CXO Spectrum

Digital Transformation

IBM to Acquire Apptio Inc., Enhancing Financial and Operational Insights in Enterprise IT

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IBM has announced its definitive agreement to acquire Apptio Inc., a prominent provider of financial and operational IT management and optimization (FinOps) software, from Vista Equity Partners for a total of $4.6 billion. This strategic acquisition represents a significant step forward for IBM’s IT automation capabilities and will empower enterprise leaders to deliver heightened business value through their technology investments.

With digital transformations occurring at an unprecedented pace, businesses are witnessing the expansion of IT environments across public and private clouds, often involving multiple service providers. To navigate this complex landscape, organizations have increasingly turned to Apptio’s solutions, which offer integrated and simplified visibility into technology spending across hybrid and multi-cloud environments, as well as labor and associated resources. By combining Apptio’s expertise with IBM’s IT automation software and watsonx AI platform, companies worldwide will gain the ability to effectively manage and optimize their enterprise IT spend, driving tangible financial value and operational improvement.

Apptio has established itself as a profitable leader in technology business management and FinOps, boasting over 1,500 clients, including more than half of the Fortune 100. The company has built strong partnerships and integrations with industry giants such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, Salesforce, ServiceNow, Oracle, and SAP, aligning with IBM’s commitment to an open partner ecosystem.

Apptio equips enterprise leaders with the tools to manage technology spend and direct investments toward high-value cloud innovation and digital transformation. The company’s core offerings, delivered as software as a service (SaaS), include ApptioOne, Apptio Cloudability, and Apptio Targetprocess:

ApptioOne: Offers hybrid cloud spend management and optimization capabilities for analyzing, optimizing, and planning IT spend and value. ApptioOne enables repeatable and accurate planning and financial management processes, delivering actionable insights regarding cost and utilization, while facilitating continuous optimization through benchmarking against industry peers.

Apptio Cloudability: Provides visibility and optimization capabilities for managing public cloud spend, connecting multi-cloud and SaaS infrastructure with cloud financial management best practices to maximize clients’ cloud strategy.

Apptio Targetprocess: Delivers agile investment planning capabilities to align development resources with business outcomes, enabling effective planning and tracking of value delivery for projects or products.

Arvind Krishna, CEO and Chairman of IBM, emphasized the need to optimize investments to derive better business value in the rapidly evolving technological landscape. He stated, “Apptio’s offerings combined with IBM’s IT automation software and watsonx AI platform give clients the most comprehensive approach to optimize and manage all of their technology investments.”

The acquisition of Apptio aligns with IBM’s strong focus on hybrid cloud and AI, and is expected to generate significant synergies across various key growth areas, including automation, Red Hat, IBM’s broader AI portfolio, and IBM Consulting. Moreover, it will strengthen IBM’s collaboration with leading systems integrators such as Accenture, KPMG, Deloitte, and EY. By integrating Apptio’s anonymized FinOps data, IBM will augment watsonx with new insights, further driving innovation.
Sunny Gupta, Co-founder and CEO of Apptio, expressed excitement about joining IBM, stating, “We are so excited to be joining IBM and combining our industry-leading offerings with IBM’s global presence and strong portfolio across AIOps, automation, and hybrid cloud offerings.” The acquisition will enable Apptio to leverage IBM’s extensive scale and reach, collaborating with clients and partners across over 175 countries.

Robert F. Smith, Founder, Chairman, and CEO of Vista Equity Partners, emphasized the success of Apptio’s transformation in optimizing IT spend and performance for leading organizations. He expressed pride in the shared accomplishments and the potential for further evolution of Apptio under IBM’s ownership.

The acquisition of Apptio will be funded using IBM’s available cash reserves. The transaction is subject to customary closing conditions and regulatory approvals, with completion expected in the latter half of 2023.

Increase in Chance of Vendor Acquisition:
IBM’s acquisition of Apptio Inc. and its leadership in ITAM and FinOps may lead to increased speculation about the acquisition of other vendors with FinOps and ITAM expertise, such as Flexera. The market recognizes the value and importance of these companies in providing actionable financial and operational insights across enterprise IT, and industry players may seek to acquire such vendors to strengthen their capabilities in this space.

Gartner Finds 62% of CFOs Looking to Cut Admin Budgets

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According to a new study from Gartner which surveyed 317 CFOs and finance leaders, nearly two-thirds are planning at reductions in selling, general, and administrative budgets this year.

The survey also found that 18% are looking to cut budgets across all departments, with the biggest anticipated cuts in marketing, with 31% of respondents expecting a budget cut of more than 10%.

To adjust to this new normal, Gartner recommends the following four cost management tactics:

  • Think big: Consolidate products and services into fewer lines of business, building on a foundation of a narrower industry footprint.
  • Involve the business: Include other decision-makers to explore identify best cost-saving opportunities.
  • Establish new leading indicators: Gartner analyst Dennis Gannon, Advisory VP for the Gartner Finance Practice says, “The organizations that will come out of this crisis in leadership positions are those that quickly move resources to emerging areas of opportunity while competitors are ducking for cover.”
  • Create a recurring headwind and tailwind cost report: Identify and quantify uncertainties in the external environment in an effort to gain full transparency into the factors that might affect business performance.

