CIOs and Start-Ups: a Natural Fit, article in Forbes

November 12, 2012
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Savvy CIOs are getting involved beyond their own companies to sit on boards of start-ups and help their smaller external partners grow up.

by Peter High, published on Forbes.com

10-30-2012

It is a well-worn debate: When companies identify needs that may be met by engaging vendor partners, should they turn to large, established players or small up-starts? All things being equal, most companies tend to hire the established player, as there is a perception that the risk is lower.  Just as the old adage of “no one ever got fired for hiring IBM” suggests, many people think that partnering with a larger vendor will be less risky for several reasons. The larger vendor has a longer track-record. It has likely dealt with a wide array of complex customers of different sizes, and it has the financial history to suggest that it will not soon go out of business.

These rationales often hold true, but they should not necessarily win the debate in situations where the smaller companies have the better products or services. Having worked with a number of chief information officers in Silicon Valley, these executive often find that the best solutions are from start-ups.  Of the CIOs I surveyed, the reasons given for pursuing smaller vendors include:

  • More innovative products;
  • An ability to adopt more quickly to changing business and computing models;
  • Products that are easier to deploy and often are easier to tailor than comparable products from larger players;
  • Better and more timely customer service

True, one cannot avoid the fact that partnerships with start-up ventures come with a higher degree of risk. It is much more likely that a start-up will fold in the medium term than it is for an IBM or an Oracle to do so.  Interestingly, the CIOs of large companies may be part of the solution to this concern.

To read the remainder of the article, please visit Peter High’s Technovation column on Forbes.com.

Explore more pieces in the Technovation column here.

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