Midsize IT Strategy: Tips from Start-ups

By | Dec 17, 2013

The mystique surrounding the term "start-up" has generated a lot of media hype. Behind all the hype is the fact that many start-ups have grown into midsize firms almost overnight, and with their new status have come all the IT requirements that midsize firms share.

Growing start-ups soon find that they must provide a range of IT services, from data warehousing to support for customers and employees who may not have a technical background. The IT strategy choices made by these newly fledged midsize companies may provide useful insights for IT professionals at more established midsize firms as they grapple with a rapidly evolving technology environment.

Growing Up Quickly

As Beth Stackpole reports at CNET, start-ups, especially tech start-ups, usually handle their IT needs on the fly, at least at first. In the early stages this is fairly easy. As Eliot Horowitz of MongoDB puts it, "From an IT perspective, anything works with two people because the requirements are so sparse."

As start-ups grow into midsize firms, they encounter more IT challenges and need a more formal structure to handle these challenges. In particular, says Horowitz, "Scaling the IT organization had to happen when we started to support nontechnical people." In response, according to Stackpole, growing start-ups often adopt four key strategies: They embrace software-as-a-service (SaaS) for faster delivery, focus on self-service, keep the organizational chart flat and do not hesitate to fail and move on.

Adapting to a Rapidly Evolving World

IT professionals at most midsize firms cannot imitate start-ups. Unlike start-ups, most midsize companies are not coming up out of nowhere. They have a past, including an IT past full of legacy systems and processes that they cannot simply ignore.

All the same, the start-up experience has important lessons to teach about IT strategy. In particular, the entire IT environment is in rapid flux. Nothing embodies IT evolution more than the rise of cloud computing. Only a few years ago, the cloud was little more than a speculative idea. Now it is not only a reality, but it is also becoming a dominant feature of the IT scene.

For no one has the growth of the cloud been more beneficial than for midsize IT, which now has access to specialized tool sets and sheer computing horsepower that were formerly the exclusive preserve of the largest enterprises. A salient example is the rise of SaaS and other as-a-service products, such as infrastructure- and platform-as-a-service, which allow midsize IT to be faster, more flexible and more powerful. SaaS and the cloud in general are essentially about renting resources instead of buying them outright or licensing them over an extended period. When resources are rented, it is far easier to switch to another vendor if a particular solution does not work out or if changing needs call for a different approach. Not only is SaaS itself one of Stackpole's four strategy tips, but it is also intimately tied to two others, self-service and willingness to move on quickly from options that do not work.

Closely related to the cloud is the evolution of IT, especially midsize IT, in a more software-centric direction. Everything may ultimately run on hardware somewhere, but end users and IT itself are increasingly separated from the underlying hardware by multiple layers of virtualization, the cloud itself being just one more such layer. The positive impact of this development is greatest for midsize IT because hardware is expensive to buy and maintain and is therefore a considerable strain on midsize IT budgets. In a software-centric environment, midsize IT can at least partly escape this burden and share in the flexibility that start-ups are leveraging.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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