by Suha Saya
Consider the risks and opportunities: Purchasing from an enterprise startup
To partner (with a start up), or not to partner — that is the question.
As a large enterprise debating whether or not to work with an early stage enterprise software company, the decision to do so may feel risky. The technology may promise to improve company performance and productivity, but questions arise about stability, security, service and responsiveness. So the question is should you purchase services from a company that is not established in order to gain the disruptive benefits of the new technology, or is the purchase too risky?
The answer could be yes, if you take the right precautions, recognize and familiarize yourself with the risks and understand that change is a catalyst for opportunity, growth, and improvement.
ZDNet’s special feature on understanding the risks and rewards of working with enterprise startups discusses the particular initiatives and considerations that need to be taken when embarking on a new venture with an early stage enterprise software company.
To help maximize success and minimize the risks, keep these three tips in mind:
You are not just buying the product, you are buying the startup’s approach
At times, the pressing need for software might fool enterprise companies to think they are simply buying a startup’s software, when in fact, they are buying the entire startup company. This calls for being aware and prepared for the “unknowns” — startups may have a set implementation and maintenance plan when they support you, but that doesn’t necessarily mean they have the same vision for what the product can do, as you do. In addition to that, the startup may pivot and take their company in a new direction. Would they be willing to compromise and bend their ideals to fit your needs? Or will they use your company for only self fulfillment?
In case anything goes wrong, take the precaution to analyze the potential cost to switch to another software provider before jumping into the deal.
When you do dive into the relationship, make sure you’re on the same page. Keep in mind that the startup company as a whole is affecting you. It’s important to spend time with the leadership of a startup to understand motives and goals, and in addition, bring that startup culture into the internal part of your own company.
Drive the startup, don’t let the startup drive you
Though partnering with a startup is all about collaboration, it’s important to still remember to set an agenda for the business. You have your requirements, goals, and business needs, so remember to drive the startup, rather than let them drive you.
Talk about new ways to deliver services, bring your ideas to the table, seek out new relationships, and most of all — lead your company to success by being the leader yourself.
Sell it internally
Gain support for the partnership before and after the sale. Do you think the partnership would be worth it? Can you convince your board members that it will be beneficial? What about after you seal the deal … was it worth it? Did it change your company culture for the better? These are all questions you should ask yourself when going through the process.
When adopting the software, training, support, and utilization should all be used to strengthen internal satisfaction, and to confirm you made the right choice with the startup you chose to partner up with. The change in management may cause need for adjustment, but that doesn’t mean you can’t make the adjustment efficient. To make sure the entire transition process runs smoothly, think in terms of smart utilization. Make sure resources from the startup are provided to train your company employees to use the software, make sure the startup supports any needs and questions people might have about the software, and be sure the startup is present when implementation times comes around, or when additional tools are needed to use the software. If this is all planned and done successfully, the startup partnership will certainly be sold in your company internally — before and afterwards.
Is risky business worth it?
Overall, it’s healthy to produce change and take risks. If risks aren’t taken, new opportunities won’t arise, and your company most probably won’t progress. By partnering with a startup while taking precautions and being aware of future improvements, your company will be sure to grow. Reap the rewards of a new venture, don’t fear it.
Call for comments
- Have you ever purchased software from a startup and they pivoted, got bought out, or otherwise went out of business?
- Did you see it coming?
- How did you handle it?
- What lessons did you learn