Taking the gamble

Face it: New technologies are a gamble. And choosing an emerging company as a vendor is an even bigger gamble.

          Face it: New technologies are a gamble. And choosing an emerging company as a vendor is an even bigger gamble.

          When we peg IT plans on a new or rapidly evolving supplier, we aren’t just betting on that vendor’s ability to deliver. We’re also betting on its survival.

          So why do it? Why take the gamble? The answer goes to the core of what IT means in business today. Corporate IT is where increased productivity, efficiency and effectiveness must come from. If we in IT can’t deliver more, better, faster, cleaner, more timely and more useful information — well, we’ll be swept away by competitors, by new ideas, by alternatives we never saw coming.

          Same-old, same-old won’t do it. Either we find new ways to use existing technologies, or find new technologies.

          Like with any gamble, there’s risk. But the more questions you can answer, the better the chance that gamble will pay off.

          Ask yourself — and them:

          • Will this vendor survive? How’s the capitalisation? What’s the burn rate? How quickly is the vendor collecting customers? Great ideas and technical talent do you no good if the vendor goes belly up.
          • Will the products you buy continue to be developed? Small vendors like focusing on one thing at a time. If this vendor is suddenly more enthusiastic about a new, different product, you could be facing a dead end.
          • Will these products continue to be supported? Maybe a dead end is okay — but only if you can get the source code, hardware specs and other information you’ll need.
          • If this vendor is bought by a larger company, will you be forced to switch to the larger vendor’s product line?
          • Is the infrastructure in place — training, user groups and consultants who know the product — to support you?
          • Are third-party vendors on board? Their commitment is a good sign that they think your emerging company’s product will survive. Remember, successes travel in packs.
          • What are this vendor’s plans to licence out its new technology? No, not this year — but down the line, it’s in your interest to have multiple suppliers. And unless they can grow faster than the market, you could find yourself with Betamax technology in a VHS world.
          • Or is this vendor more interested in licensing than producing products and building market share? Maybe you should look to one of its licensees instead. You want a product, not a loss-leader from an idea factory.
          • If the product is hardware, who’s actually manufacturing it? Quality matters, and you want some experience behind how it’s built. Start-ups can buy that experience by farming out manufacturing to a third party, or by bringing in expertise through their management team. But make sure somebody knows how not to build lemons.
          • Finally, what do your own technical people think? They’ll have to learn, implement and maintain the product. They hear scuttlebutt, and they know what’s failed before. If they think it’s a dog, it probably will be for your company. And no matter how well it works somewhere else or how good this bet looks on paper, that’s a gamble you can’t afford.

          Hayes, Computerworld US' senior news columnist, has covered IT for more than 20 years. Send email to Frank Hayes.

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