There is a continuing trend of using startups to help supplement the goals and efforts of enterprises all over, but there are also risks to take into account. How can you as a CIO decide if the risk is worth the benefit? This article on CIO by Jonathan Hassell shares both pros and cons of working alongside startups, and how to decide whether to use them at all.
Great for New Tools and Customizations
For instance, startups tend to be disruptive in that they shake the way business understands or deals with a process or system. They can fundamentally make a huge impact in how business is done and, if a CIO is lucky enough to engage them, bring in huge amounts of revenue and business. Another benefit is just how willing startups can be to customize what they are working on to support the needs of a mid-sized to large business that supports them:
…organizations using startups can suggest features or otherwise influence the direction of the product. For midsize and large businesses, startups often offer direct access to developers and test managers to get to the bottom of problems quickly and understand where certain features and capabilities make sense. Larger, more established vendors generally won't offer this kind of access to the actual coders behind a product or service; at best, they'll put your organization on some kind of customer advisory council or similar informal group.
Bad for Saving Money and Keeping Unique Tools
But it isn’t all positive, of course. One of the major risks is the cash-burn problems that IT startups often find themselves in. As the article explains, expenses are very high while revenue is (normally) minimal to start, so be prepared to put more in than you’re getting out in the beginning.
Another danger is the risk of customizations becoming available for everyone to use before you can gain the competitive edge from them.
Read the full article here: http://www.cio.com/article/748794/What_CIOs_Need_to_Know_Before_Relying_on_Startups