It seems there is a new article almost every day talking about how CIOs and IT departments are fighting to maintain relevance in our changing economy and technology landscape. A recent Harvard Business Review post titled "Avoiding the Schizophrenic IT Organization" highlights the two opposing forces in today's IT departments. On one side there is a need to run complex, global infrastructure that is compliant and secure, and on the other side there is a need to provide IT value quickly to users. There is constant pressure for IT to provide value and innovation at light speed that supports the necessity of startups and the innovative products that startups bring to market.
For CIO's of both large and small organizations the cloud has been a transformational megatrend. Some CIO's (and CFO's) prefer the cloud, because it allows them to shift more IT spend to OpEx and preserve CapEx for strategic IT investments. Other CIO's like that the cloud is easy to access from just about any device and that cloud applications are easy to deploy, particularly in comparison to traditional on-premises applications. Startups take full advantage of the cloud, because it allows them to develop new products quickly and at low cost, while avoiding significant infrastructure investments. Many startups run their businesses fully on the cloud using commercial cloud applications that are readily available on application ecosystems like Salesforce.com's AppExchange. These same startups design and build their own products on a cloud platform like Amazon Web Services (AWS) or Google App Engine. If the founders of startups are leveraging the cloud to run their business for both internal IT, and product development, then CIO's can do the same thing.
At Enterasys, we have a long tradition of investing in startups and small businesses. We remember becoming a Salesforce.com customer in 2003 and since then we have demonstrated a rich history of collaborating with nimble and customer focused innovators. It is also rewarding for us to partner with startups that successfully go public like Marketo - a wonderful marketing partner for us. Today, we are partnering with some of the best technology startups to grow our business - see graphic below.
There is no better time for CIOs to embrace and introduce innovation into their companies as today. But CIO are also responsible for business continuity and efficiency, so there they have to balance risk against speed, efficiency, cost, and other factors. Experienced CIOs that were once unlikely to move mission critical applications like email, CRM, and ERP to the cloud are making massive shifts in vendors and products to go 'cloud'. Even so, in some companies, there is too much risk to move core systems to the cloud. In our own business we love the cloud, but ultimately we will always have a hybrid IT environment, because certain applications are too costly or difficult to change. This is where startups can be a huge asset to a CIO's application portfolio. Startup's offer innovative, cost effective technology for every nook and cranny of IT. Whether it is Identity and Access Management (IAM), Analytics, Social, Collaboration, Advocate Marketing, Expense Reporting, or Supplier Management there are many innovative solutions that can be deployed to users with little risk.
Strategic CIOs recognize that the "I" in CIO is no longer about information alone, but it also means innovation, implementation, integration, intelligence and imagination. Strategic CIOs are nimble and adaptive and are best suited to champion digital business transformations that leverage technology to increase revenue, profitability and customer delight. But to do this, CIOs must not ignore small businesses and startups. Here are the 8 reasons why it makes sense for CIOs and CTOs to invest in startups.
- Leverage for Optimal Price and Value - Working with startups can be part of an effective technology and vendor management strategy. Medium and large companies have a lot of leverage when negotiating with startups. As a result, startups are often willing to aggressively discount their solutions to get initial customers and to build their client base. In fact part of a well-funded startup's business plans is to acquire a certain number of customers before making money on those sales.
This blog was co-authored by Benjamin Doyle, Vice President of Sales Enablement at Enterasys.