“As an IT manager, are you going to put your reputation on the line that five guys from a small startup in Vancouver are to deliver for your organization,” asked Jevon MacDonald, blogger and co-founder at StartupNorth.ca.
It’s a question that IT managers at large and medium-sized enterprises alike have faced for years. Those who have avoided venturing to smaller firms cite lack of experience, expertise, and stability as the reasons for staying away. But amidst pressures from employees looking for innovative new ways to do their jobs and C-level executives trying to keep the costs in line, more and more companies might be forced to look at more than just IBM or SAP for their software and services. And according to some industry observers, that isn’t a bad thing.
“Enterprises need to be looking at the local startups now to keep them fresh and drive toward the products they need,” said Jonas Brandon, blogger and co-founder at StartupNorth.ca. “Large corporations are unlikely to deliver on the needs of other large corporations, so it’s the startups that give them the guidance and feedback on their products.”
Unlike some of the bigger vendors, small and emerging firms can often deliver a more flexible and responsive solution to the IT manager, according to Kevin Joy, vice-president at Toronto-based online reputation and security vendor Brand Protect — a young company founded in 2001. He said that while larger companies would typically have multiple services portfolios to dilute their attention, most startups are specialized.
“We’re better able to respond to the question, ‘I have A, but I’d like it in the shape of B,” said Joy. “For the most part, the smaller companies are also platform and service agnostic, so they don’t necessarily bias what they offer on the basis of what they already have in their portfolio. This means they can often provide a more credible third-party assessment of your situation and provide flexible solutions.”
This flexibility also extends to the pricing model, as many younger firms are not tied to large overheads or other cost models.
“Our costs are significantly lower as we don’t have shareholders to answer to,” said Martin Ostrovsky, co-founder and CEO at Toronto-based startup MonkeyBean Solutions. “We don’t have large office buildings to pay for, so we can keep our costs down. The beauty of being a smaller company is that we’re not restricted to fixed costs; ours are already entirely variable.”
StartupNorth.ca’s MacDonald said that technology is undergoing the first software revolution created by users, rather than being adopted by them. He said that IT managers are going to be facing more and more pressure to bring low-cost IT tools — such as technologies based on those being used in the consumer world — into the enterprise.
“CEO types are also going to start demanding these new innovative technologies, because they don’t want to look like their organization is getting stale,” he said. “Nobody wants to get in front of their shareholders and say, ‘SharePoint is on a five-year release cycle for major features, so we’re not going to have any new stuff for five years.’
Enterprises now have to start looking at the tech companies on the cusp, because the days of the IT department just saying ‘no’ to everything has passed.”
But once an IT manager decides to “stay ahead of the game” and go with a younger company, there is a lot of due diligence that needs to be done. For starters, looking at the financial situation of the vendor is a must, according to Info-Tech Research Group lead analyst Andy Woyzbun. He advised that enterprises use careful reference checks to try and find out whether or not the company is growing. “Interpreting a financial statement requires good accounting insight,” Woyzbun said. “If their customer base is increasing, it’s a very good sign.”
Emerging vendors might also have a small or non-existent sales force, he said, so looking at the clarity of the company’s Web site is crucial. A firm that can clearly demonstrate that they have a credible approach to what they are doing and have a reference base to support that is important, he said.
But quite possibly the biggest piece of advice to follow before signing on with an emerging firm, is to just get to know them better. “My advice is to talk to the principles of the startup,” Ostrovsky said. “Ask them questions and try to gauge how well they know their stuff.”
MacDonald, who deals with a lot of emerging companies through his Canadian startup blog, agreed, saying that the more prodding the IT managers do, the better. “Ask them about what they are building, what their stack looks like, what their integration points are and how their delivery infrastructure works — don’t let them push you back,” he said. “If they want the sale, they should be willing to show you what’s behind the curtain and that they have built a great, enterprise-ready system that’s going to be able to scale.”
