nice result for Portland, the very first tech scene that I worked in. I retain a fondness for both the city and the people (shout-out to Rick Turoczy,  Silicon Florist, et al).

But even more, Cloudability’s exit to the currently-private Apptio is part of something larger. Read what IT-focused ZDNet had to say this morning on the deal:

Companies that optimize cloud spending are likely to become key acquisition targets. For instance, Flexera recently bought RightScale. In addition, cloud customers are often looking to optimize spending after first getting hit by sticker shock. Companies both large and small are trying to get a handle on cloud costs.

That makes sense. It’s become a meme when a tech company goes public in the last 18 months to dig into its S-1 filing to find out how much money it has promised to spend on AWS, Azure, and Google’s Cloud. Often the numbers are in the eight and nine figures. It’s a lot of cost.

So, now that the cloud is the de facto way forward for tech-focused companies, keeping spending in check has rising demand. Enter Apptio’s deal, and the Flexera-RightScale tie-up.

Consider this our entry for the month concerning IT.

Illustration: Li-Anne Dias.