New Report Uncovers How CIOs and It Decision-Makers Are Engaging Start-Ups and Emerging Technologies
Sapphire Ventures, a Silicon Valley based venture capital firm that globally invests in early- and growth-stage startups and early-stage venture funds, released a new report, The CIO Innovation Index: A Blueprint for Successful Startup Engagement, to better understand how CIOs and IT decision-makers are identifying and engaging start-ups and emerging technologies.
Sapphire Ventures created the CIO Innovation Index to help Global 2000 companies, and the startups who sell to them, benchmark the best practices being used to adopt new, emerging technologies. In ongoing collaboration with enterprise CIOs, Sapphire found that while startup engagements were increasingly common across industries, there was a marked lack of aggregated data sets that could guide IT leaders in comparing their organization’s startup engagement practices relative to peers and in better understanding determinants of success.
For the report, the firm surveyed over 70 senior IT decision-makers from Global 2000 organizations, including Aegon and Mohawk Industries, to catalog the key processes, motivations and results CIOs are experiencing with startups and emerging technologies. CIO Innovation Index respondents came from over 14 different industries, and more than 75% work in organizations with more than 25,000 employees.
Some of the most notable findings from the CIO Innovation Index include:
- Start-ups consume a median of 10% of IT budgets, with respondents expect that spending to accelerate to 15% of budgets over the next 12-months;
- Corporations recognize the need to engage startups differently, with 70% of CIOs reporting having a dedicated role on their staff for start-up engagement;
- Having a defined strategy for emerging technologies is a key indicator of success. Companies that said they had a comprehensive IT strategy experience significantly shorter Proof of Concept (POCs), and have a great number of those POCs convert into successful production implementations of the technology;
- Over half of respondents have a clear preference to partner with growth-stage; startup-ups (Series D or later) with only 7% citing a preference for early-stage (Series A-B) start-ups;
- Artificial Intelligence (AI) and Machine Learning (ML) are emerging technology domains where CIOs are more likely to engage with startups (67%) than established technology vendors (36%);
- Of the emerging technology areas, corporate IT leaders are most likely investing in AI (81%), cybersecurity (75%), next-gen data management (75%) and augmented analytics (69%) technologies, with virtual reality (56%) and quantum computing (38%) receiving the lowest levels of investment.
“We often hear from CIOs that they have no way to accurately benchmark their organization’s ability to adopt emerging technologies,” said Rami Branitzky, Managing Director at Sapphire Ventures. “As an active collaborator with CIOs and startups, we wanted to increase the transparency between the groups on how they can work better together. This data provides clear examples of how leading CIOs are preparing their organizations to identify and engage both emerging technologies and startups.”
“Leveraging emerging technologies from startups is a key ingredient within the CIO’s innovation playbook,” said Mark Bloom, Global CIO, Aegon. “However, there has been a lack of available data for IT leaders to benchmark their startup engagement practices relative to other organizations. The new Innovation Index initiative from Sapphire Ventures helps address this data gap, and serves as an actionable guide for CIOs seeking to better harness the value of startup innovation”.
In addition to benchmarking perspectives for CIOs, the CIO Innovation Index also provides startups with insight on a variety of topics including:
- The channels CIOs leverage for identifying emerging technologies and startups, and the internal evaluation processes they follow to assess startups before adoption
- Perceived challenges of working with startups, including geographical reach, lack of global support, and an unproven product and organizational maturity
- Reported benefits of working with startups relative to major vendors, such as better customer experience, more modern architecture and faster pace of product delivery
“Better understanding how CIOs in the largest global companies identify new technologies and vendors to work with is incredibly valuable to startups like us,” said Sudheesh Nair from ThoughtSpot, a Sapphire Ventures portfolio company. “The CIO Innovation Index is another example of how Sapphire Ventures works to help their portfolio companies reach new customers and markets.”