Innovative IT startups face a big obstacle to success: Enterprise IT budgets

​IT startups face considerable challenges because enterprise budgets are set up to buy existing technologies...
Written by Tom Foremski, Contributor

Corporations spend a lot of money on IT globally and a small part of the trillions of dollars they spend globally helps to support innovative IT startups.

But it's a hard slog for those startups when they have something truly innovative to sell because who do they sell it to? Who holds the budget for something that didn't exist until a year or two ago? And there's not even a category to label the technology?

There's budgets for databases, servers, for networks, and hundreds of other IT components. But where are the budgets for as-yet unknown technologies that could be transformative across the entire business?

Innovate or go home...

Corporations are constantly talking about their need to acquire innovative technologies as a way of gaining a competitive lead. Alan Boehme, Chief Innovation Officer of Coca-Cola, said at a recent CIO conference, he looks for technologies that can give Coca-Cola at least a six months lead over competitors because he can quickly leverage that advantage across the entire organization and its partners.

Companies know that innovation is vital to their futures but they haven't created a way for innovation to come into the organization.

IT status quo...

How can innovative startups succeed if IT budgets are only for an existing catalog of IT products? And what if your innovation does away with the need for many IT products and can eliminate several budgets? With the way things are managed today, there's no incentive for the individual budget holders to find ways of doing away with their budgets.

Multinational companies have the scale and the most to gain from rapid discovery and integration of innovative IT technologies. But their own organization works against their business goals of agility and speed to markets.

It's an example of how the rigid, silo-based corporate structure handicaps the business and also handicaps innovative startups.

And it's understandable why there's so many IT products that provide incremental improvements to existing systems because there are existing budgets, rather than disrupt entire processes -- which is what truly innovative technologies do.

Innovation in budgets...

We need a new approach to harnessing IT innovation by large enterprises. Maybe it'll come in the form of new types of executive roles, such as Chief Information Architects, that have the means to evaluate the business impact of novel technologies across the entire organization. And then have the budget and communications skills to champion those technologies inside the organization.

Innovation in IT will wither on the vine if there's no budget for it. And enterprises will miss unique business opportunities.

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