Essential eCommerce editor Caroline Baldwin offers her thoughts on how tech start-ups and established vendors need to be working side by side.
The Silicon-clad start-up world first piqued my interest three years ago, when an increasing number of consumer-facing businesses began dabbling with early-stage companies to solve some of their technology challenges.
It became quickly obvious that the USP of a start-up is its agility and speed, making them very attractive to businesses going through the growing pains of digital transformation while stuck in multi-year contracts monolithic IT vendors.
The established IT players soon got wind of the cloud-based SaaS-style start-ups from California’s Silicon Valley and even much closer to home in East London’s Old Street roundabout. Indeed, the start-up movement over the last couple of years, many would argue, has put the fear of God into these IT giants, as they watch their customers move towards these agile companies.
But back then it was only the brave who would take a bet on a start-up to provide IT services – John Lewis for instance which began investigating start-ups in 2012. Now, the word ‘start-up’ is engrained in business culture.
Lucy Larkin, managing director in Accenture’s UK retail practice, told me all industries need to think about working with start-ups.
She said: “If you look at the market and the level of disruption that’s gone on in recent times – Uber, AirBNB – no one could have imagined this a few years ago, so we can’t afford to isolate ourselves from this type of thinking that makes these companies.”
If the packed room at TrueStart’s retail start-up investor evening was anything to go by last week, businesses of all shapes and sizes are now taking start-ups seriously. But this doesn’t mean the Oracles, SAPs and IBMs of the retail tech world will become redundant – they just need to work alongside the early-stage companies retailers are choosing to implement.
Speaking to River Island’s CIO, Doug Gardner, he told me the established IT players have spent years developing robust, core, back-end solutions for retailers. But retail today is such a competitive industry, they also need additional technology services to stand out from the crowd and be truly different. And it’s the speedy start-ups which have the ability to provide these bespoke solutions.
Gardner said it tends to be the customer-facing digital solutions which need help from the smaller companies. “Things like websites, app development, in-store systems and tech that sits on our store, that’s an incredibly rapidly moving space, where you can actually make a difference by bespoking and working with incredibly agile partners,” said Gardner, who describes the 12-man band who developed the River Island website and the tiny company who implemented its store system the retailer is about to roll out.
“We find agility in those companies and a different mentality. And it’s incumbent on us to work in a very different way with those people,” he added.
But it’s not just the start-ups he works closely with, Gardner says he has a small team from Oracle consulting with him at the moment – surely a sign that the big IT vendors have realised they can no longer just provide off-the-shelf technologies from a distance, but a dedicated service to its clients?
Baz Saidieh, CEO of retail tech investment hub TrueStart, doesn’t think start-ups mean the end of the big traditional IT companies. He believes there is a place for both the IBMs and Oracles alongside the new disruptors.
“No one joins the TrueStart programme without the ambition to become a billionaire and to not have systems and tech which change the industry,” he said. “Do you rip out Oracle? Absolutely not, but you find out ways to interlink the technologies.”
But Saidieh says start-ups need to understand how their technologies can work with complex large organisations and while it’s difficult for a six-month-old company to radicalise a retailer’s technology stack. And its through programmes like TrueStart and its partners including Accenture which can guide both start-ups and retailers in how to get the best out of the technology for the business.
“The dynamic in the way you operate will make the decent retailers successful.”