The Cloud

IBM to Buy Software Company Instana

The company said the move is part of its hybrid cloud and AI push.
Lauren MuskettNovember 18, 2020

IBM has reached an agreement to buy application performance monitoring and observability company Instana.

In a statement, the U.S. tech giant said the move would help it better manage modern applications that span the hybrid cloud landscape and strengthen its AI-powered automation capabilities.

Financial details of the transaction were not disclosed.

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In a statement, Rob Thomas, senior vice president at IBM, said the company’s clients have to manage applications and data running across a mix of environments.

“IBM’s acquisition of Instana is yet another important step that we are taking to provide companies with the most complete portfolio of AI-automated solutions to tackle this enormous challenge and help prevent unforeseen IT incidents that can cost a business in lost revenue and reputation,” Thomas said.

IBM said once Instana’s capabilities are integrated into IBM, companies will be able to feed these insights into Watson AIOps.

The deal comes days after IBM announced it was buying the IT services and consulting partner TruQua Enterprises. It also recently acquired WDG Automation and reached an agreement to partner with ServiceNow as part of a wider automation push.

Last month, the company announced plans to split into two public companies while focusing on its cloud platform and AI.

“IBM is essentially getting rid of a shrinking, low-margin operation, given the cannibalizing impact of automation and cloud, masking stronger growth for the rest of the operation,” Moshe Katri, an analyst at Wedbush Securities, said.

Instana was founded in 2015 by Mirko Novakovic, Pete Abrams, Fabian Lange, and Pavlo Baron as a spinoff of Codecentric. It is headquartered in Chicago, with a development center in Germany.

Before this deal it had raised $57 million from Meritech Capital Partners, Accel, and Target Partners among other investors. About $26 million of its capital came from investors in Germany.

The deal is expected to close in the next several months.