IT execs say working with startups is worth the risk

It's about partnership and managing expectations

SANTA CLARA, Calif. - IT leaders say they enjoy working with startups, but doing so successfully requires understanding the level of risk, managing that risk and setting reasonable expectations. That was the consensus during a panel discussion among four IT executives held Wednesday at the DEMO show here.

"I love startups, but you have to look at what you're doing and understand who you're working with" and where the startups are in their development, said Cindy McKenzie, senior vice president of enterprise application services at entertainment conglomerate Fox Group, in an interview after the panel. "I've had issues with startups going out of business. At one, the founder of the company died and they walked away from us."

A number of startups were acquired and the new owner retired the product that Fox was using, she added.

Even so, McKenzie said, she wouldn't have made different choices; the risk was worth the reward. IT leaders said the biggest benefit of working with startups is access to leading-edge technology that solves their business problems more quickly than they could by building something internally.

Sasan Goodarzi, CIO of Intuit, said he also learns from the startups that his company has either acquired or worked with over the years. "There's a reverse integration and reverse mentoring -- there's a mindset of passion, urgency, speed" at which the startups move, he said. "We try to integrate that" into the broader Intuit corporate culture, he said. "Most large companies move too slowly."

Tom Soderstrom, chief technology officer at the NASA Jet Propulsion Laboratory, said, "You can go to a startup and see how we'll be doing IT in two years." One example is the co-working phenomenon, he said. "Startups don't need offices -- they work at Starbucks. We're getting there, with more mobile and configurable workspaces," he added.

Big data is an area where the executives said they are open to working with startups. Ricardo Angel, senior vice president of General Electric Energy Financial Services, said the company is looking to mine data to better understand how to maintain its IT gear and other systems via mobile devices, especially in climates or locations "where it's difficult for people to go." Another longer-term goal is to continue to learn about making the machinery GE sells to customers more robust and require less maintenance.

Intuit's Goodarzi said he's looking for help in defining patterns that could be useful to the company's customers. "We want to help accountants save time, help small businesses grow" and be able to help a farmer in Iowa or a roofer in Philadelphia implement best practices based on what has worked for similar companies.

He's talking to "a couple" of companies in this niche, he said. "We call it: Data for the little guy."

Fox, too, is using Big Data tools, some from startups and others from more established firms. There's an initiative to track the studio's top 5,000 end customers, McKenzie said, "So we're working with a variety of vendors," she explained. This includes sentiment-analysis vendors as well as Hadoop suppliers and others.

Do your homework

If your goal is to get to market faster via a startup's technology, make sure you "do due diligence," McKenzie said. "There are a lot of things they may not know how to do -- a contract, for example. Everything can be more cumbersome," since it's unchartered territory for a new company. One of the things that makes startups so nimble can be a lack of process, but that's something most larger organizations require.

Also, IT leaders will likely need to train the startups on how best to work with them. "I can't tell you how many times I get an email saying 'I'd like to show you my product -- are you free for an hour next week?' " said JPL's Soderstrom. "There's no way I can do that -- I'm already triple-booked with meetings."

A much better approach, for him anyway, is to request a 15-minute Skype video session. "Talk to me, find out which problems I'm trying to solve."

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