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Apptio CEO Sunny Gupta speaks at the 2017 GeekWire Cloud Tech Summit. (GeekWire Photo / Kevin Lisota)

Apptio has made its first acquisition since its $1.9 billion private equity deal closed in January, snapping up Portland’s Cloudability, which also helps companies track their spending on cloud services, for an undisclosed amount.

Cloudability, ranked #63 on the GeekWire 200, had raised $39.8 million in funding to date, according to Crunchbase. The companies plan to integrate their products to “focus on cloud/DevOps capabilities including deeper reserved instance planning, predictive forecasting, optimizing workflow integration to CI/CD tools like Jira and Slack and rightsizing based on leading monitoring tools like DataDog,” they said in a press release.

Apptio, founded in 2007 based in Bellevue, has steadily grown since going public in September 2016. It offers companies that want to track how much money they are spending on technology services — which is a lot harder than it sounds — tools and services that help companies analyze that spending and forecast future spending.

In an interview with GeekWire, CEO Sunny Gupta said Apptio wanted to augment its products for hybrid cloud and business management spending with Cloudability’s edge in public-cloud cost management. He thinks the combined organization offers the cloud computing market a hedge against the power of the Big Three cloud providers: “when you’re managing somebody’s cost base … they want an independent provider, rather than the provider of cloud services to manage and optimize their spend,” he said.

Cloud pricing is notoriously complicated, and spending on cloud services is managed by individual departments inside a lot of companies, Cloudability co-founder J.R. Storment said in an interview with GeekWire in April. “For most companies, cloud is still a small line item in the larger IT budget,” he said, but that is changing fast as older companies move operations into the cloud and start looking at bigger multiyear contracts to manage their spending.

For its part, Cloudability co-founder and CEO Mat Ellis said Apptio has always loomed as a competitor: “ever since I met Sunny in 2011 and as the company has grown, I knew we’d either be competitors or partners because what we do is so similar.” Ellis was in the process of raising a Series C round when Gupta approached Cloudability about joining forces, he said, and the deal came together in about a month.

Last November, after Apptio agreed to be acquired by Vista Equity Partners, Gupta told GeekWire that the deal would allow Apptio “to accelerate growth in the private markets, which sometimes can be harder to do in the public markets because of the fickleness or whatever may happen in the public market.” Cloudability has around 125 employees, Gupta said, which would take the combined organization to the 1,000 employee mark when the deal is completed, expected by Apptio’s second fiscal quarter.

For now, the two companies will continue to operate separately until the deal is completed, and for a few months after completion will sell their cost management products and services separately. About three months after the deal closes, Apptio will introduce a new product road map that outlines how some aspects of Apptio’s cloud-spending tools will integrate with Cloudability, Gupta said.

Cloudability’s Portland office will remain a strategic engineering center for cloud product development, and the two companies will also combine their separate engineering centers in Denver. Gupta doesn’t anticipate a lot of redundancies in job overlap between the two companies, but that’s what companies usually say when acquiring a similar startup.

The deal is easily the largest acquisition in Apptio’s history, Gupta said, but he declined to share specific financial details of the transaction. Cloudability had raised a total of $55 million in equity and debt funding, Ellis said.

“Going private has allowed us to have access to a broader set of resources,” Gupta said.

Apptio has made two other acquisitions over the past year and a half, buying a cost-analysis company called FittedCloud right before the Vista Equity Partners deal was announced and acquiring Digital Fuel for $42.5 million in February 2018.

[Editor’s note: This post was updated several times as more information became available.]

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