2021 Enterprise Shocks: 5 Stories That Made Headlines

The Enterprise Tech Landscape: Far From Dull

A common misconception exists that the enterprise technology sector lacks the excitement found in the consumer market. However, after observing this field for over twenty years, it’s clear this couldn’t be further from reality.

Significant financial activity consistently characterizes the enterprise space. Consider Oracle’s recent acquisition of Cerner for $28 billion, a move that significantly impacted the healthcare industry. Similarly, UiPath experienced rapid growth, evolving from a relatively unknown startup to a leading RPA (Robotic Process Automation) company valued at $35 billion before a slight market correction following its IPO.

Intrigue and Corporate Maneuvering

The enterprise world is also filled with intrigue. Activist investors frequently attempt to instigate strategic shifts within companies, often leading to power struggles for board control, as exemplified by the events at Box this year.

High-Stakes Competition and Controversy

Dramatic events are commonplace. The competition for the $10 billion Department of Defense JEDI cloud contract, involving the largest cloud infrastructure providers, unfolded over three years. This procurement process was marked by legal challenges, internal reviews, and even presidential involvement.

A Year of Significant Events

To characterize the enterprise as “boring” would be a misjudgment – and 2021 proved this point definitively. Therefore, a review of five key stories that significantly impacted the enterprise technology sector is warranted.

Selecting just five defining stories from a year’s worth of news is a challenging task. Nevertheless, the following selections represent the most impactful events.

• Significant acquisitions reshaping industries.
• The rise of innovative companies.
• Intense battles for corporate control.
• Controversial government contracts.
• Overall dynamic shifts within the tech landscape.

Leadership Transitions at Amazon: A Year of Change

One of the most significant developments of the year centered around Jeff Bezos’s decision to relinquish the role of CEO, transitioning to the position of chairman. While this shift didn't immediately create substantial changes for Amazon’s core e-commerce operations, the subsequent events proved noteworthy.

Concurrent with his announcement, Bezos designated Andy Jassy, then CEO of Amazon Web Services, as his successor. Jassy was instrumental in developing Amazon’s cloud infrastructure division into a substantial enterprise, achieving a run rate exceeding $64 billion in the latest fiscal quarter.

The challenge of finding a replacement for Jassy led Amazon to recruit Adam Selipsky, formerly the CEO of Tableau. Selipsky had a prior tenure at AWS, beginning with its initial launch and continuing until 2016.

His current responsibility involves sustaining the growth trajectory of AWS. Despite existing momentum, the cloud computing landscape is becoming increasingly competitive, making Selipsky’s future leadership a key area to observe.

The transition represents a significant reshuffling of leadership within the company. It will be crucial to monitor how Selipsky navigates the evolving challenges within the cloud market.

Key Leadership Roles

• Jeff Bezos: Transitioned from CEO to Chairman.
• Andy Jassy: Appointed as the new CEO, previously led Amazon Web Services.
• Adam Selipsky: Became the CEO of Amazon Web Services, formerly CEO of Tableau and an early AWS employee.

Amazon Web Services has experienced considerable growth under Jassy’s direction. Maintaining this expansion will be a primary focus for Selipsky.

Bret Taylor’s Remarkable Professional Advancement

A significant development in late November centered around Bret Taylor, a prominent figure at Salesforce, who secured two substantial positions within a single week. This period proved exceptionally successful for his career trajectory.

Initially, Taylor was appointed as the chairman of the board at Twitter. Subsequently, he also assumed the role of co-CEO at Salesforce, a company where he had experienced rapid advancement since the acquisition of his firm, Quip, in 2016 for a sum of $750 million.

Impact on Salesforce and Potential Future Moves

The appointment of a co-CEO at Salesforce, a leading CRM giant, represented the more impactful news from a business standpoint, despite the internal changes occurring at Twitter with the transition from Jack Dorsey to Parag Agrawal.

Reports from The Information indicated that Taylor would continue to report to Marc Benioff, the company’s co-founder, chairman, and co-CEO. However, this promotion positions Taylor as a potential successor to Benioff, mirroring a similar transition observed earlier in the year with Jeff Bezos.

Looking ahead to 2022, it will be interesting to observe whether Salesforce reconsiders a potential acquisition of Twitter, an idea previously explored in 2016 before being ultimately abandoned.

Key Takeaways

• Bret Taylor was named chairman of Twitter.
• He simultaneously became co-CEO of Salesforce.
• This positions him as a potential successor to Marc Benioff.
• Salesforce may revisit the possibility of acquiring Twitter.

Taylor’s ascent within Salesforce has been noteworthy, particularly following the $750 million acquisition of Quip. His dual role signifies a vote of confidence in his leadership capabilities.

