As he sits across the table from his chief executive (CEO), the head of information technology (IT) for a small startup senses immediately this isn’t going to be the usual Monday morning review. “Our little garage operation is doing unbelievably well,” the CEO says, arching his fingers. “A year ago, no one knew we existed. But we’re already a multimillion-dollar company and we are going to be a multibillion-dollar company soon. I want an IT capability that will be the envy of the Fortune 100. We need large-scale, industrial-strength IT, and we need it immediately. I need you to tell me how we are going to do it.”
How do you build a world-class IT operation for a small company that is quickly turning into a major global enterprise?
It is the sort of conversation that could be taking place across town from where you are, or in an industrial park on the other side of the globe, even as you read this.
At least 55 public companies around the world have gone from less than $50 million to over $500 million in revenues between 2007 and 2011.
Chief information officers (CIOs) at established corporations may not themselves face the specific challenge of quickly building and scaling up enterprise IT from the ground up. But it will be increasingly harder for them to ignore how fast growing startups will use IT to achieve speed, scale, efficiency and innovation—like Netflix , eBay , Zynga , Wilton Re and Clearwire Corp. have done.
Our belief is that established firms saddled with legacy systems are in danger of being outmaneuvered by emerging challengers. Armed with new and better technology, infrastructure and organizations, these companies are better positioned to meet ever-more demanding business needs.
But it does not have to be this way. CIOs at established firms have an opportunity to adopt some of the strategies of infant companies to transform their existing IT support structure and become more relevant to their core business or a new line of business.
We have identified four key to-dos to build IT in fast-growing companies which CIOs at established firms should consider.
Keep the IT fundamentals simple. Companies that build infrastructures designed for easy integration and scalability are able to grow quickly with fewer technical hiccups. That includes adopting standard processes and technologies, buying plain vanilla core applications as much as possible, and avoiding customization. Consider using cloud providers for infrastructure, applications, processes and storage. Providing applications through a self-service menu of downloads helps make IT easy to obtain for employees.
Own the technology IP that makes you distinctive. Innovative startups often build their company around a proprietary system that provides them with competitive advantage. You don’t have to be a Silicon Valley company to build custom software that supports distinctive products and provides unique insights. For example, Wilton Re, a seven-year-old life reinsurance company, treats IT as a commodity and has a small IT organization. Yet, the company has created its own insurance analytics software because it regards business intelligence as uniquely strategic.
Experiment with end-user and customer-facing IT to facilitate business breakthroughs. Typically, tech startups take an experimental approach to IT. They are willing to try something out and see if it is adopted, rather than figure out everything upfront. Established companies can also encourage employees to use their favorite tools and devices to improve productivity, and encourage them to innovate via mashups and collaboration. Think about experimenting with social media and analytics to obtain inputs from the company’s customers and IT end-users. Then turn these insights into action with websites and services that provide customers what they want. Run quick experiments, obtain feedback, measure the results and experiment again, repeating the cycle until the services contribute significantly to growth.
Hire resilient management talent. Bring aboard the kind of people who thrive despite tight time frames, volatile customer demands and limited resources. Larry Rowland of Nuance Communications, a veteran CIO who has led IT in several rapid-growth companies, learned to bring in IT executives who not only have good business and IT acumen and interpersonal skills, but also have “the ability to get things done without having massive amounts of staff. . . . individuals that can deal with change and ambiguity—things that sometimes frustrate very quantitative and analytical people.”
It’s often said that parents learn from their children, and teachers learn from students. Similarly, established companies can learn from upstart companies who look at the world with fresh eyes, and have the luxury of growing without the burdens of legacy IT. CIOs at established firms who want to stay ahead of new rivals will be taking a watch-and-learn attitude toward them.
Jeanne G. Harris is an executive research fellow and senior executive at the Accenture Institute for High Performance in Chicago. Ms. Harris is the coauthor of “Competing on Analytics” and “Analytics at Work.” Allan E. Alter is a research fellow at the Accenture Institute for High Performance in Boston .