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    Why Are More Enterprises Betting on Startups?

    Authored by: Gary Smerdon



    Will adding tech startup solutions to your infrastructure give you a competitive edge? A growing number of enterprises appears to think so.

    A recent Sapphire Ventures paper titled CIO Innovation Index: A Blueprint for Successful Startup Engagement underscores the importance of organizations embracing digital innovation. On the cusp of 2020, this might seem like well-worn territory. But taking a look at what companies gain from successful integrations of brand new technologies, it’s clear to see why this topic deserves a deeper dive.

    According to the CIO Innovation Index, spending on technology solutions from emerging startups will increase 50% in the next 12 months. 

    Why are companies increasingly saying yes to digital innovation? 

    For starters, consider where the real breakthroughs are more likely going to come from. Are they more likely to emerge from a behemoth vendor clinging to legacy solutions and trying desperately to modernize them? Or from a group of innovators who’ve been disrupting from the start with nimble out-of-the-box thinking? 

    In addition, large and established vendors often have a wide and varied portfolio of solutions, making it hard to be really good at one thing, and generally okay at everything. Compare that to a startup whose sole purpose is to hone and refine their single, groundbreaking offering. 

    Form a start-up strategy

    Embracing technology innovations doesn’t just happen overnight. A comprehensive strategy is key, according to the CIO of Mohawk Industries, a Fortune 500 company and one of the world’s largest flooring manufacturers.

    “Working with startups is core to the digital innovation agenda at Mohawk,” says Kanyadan. As global CIO, I encourage my team to regularly assess emerging technologies and disruptive startups that can aid our company’s transformation and enable us to better serve customers. Some of the keys to our success include forming a comprehensive strategy for adoption of emerging technologies and collaboration with venture capitalists to identify winning startups.” 


    I encourage my team to regularly assess emerging technologies and disruptive startups.”

    Jana Kanyadan SVP and CIO, Mohawk Industries
    in CIO Innovation Index: A Blueprint for Successful Startup Engagement


    Make it about more than IT

    This strategy can’t just be siloed in IT, either. As Kanyadan’s comments suggest, adoption must be company-wide for the solution’s impact to be effective and meaningful.

    On the flipside, proof of concepts (POCs) are critical for startups to close the deal. And we at TidalScale put a lot of time, effort and attention into ours. After all, POCs are where the rubber hits the road, since six out of 10 CIOs say that they convert less than a third of POCs into production implementations. Successful enterprise-startup partnerships emerge when a well-planned and  properly resourced POC meets a customer looking for innovation--but innovation it can rely on.  


    To make your strengths shine, obsess over customer experience

    A majority of CIOs also reported that, compared to long-established IT vendors, startups deliver more modern architecture, a faster pace of product delivery, better customer experience and more responsive, tailored product roadmaps. Of course, they lack the global reach and resources of large, established players. But that, as any successful startup will tell you, is where collaboration and obsessing about delivering a successful customer experience comes in.

    For a look at the transformative impact one startup can have on your own enterprise infrastructure, read our latest paper featuring research from Gartner.