Few IT leaders have the in-house talent to build the bleeding-edge technologies that many digital initiatives require. To fill this gap, CIOs are increasingly looking to startups to help fuel innovation around blockchain, internet of things (IoT), AI-infused analytics and cybersecurity software.
But working with startups courts risk. Most startups rarely last 10 years, as acquisitions and flame-outs challenge the long-term direction of even the most promising vendors. Then there is the culture issue, which is often a bridge too far for CIOs beholden to big company bureaucracies. New companies just operate differently than enterprises.
Even so, CIOs can’t afford to ignore the newcomers when seeking strategic partners, and many enterprises have formal programs in place to work with startups. Ninety-five percent of large organizations with a structural innovation program invest in tech incubators, while 90 percent work with startups or niche vendors directly, according to Gartner research. And 84 percent of organizations acquire startups to bolster innovation.