The Box-Starboard Value Proxy Battle

An attempt by the activist investment firm, Starboard Value, to gain control of Box’s board of directors was successfully resisted by Box. This outcome likely prevented the displacement of co-founder and CEO Aaron Levie, as well as a potential sale of the company. The events unfolded over several months and represented a significant development in the enterprise technology sector during 2021.

Starboard Value initially acquired a 7.5% ownership stake in the cloud content management provider, Box, in 2019. This stake subsequently increased to 8.8%, granting the firm substantial leverage. After a period of relative inactivity, Starboard initiated a campaign to replace Box’s board, triggering a contentious proxy fight.

Box responded strategically by securing a $500 million investment from KKR. This move was met with disapproval from Starboard Value. Furthermore, Box submitted a filing to the Securities and Exchange Commission (SEC) contesting Starboard’s proposed nominees for the board.

The company also proactively released its earnings report ahead of schedule, providing shareholders with current performance data. Fortuitously, Box reported positive financial results for two consecutive quarters following Starboard’s initial actions.

Consequently, Box convincingly won the proxy battle, preserving the existing leadership and direction. The current situation remains stable, but the future is uncertain.

Looking Ahead to 2022

It may be advantageous for Box to leverage the capital provided by KKR to pursue strategic acquisitions. Specifically, expanding its capabilities through the purchase of complementary technologies could be a beneficial course of action.

Strategic acquisitions could allow Box to broaden its product offerings and strengthen its position in the competitive cloud content management market.

• The proxy battle highlighted the importance of investor confidence.
• Box’s financial performance proved crucial in swaying shareholder votes.
• The KKR investment provided a significant defense against the takeover attempt.

The outcome of this proxy fight demonstrates the challenges faced by companies navigating activist investor pressure and the importance of a robust defense strategy.

The Department of Defense Terminates JEDI and Launches a New Cloud Strategy

The Joint Enterprise Defense Infrastructure (JEDI) cloud contract, valued at $10 billion over ten years, has been a source of considerable controversy since its initial announcement in 2018. Having covered this story extensively with over 30 articles, the Pentagon’s ultimate decision to cancel the program this year marked a significant development.

Initial expectations heavily favored Amazon as the likely recipient of the contract. Allegations surfaced suggesting the Request for Proposal (RFP) was tailored to benefit Amazon specifically. However, Microsoft was ultimately awarded the deal.

Amazon subsequently challenged the award in court, asserting that undue political influence from the former president impacted the procurement process due to a personal conflict with Jeff Bezos, the CEO of Amazon and owner of The Washington Post. They maintained that their proposal possessed superior merits.

These legal challenges led to a court order halting the project in February 2020. The initiative remained suspended, and in July, the DoD announced its intention to pursue a different path.

The Department of Defense cited the rapid evolution of technology since 2018 as a key factor in its decision. Rather than a single-vendor solution like JEDI, the DoD has opted for a multi-vendor approach with its new cloud initiative.

A Shift in Strategy

The move away from a winner-take-all model represents a strategic shift for the DoD. This new approach aims to leverage the strengths of multiple cloud providers.

This change acknowledges that the technological landscape has significantly altered since the original JEDI RFP was created. A more flexible and diversified cloud infrastructure is now considered essential.

• The original JEDI contract was designed for a single cloud provider.
• The new initiative will utilize services from multiple vendors.
• This shift reflects advancements in cloud technology.

By embracing a multi-vendor strategy, the DoD seeks to enhance resilience, foster innovation, and avoid vendor lock-in. This represents a more adaptable and future-proof solution for its cloud computing needs.

VMware's Separation from Dell

The acquisition of EMC by Dell in 2015, finalized at a cost of $67 billion (subsequently adjusted to $58 billion), marked the largest transaction in the technology sector at the time. This event generated significant coverage and analysis. Within the EMC portfolio, VMware consistently represented the most valuable asset.

Consequently, industry analysts and journalists, including myself, closely monitored Dell’s strategic plans for the company. For an extended period, Dell maintained the status quo. However, a significant development occurred earlier this year with the announcement of VMware’s spin-off, valued at $9 billion.

The valuation appeared somewhat conservative considering the substantial financial commitment associated with the original EMC acquisition. Future developments are anticipated. Will another entity pursue an acquisition of VMware now that it operates independently from Dell?

Dell will retain a substantial ownership stake and continues to manage considerable debt incurred during the EMC transaction. This situation warrants continued observation throughout 2022.

Selecting only five key storylines proves challenging, inevitably omitting some noteworthy narratives. What stories would you have prioritized? Share your thoughts in the comments below.