Ana has a plan: for dealmaking

Private investors are continuing to look for deals amongst enterprise software companies that rode the SaaS investment boom over the last several years. Just a few months ago PE firms Vista and Evergreen bought Citrix for $16.5 billion, and earlier this week, Thoma Bravo bought Anaplan for $10.7 billion.

Just as the final touches of the deal were coming to a close but before it was announced, Protocol spoke with Anaplan Chief Development Officer Ana Pinczuk about the tech investing landscape and the role CIOs should play in helping deals come together.

The market for technology stocks is volatile, but there’s still interest in dealmaking from PE firms and large SaaS companies.

• In the past few months Snowlake’s stock fell despite beating expectations, Justwork’s IPO was delayed and potential deals like Zendesk’s acquisition of Momentive were flat out rejected.
• “If you look at many of the companies that have IPO’d, a whole lot of them, I don't know if it's about 70% or so, are sort of below their IPO value,” said Pinczuk.
• Despite market volatility, there have been a number of historic deals in recent months, like Oracle's acquisition of Cerner and Microsoft's purchase of Nuance. And Pinczuk thinks dealmaking from both enterprise companies and PE firms will continue.
• “There's a lot of money and there's a lot of appetite for investing specifically in technology and software stocks,” she said.

CIO involvement in the dealmaking process is increasing as the role becomes more strategic.

• “They're becoming much more of an adviser to CEOs in terms of what the tech landscape looks like and what companies should be considering from a software perspective or a digital perspective,” said Pinczuk.
• In the past, CIOs would mostly come into M&A after the deal was already selected. But now CIOs are “being brought in to help assess what companies to look at because they have a great view of the landscape,” said Pinczuk. “They're being brought in to be part of the strategic fit and also the deal team.”

The complexities of tech stack management, data and cyber risk have made CIOs essential to the due diligence process. The proliferation of enterprise technology means factors like data, cybersecurity risk and enterprise environments are key to acquisitions.

• “If we think about the deal process, you have to look at a ton of data, right?” said Pinczuk. “And the CIO can do both: can give you access to data and they help you assess risk — whether it's cyber risk, people risk, location risk, things around sustainability, all kinds of things.”
• CIOs are also essential in assessing how a merger or acquisition will impact the tech stack. For simplicity, a CIO may want to focus on deals that let the company stick with existing vendors, but that’s not always possible, said Pinczuk.
• And in the fast-moving tech world, companies can’t afford to have long interruptions in service or take 18 months to fully merge the enterprise environments. “To me, that's where you put the M&A value proposition at risk,” said Pinczuk.

CIOs' increased involvement in dealmaking is changing the way the role is evaluated. To be a more strategic CIO means being tied to metrics that go beyond efficiency measures towards growth and customers.

• Strategic CIOs are now “at the board level, they’re having conversations about how to enable M&A, how to enable growth, how to enable profit, they're really tied very clearly to multiple metrics at a company,” said Pinczuk. Some of those metrics are growth, profit, operating margin or customer experience.
• To Pinczuk the difference between an operating CIO and strategic CIO comes down to whether the CIO is also thinking externally about growth and customers. “Am I participating in the growth and customer angle for this company? If not, I'm really more of an operating CIO, not a strategic CIO,” she said.

The interplay between CTOs and CIOs will define how enterprises approach dealmaking moving forward. It’s becoming increasingly common for tech companies to have both CTOs and CIOs, roles that are distinctive but should work in tandem.

• “When I think about M&A activities for example, I feel like there's a really nice partnership opportunity between the CTO and CIO,” said Pinczuk.
• While the CTO can help with the strategic fit of a merger or acquisition target, the CIO can work on enabling faster integration, said Pinczuk. Together, the two roles can take a deal all the way from strategy to execution.

— Aisha Counts (email | twitter)

A MESSAGE FROM UPWORK

Seeking to triple its employee base, Whisk, a fully remote team, sought diverse talent from a wide variety of regions through Upwork, a work marketplace that connects businesses with independent professionals and agencies around the globe.

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More questions for Okta

Okta grew into a $25 billion company by promising customers it could verify that everyone granted access to their internal data was an authentic user. This week, those customers have lots of questions.

After initially downplaying the impact of the remote takeover of an internal account belonging to a contractor working for Okta, the company confirmed Tuesday night that the group behind the takeover was able to view the internal data of hundreds of customers. The incident occurred in January, but David Bradbury, Okta’s chief security officer, wrote in a blog post that Okta did not receive the forensic report from the contracting company until Tuesday morning, hours after the Lapsus$ hacker group posted screenshots of Okta’s internal IT systems to Twitter.

“[W]hile the attacker never gained access to the Okta service via account takeover, a machine that was logged into Okta was compromised and they were able to obtain screenshots and control the machine through the RDP session,” he wrote. Support engineers have “limited” access to Okta customer data, according to Bradbury, but he still called the incident “embarrassing.”

However, the length of time between the discovery of the incident in January and Tuesday’s disclosure could prove to be more embarrassing for Okta in the long run. Security incidents are somewhat inevitable, even at companies that offer security services, but enterprise customers are more forgiving of vendors that disclose incidents clearly and promptly.

— Tom Krazit (email | twitter)

Nvidia CEO Jensen Huang, on cooking

Despite Nvidia’s failed attempt to acquire Arm, CEO Jensen Huang said his company’s plans for the future include doubling down on the number of Arm-based chips as part of the company’s “holy trinity” of computing.

“You know in cooking, almost every culture has their holy trinity, if you will. My daughter is a trained chef and she taught me that in Western cooking it’s celery, onions and carrots — it’s the core of just about all soup,” Huang said at a Wednesday press conference. “And in computing, we’ve got our three things: the CPU, the GPU and the networking that gives us that foundation to do just about everything."

— Max A. Cherney (email | twitter)

Around the enterprise

Video game developers saw the launch of two new cloud services for building and supporting games, one from AWS and one from Microsoft.

Chip executives including Intel CEO Pat Gelsinger asked Congress to pass the long-delayed chip subsidies bill, raising the specter of falling behind other countries.

Intel is reportedly about to purchase Israel’s Granulate, a cloud-computing optimization startup, for $650 million.

A baffling decision to introduce GitHub users to an algorithmically driven feed went over about as well as you’d expect.

A MESSAGE FROM UPWORK

Whisk isn’t alone in unlocking the global marketplace to find the right types of employees to support its business goals. More than three-quarters of U.S. companies have used remote freelancers, according to research from Upwork, and more than a quarter of businesses plan to go fully remote in the next five years.

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