For more information, you can find the Gartner announcement here.

LifeLink Chatbots to Provide COVID-19 Screening and Testing for Jefferson Health

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To respond to the Coronavirus crisis, Jefferson Health will be using LifeLink chatbots to automate clinical screening and testing.

The initiative is a three-pronged approach to automation, according to the announcement Jefferson Health made today. The new conversational chatbots can:

  • Conduct a risk assessment based on patient symptoms and exposure profile
  • Connect screened patients with recommended care pathways and action steps
  • Automate the clinical intake process for patients who need to schedule appointments

The bot is currently live on the Jefferson Health appointments website, and the company recommends patients use the chatbot before calling or visiting one of its facilities.

LifeLink also provides a smart conversation platform for Banner Health.

Accenture Finds Timid Approach to Technology Costing Enterprises Billions

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A new survey showcases the delta between vision and implementation in digital transformation. Accenture’s recent report, “Your Legend or Your Legacy” found that C-level execs embracing bold technology initiatives are reaping the rewards. Yet the number who do so is surprisingly small – Accenture finds only 10% are investing optimally in technology and adoption decisions to realize full value of those investments. Further, Accenture finds that, “By adopting new technologies more aggressively and breaking down barriers to effectively scale innovation across their organizations, these leading companies are generating more than twice the rate of revenue growth than those on the lower end of the spectrum.”

The study was conducted with 8,300 organizations across 20 industries and 20 countries.

Accenture offers five key factors— or “PATHS” — that it has identified as distinguishing the top 10% of companies from the rest:

  • Progress: The extent to which companies apply new technology to evolve business processes across the enterprise. One example is the use of cloud and artificial intelligence (AI) to increase the effectiveness of multiple business processes rather than working in silos.
  • Adaptation: Ensuring that IT systems can adapt and respond to changing market conditions with actions such as decoupling from legacy systems and using cloud services as a catalyst for innovation.
  • Timing: Creating an appropriate sequence and roadmaps for deploying new technology. This begins with identifying foundational technologies and prioritizing adoption based on their enterprise-wide impact.
  • Human+machine workforce: Using technologies to augment employees and make work more engaging while simultaneously realizing efficiency gains. This could entail delivering technology-augmented training that is personalized and experiential for working with technologies of the future.
  • Strategy: Actively aligning business strategy and IT strategy and weaving technology investments together to better seize opportunities.

Frost and Sullivan Find Retail and Transportation Ahead of Other Sectors with Digital Transformation

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Frost and Sullivan released results from its “Top End User Priorities in Digital Transformation, Global, 2019,” which measures current use and future decision-making behavior toward Information Technology and communications and monitors the status of digital transformation. For those evaluating IT spend, Frost and Sullivan found that improving customer experience, digital presence and sales and marketing effectiveness were the three major drivers for IT/Telecom investment.

Other key findings include:

  • The retail (44%) and transportation (43%) sectors are ahead of others in their digital transformation.
  • More than two-thirds of companies feel that the sales and marketing department will be the most impacted department by their digital transformation.
  • Enhancing customer experience, digital presence, and sales and marketing effectiveness are the three major drivers for IT/telecom investment over the next two years.
  • Improving operational efficiencies is a top priority in Asia-Pacific and Latin America, while upgrading customer experience and satisfaction is the most important corporate goal in North America and Europe for 2020.
  • Malware (41% of companies) remains the greatest security threat, followed by security misconfiguration and hacking. Malware is common in both smartphone and desktop platforms.
  • Internet of Things is being used by 65% of companies. Almost 42% of organizations are developing IoT through a third-party service provider. Government is the predominant developer of IoT in-house.
  • IT and communications, finance, banking, and insurance are the top industries implementing artificial intelligence.
  • Cost of integration remains a major setback for the adoption of new digital technologies.

Gartner: Blockchain Technologies Are Still Five to 10 Years Away From Transformational Impact

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Gartner says Blockchain is not yet mainstream.

“Blockchain technologies have not yet lived up to the hype and most enterprise blockchain projects are stuck in experimentation mode,” said Avivah Litan, distinguished analyst and research vice president at Gartner. “Blockchain is not yet enabling a digital business revolution across business ecosystems and may not until at least 2028, when Gartner expects blockchain to become fully scalable technically and operationally.”

For blockchain to become mainstream, Gartner said users shouldn’t have to worry about picking the right platform, the right smart contract language, the right system interfaces, and the right consensus algorithms. Additionally, concerns about how users will interoperate with partners that use different blockchain platforms for their projects must be rectified.

“We are witnessing many developments in blockchain technology that will change the current pattern. By 2023, blockchain platforms will be scalable, interoperable, and will support smart contract portability and cross chain functionality. They will also support trusted private transactions with the data confidentiality required. All together, these technology advances will take us much closer to mainstream blockchain and the decentralized web, also known as Web 3.0,” said Ms. Litan.