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Apptio's acquisition of cloud cost management vendor Cloudability reflects further market consolidation as more customers pursue multi-cloud strategies and seek to optimize their investments along the way.
Cloudability's software provides real-time information about billing, rate and utilization of cloud services. In February, Cloudability rolled out a new initiative around FinOps, with the goal to connect finance and IT teams and manage cloud budgets more effectively.
This is a real challenge in the cloud, where fixed, upfront capital expenses, such as for software licenses and servers, become variable spending through subscription- and consumption-based models. Add in the fact that customers can procure cloud purchases in a more decentralized manner than legacy IT, and you have a recipe for complexity.
Once the deal closes, Apptio plans to align Cloudability's technology with its own efforts around DevOps, reserved instance planning, forecasting and workflow integration with CI/CD tools, according to a statement.
Cloudability claims its software platform has 250 enterprise customers, and tracks more than $9 billion in spend across AWS, Microsoft Azure and Google Cloud.
This deal is expected to complete in the current quarter. Terms were not disclosed.
Deal marks wave of cloud cost consolidation
Apptio went private in November 2018 through a $1.9 billion buyout from Vista Equity Partners. Often, companies do that to regroup and retool their plans away from the glare and demands of public markets.
Vista, like other PE firms, has somewhat of a reputation for cost-cutting after it buys a company. However, the purse strings were apparently open for Apptio to buy Cloudability. And Apptio's shopping trip may have been fairly brief.
Cloudability was one of few remaining cloud cost reporting platforms in the market, and an acquisition by a service provider or management platform has been in the cards for a while, said Owen Rogers, director of the digital economics unit at 451 Research.
Cloud providers have built better reporting dashboards themselves in the past few years, he added. In turn, several Cloudability competitors have been acquired, such as with Microsoft's purchase of Cloudyn in 2017.
Owen RogersDirector of the digital economics unit, 451 Research
Apptio previously acquired Raveld, another cloud cost management vendor, in 2012. That led to a service called Apptio Cloud Express.
"The market is now moving towards cost optimization, not just cost reporting," Rogers added. Apptio has also followed this trend with the acquisitions of FittedCloud in October 2018 and Digital Fuel in February 2018, Rogers said.
Cost optimization will become even more crucial as enterprises push into multi-cloud and hybrid cloud deployments. The industry writ large has moved in this direction over the past couple of years, with the emergence of software platforms such as Google Anthos, VMWare's support for AWS, and tie-ups such as Microsoft's work with Red Hat to support OpenShift on Azure.