February Issue

CIOs: Time to Tune In to Startups

What if you could buy your way out of the IT talent crunch -- and outrun competitors with some leading-edge technology -- by acquiring a digital startup? It's a risky but exicitng idea, says Maryfran Johnson.




A CIO friend of mine is in the market for a particular set of IT skills that his digital marketing firm desperately needs but cannot find. "It's the cloud broker type of skill set--like a cloud architect or orchestration person--someone who can provision out a lot of virtual infrastructure," he said. "The trouble is, they don't exist. You have to make them."

Maybe not.

What if you could buy your way out of an IT talent conundrum like this one--and outrun competitors with some leading-edge technology--by acquiring a digital startup?

That's the question that launched our story "Bellwether Companies Are Buying Startups to Grab Tech and Talent." Managing Editor Kim S. Nash provides some useful insight into what works (and especially what doesn't) in the risky but exciting business of acquiring talented young companies.

"Aetna, Capital One, Home Depot, Wal-Mart Stores and several other non-IT companies have made such acquisitions recently, pursuing startups for their technology and talent," Nash writes, noting how brisk the acquisition business has been for the past two years.

But if anything ever topped the list of "easier said than done," it's this. Most CIOs aren't even involved in their companies' acquisition plans until the integration preparations begin. "And yet, if you pull it off, you could catapult your company ahead of competitors and boost your own credibility as a digital strategist," Nash points out.

To build up business credibility in this realm, CIOs must start tuning in to the startup world more actively, says former CIO Karla Viglasky, now CIO-in-residence at consultancy Stafford and Associates.

Develop a point of view about where your industry is going, she recommends, and start scouting out emerging tech companies relevant to that direction.

Cultivate relationships with some venture capitalists and seek out events (like IDG's DEMO conference) where you can meet startup founders. Above all, be ready to make the business case with your CEO and C-suite colleagues when you spot something worthwhile.

"When you can prove the tech is going to do something amazing for customers, or in differentiating your [corporate] performance, you have to tell that story," says CIO Chris Laping of Red Robin Gourmet Burgers. "I'm always pitching our CEO."

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