Summary Bullets:

• IBM’s pending deal to acquire HashiCorp, with its Terraform infrastructure-as-code software platform, gives the company a popular cloud configuration toolset.

• The buy isn’t a slam dunk; HashiCorp has struggled to make money from its formerly open-source software.

One of the issues organizations struggle with is efficiently setting up and managing their multi-cloud environments. Last week, IBM announced plans to acquire Hashicorp, a vendor with a Terraform platform the company says can help IBM clients do that. HashiCorp’s catalog includes infrastructure lifecycle management and security lifecycle management solutions enterprises can use to automate hybrid and multi-cloud environments. This will extend IBM’s automation and multi-cloud management product set, which it delivers through the Red Hat subsidiary.

When IBM executives were questioned about any potential overlap between HashiCorp’s solution set and Red Hat’s offerings, the executives said they were distinctly different capabilities. HashiCorp delivers a record for workflows necessary for hybrid and multi-cloud deployments. The company’s flagship Terraform is popular with enterprises looking to automate cloud infrastructure provisioning, which is more closely associated with the initial cloud migration. IBM executives said Red Hat’s Ansible software suite is more closely associated with ongoing cloud management.The acquisition follows IBM’s $4.6 billion deal to buy cloud financial management vendor Apptio in August 2023. The combined automation and management solutions could give IBM a bigger edge as organizations try to optimize both the performance of their multi-cloud infrastructures and the cost-efficiency of these environments.However, big questions loom as HashiCorp has grappled with turning Terraform into a money maker. To this end, in 2023, HashiCorp moved Terraform from an open source to a business source license model. Not surprisingly, this was not a popular move among developers and partners.There are questions about how IBM might change Terraform’s licensing model. And OpenTofu, an open-source fork of Terraform, could also undercut Terraform’s sales.The hope is that with the sales and technology development support, HashiCorp will be able to expand its revenues and profits. Like Red Hat, when the acquisition closes later in 2024, HashiCorp will operate as a standalone subsidiary.