78% of IT decision makers in a Helion Study consider it risky to buy solutions from startups

Helion Ventures Partners is a $605 million India-focused, early to mid-stage venture fund, investing in technology-powered and consumer service businesses. The company recently conducted a study covering over 100 CIOs and top IT decision makers (ITDMs) across enterprises as well as nearly 300 startups. The study aimed at mapping the enterprise IT demands to startup solutions.

Key Results:

Mobility, security and analytics come under the radar of CIOs: Technologies that are constantly under the radar of IT decision makers (IT DMs) are topped by mobility solutions and mobile apps, while security, analytics and collaboration solutions are also drawing great interest within this group. An emerging, but potentially strong contender for attention is the BYOD (Bring Your Own Device) syndrome, as a majority of respondents (73%) affirmed that it is likely to play a key role in their organisations. Cloud solutions are also being closely watched, irrespective of whether they are private or hybrid solutions, as well as enterprise-wide services being delivered from public clouds. Use of personal cloud by employees, though a small trend, is also under the overall ‘cloud solution’ tracking of these organisations.

Indian product startups geared to disrupt IT adoption: As many as 82% of the respondents have already developed and deployed application solutions. Business analytics and big data solutions are being offered by 46% of startups that responded to this study, enterprise services on the cloud by 30% and mobility solutions are served up by 21%. Key functions targeted by these solutions include sales (73%), business development (70%), service delivery (66%), HR (51%) and the supply chain (48%).

slide-1-638Younger technologies expected to drive agility and flexibility of organisations: A whopping majority of the IT decision makers (95%) believe that solutions arising from new technologies could not only improve business processes and customer services, but increase the agility and flexibility of the organisation itself. Some of the concerns plaguing IT DMs, and driving them to seek new solutions, include the increasing demand to invest in new technologies by business users (80%), upgradation of their aged IT systems (74%) and increasing security risks with information management (71%). The study reflects that it is a bucketful of new-age technologies, less than a decade old, that are expected to address these concerns. Mobility solutions top the list (91%), followed by solutions in collaboration (82%), security (81%), mobile apps (80%) and big data / business analytics (71%). Surprisingly, cost is not a major factor that is driving the adoption of these new technologies as less than half the respondents (43%) strongly believed that it had impact.

CIOs and top IT decision-makers keen to look at startups: Perceptions about solutions from startups is encouraging as 90% of IT DMs said that they are likely to see a demo, implement on a trial basis or conduct a review. As much as 72% of respondents are likely to invest in a limited implementation of the solution, while 54% are willing to invest in a full implementation of the solution.

India emerging as the hotbed to test technologies for developed and emerging markets: Entrepreneurs agree that there are elements of ‘India advantage’ in the ecosystem, especially with relation to cost of product development, implementation and support. The ease of pilot testing and availability of technical skills contribute to enhancing the global product offering. However, availability of funding and infrastructure pose serious challenges to sustenance, as entrepreneurs have cited these two factors as low advantages.

Technology buyers keen to fuel startup ecosystem: In a bid to fuel the technology product surge in India, IT DMs are demonstrating a new-fangled willingness to help startups, beyond mere purchase. 85% of respondents stated that they are willing to work (and play an advisory role) with the startup to help evolve or improve the product. A majority of respondents (82%) are keen to provide customer references while 68% agree that being one among the first five customers for a startup is acceptable.

Startups and IT decision makers are not completely aligned with factors contributing to the purchase decision: While both groups (startups and the IT decision makers) agree on a few factors as being key to the purchase decision, including performance and reliability of the solution, vendor support, scalability and costs, they are still non-aligned on several other factors. Consider this: while IT DMs placed great emphasis on the features and functionality of the solution (78%), only 36% of startups ranked this as very important factors. Moreover, as much as 65% of IT DMs believed that technical specifications of the solution was key to purchase, but only 15% of startups believed so.

Hierarchy, access and appetite for risk are chief bottlenecks for startups: As many as 70% of entrepreneurs cited hierarchy in decision-making as the most important hurdle in selling to enterprises, while access to the right people (54% cited this) and the risk appetite of CIOs for startup solutions (51% cited this) came up as challenges too. Other pain points included mindset of the business user, lack of sufficient customer references and the opportunity cost of a demo.

Chief concerns when buying from a startup: IT decision makers primarily worry about the reliability of the solution (78% cited this as a high risk) as well as the long-term quality of support from a startup vendor (72%). Scalability of the solution and its performance are also aspects which IT buyers believe that startups must fine-tune in order to seal the deal.

Jubin Mehta

Jubin Mehta

Jubin is an old timer at YourStory. Deeply entrenched in the Indian startup ecosystem, he has written about more than 1000 startups. With an engineering background and a keen interest in data analysis, his passion for writing and entrepreneurship makes him a perfect match for Yourstory. He operates from the mountains in Dharamshala where he also runs a hackbase. He can be reached on Twitter @jub_in and on mail at jubin@yourstory.com