Why Best Tech Companies Are Usually Hidden
There’s an age old adage in enterprise software — “Nobody ever got fired for buying IBM”. The phrase implies that no matter what the situation, if you ended up procuring IBM equipment in an enterprise context. It was a safe bet to choose IBM — stable, marquee brand — if things go bad with the decision, no one could blame you.
As procurers of technology, the CIO, CMO, CSO often end up making software purchase decisions which have long term implications for their companies. Choosing correct software requires a lot of energy — parsing the feature lists, pricing, claims, vendor reputation, support SLAs, studying competing technology companies — and can be very exhausting. Honestly, sometimes it is even difficult to tell the difference. Choosing important software usually has a domino effect — called “consequences of consequences” which is also difficult to think through always.
Since buying technology for enterprises is a difficult and complex process, it is useful to keep the following 3 principles in mind of how tech innovation happens:
1. Technology loves small: The guys who build the best and the latest technologies are those who are likely to have quit bigger companies like Google, Facebook, Adobe, Oracle, Salesforce and picked up a small portion of the overall stack and create something a lot better than the big incumbent. The reason this happens is because as companies grow bigger, they find it more and more difficult to keep their brightest engineers who usually crave more creative challenges. These founders (who sometimes go on to become millionaires and billionaires) start small with an offering at least 10X better.
2. Passion changes a lot: Because the best and the latest technology is usually in smaller companies where the founders are people who want to make a difference, they are usually experts in their field. Conversations with them will teach you a lot more than talking to Oracle salesmen.
3. Big enterprise software companies grow by acquisitions: If you look at any large company out there, be it Oracle, Adobe, Salesforce etc., they all end up growing their revenues by acquiring smaller companies and usually this means that a lot of the tech innovation stops happening within these companies (the founders are usually itching to complete their lock-in periods and then go and start another company which builds better technology). So if you are buying from these giants, you are usually buying tech which is at least 4–10 years old.
Your job is to find the best: often CXOs and mid level managers confuse what their job is — if it were to find the cheapest, the company doesn’t need you. If it were to simply pick the most prestigious, the company doesn’t need you. Anyone could do that.
Best technology companies are usually hidden; start-ups you haven’t heard of. It is your job to find what relationship would help your company the most in terms of impact.
The implication of this is that you have to take chances and spend time and effort at figuring out the best technologies for your organization and meet the smaller companies. Rajesh Rishi, GM, Loyalty for Shukran, the largest loyalty program in the Middle East with more than 15 million members, says, “I visit the National Retail Forum in New York every year to meet new startups and usually collect about 75–80 new companies information for various people within our company. This is the best way to keep updated on what can be done using technology”. Most CXOs are not as astute or savvy as Rajesh Rishi but they can be. Mobile World Congress at Barcelona is not enough ;-).
In addition to events, the best CXOs usually follow thought leaders in their area (e.g. Paul Greenberg for CRM), regularly look at the latest products onProductHunt or read latest technology blogs (like Techcrunch etc.).
3 reasons why most people don’t do this, despite it being obvious:
1. They like having a one-stop solution: a one-stop solution is usually a mediocre solution for multiple problems. Since the best tech resides in smaller companies solving a specific problem a lot better than others, it is not wise to stick to a one-stop solution or a single vendor thought process. Yes, it is more cumbersome and tiresome to talk to multiple parties. But, that’s what best technology procurement requires.
2. They like buying from big brands because of stable solutions and of course, it creates fewer questions. Both of these are fair points but they are usually a knee jerk answer to the tough challenge of doing a cost benefit analysis. Buying a 5 year old technology because it is stable and safe for you versus buying the latest which is less stable and might fail. Well, the best CXOs know that without risk there is no reward.
3. Another reason why people fail to see the importance of this is because they don’t realize the power of having good software — these CXOs are usually caught off guard and they suddenly have a realization that they are at least 4–5 years behind the technology and data curve. Their customer is the same and has come to expect a lot more from their enterprise but they just didn’t know. (It’s like how the Nokia CEO recently said, “We didn’t do anything wrong, but somehow, we lost”). In the increasingly connected world, this might happen to you.
So, to give you a real life example, for our consumer business Helpchat, we were faced with the challenge of building the best mobile analytics + mobile notifications + life-cycle email solution. To get the best product, we evaluated more than 20+ tools from 5 different countries before choosing 3 different products which each did the task the best and then wrote our own integration layer to connect them (which was painful, but still the best solution).
Software is eating the world, as Marc Andreessen famously said a few years ago. It’s time for you to figure out the how and what of this new world order. The power belongs to the techies and those who figure out how to use technology to their advantage.
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