Apptio, Not Yet Profitable, Raises $91 Million in Funding

Analysts believe that with developments like virtualization and the cloud, it has not only become more difficult but also more important to track the cost and value of IT services. The IT departments have thus had to look out for solutions that help them manage their operations and prove their RoIs. Organizations are moving to Technology Business Management solutions, a software market, that Forrester estimates will be worth $800 million by 2013.

Apptio’s Financials
Bellevue, Washington-based Apptio is a provider of on-demand Technology Business Management solutions. Apptio was founded in 2007 by serial entrepreneur, Sunny Gupta, Kurt Shintaffer and Paul MacLachlan. Today, their enterprise SaaS solutions enable CTOs and CIOs of organizations to manage the cost, quality and value of the services their departments provide. Apptio’s offerings provide the technology departments with visibility into the total cost of services, thus helping them in planning, managing and handling effective cost control of their functions. Apptio’s customer base of over 80 organizations worldwide includes the likes of Bank of America, Boeing, Cisco, Microsoft, Facebook and JPMorgan Chase. Overall, Apptio manages more than $101 billion worth of services and technology spending  on SaaS tools.

Apptio earns revenues by charging customers an annual license fee up front.  Contract values range from $100,000 to more than $1 million. Last year, Apptio’s bookings grew 121% to nearly $60 million. The company expects to double these bookings during the current year. Despite revenue growth, Apptio has yet to turn in a profit as it continues to invest heavily in building its technology platform and growth opportunities.

Apptio has received $91 million in funding so far from investors including Greylock Partners, Madrona Venture Group, Andreessen Horowitz, Shasta Ventures, Cisco Systems and T. Rowe Price. Afther a previous round of funding in early 2012 that garnered $50 million, Apptio did not disclose its valuation. However, the founders did mention that their valuation has grown more than 300% since 2010.

Apptio’s Product Expansion
Last year, Apptio launched an online community tool, the Apptio Community. The community site lets IT managers communicate with Technology Business Management practitioners and product experts who help the IT managers understand Apptio’s offerings and improve process adoption. The site also features Web-based training programs, online support tools and a repository of best practices which include dashboards, reports and vertical processes.

Apptio also released a new upgrade for its core product with added features such as a demand and resource planning application that helps determine the cost of IT offerings by enabling business users to enter projected demand within a catalog of IT services. The feature also enables decision making by the IT division as it can reduce the budgeting cycle time and provision resources according to real-time business requirements. Additionally, the updated Apptio Vendor Management module leverages source IT operational data to track SLAs and measure performance with vendors to improve IT services received by organizations and manage contract negotiations. The new version also has a built in Data Confidence Index that highlights gaps in customer data in terms of data quality, inference matching, data freshness and other key data indicator trends. The users can get a baseline understanding of data reliability and accordingly plug in relevant gaps.

Gartner estimates worldwide IT spending to reach $3.7 trillion this year. The need to effectively manage technology investments will continue to grow. With over $100 billion in IT spending, Apptio is currently managing a comparatively small pie and has immense room for growth. Analysts believe that Apptio may soon be headed the IPO way, a move that management has neither confirmed nor denied. For now, the founders are sticking with their original plan of delivering best-in-class IT financial management products.