Most startups will argue, however, this is a two-way street and enterprise IT managers will need to have a strong plan, with specific deliverables in mind when approaching an emerging vendor for their services. “I can’t tell you how many times I’ve seen clients come to us with contracts that say something vague like ‘development work,’” Ostrovsky said. “That’s not good enough. Be precise.”
For IT managers that have changed their mindset and are ready to give an emerging Canadian firm a chance, here’s five cutting-edge tech companies that offer great alternatives to what the big vendors are dishing out.
SMALLTHOUGHT SYSTEMS
If Chuck Norris was a data crunching system it would be Dabble DB, according to one enthusiastic user of the up-and-coming data management tool. Based out of Vancouver, Smallthought Systems Inc.’s hosted database creator allows users create, collaborate and customize any kind of report, chart, or table that they need.
“Typically within a lot of enterprises, data is just tracked on spreadsheets that get e-mailed around,” said Avi Bryant, co-CEO at Smallthought. “That’s fine when you’ve just got one person managing the data, but it becomes a real problem when you’ve got a lot of people looking to use that data in multiple ways.”
Dabble DB is aimed at end-users who want to easily create their own database using a simple point-and-click interface. If your data involves data and times, you can integrate calendars into the database, and if it involves addresses you can integrate maps, Bryant said.
He added Microsoft Access requires a lot of training while the Excel spreadsheet is not good at managing certain types of databases. “(What) Excel gets abused for are things like product management tracking, HR tracking, event planning, membership lists,” he said. “That’s the kind of thing that Dabble DB does really well.”
Another tool in this space is Intuit’s QuickBase product, which Bryant said is aimed at a slightly more technical user than Dabble DB and comes with a slightly higher price tag as well. “QuickBase pricing starts at $250 a month, whereas our pricing starts at $10 a month,” he said.
OCTOPZ
Toronto-based Octopz Inc.’s online collaboration platform allows users to synchronously view and mark up a variety of digital media documents such as video, images, animations and 3-D models. The Web-based software — which runs in a Flash-enabled browser — also supports all of the standard Microsoft Office docs that an organization might use. While collaborating with each other, users can communicate via built-in text, voice and video chat — even commenting on a single video frame if they’d like.
“IT managers are under pressure these days to implement ongoing evolutions of their internal systems and keep up with the demands of their internal employees,” said Ron McKenzie, CEO at Octopz. “Our application can be implemented without loading any software, there’s no plug-ins, and it’s all delivered in a secure and encrypted environment.”
While mainly geared toward creative professionals and product designers, McKenzie said that some major enterprises in the U.S., such as GlaxoSmithKline and BestBuy, have begun using the tool for online focus groups. IGLOO SOFTWARE With RIM boss Jim Balsillie sitting on its board of directors; Igloo Software Inc.’s corporate social networking platform should garner significant attention. The Kitchener, Ont.-based startup has developed a Facebook-like platform that combines content management, collaboration and social networking into its hosted application.
“The number one corporate social networking tool in any organization is e-mail,” said Igloo CEO Dan Latendre. “But instead of just sending the messages to an inbox, we want to send it back out to a corporate social network so the information can be reused.” The software works as a cross between Facebook and Wikipedia. It allows users to do things like post comments, make blog entries, upload documents, and contribute to forums. Latendre said this tool will be useful for massive companies that have an increasing number of mobile workers — especially when compared to SharePoint.
“Our pricing starts at about $5,000 or $10,000 and your up and running in seconds,” said Latendre. On enterprise platforms like SharePoint, you’re going to spend hundreds of thousands of dollars and 12 to 18 months of time to get something live. Not to mention the whole slew of professional services that you’ve got to overlay on top of it.”
“I tell companies that they should have a separate social network for sales, for marketing, for R&D, and so on. Let those individual departments run it, own it, and control it themselves.”
MONKEYBEAN SOLUTIONS
Toronto-based MonkeyBean has two flagship products which address the way data is stored, displayed, and retrieved on an enterprise’s Web site.
Co-founder and CEO Martin Ostrovsky said where most search bars like Google Toolbar or Apple OS X’s Spotlight fail is in archiving the data spread across your computer network. MonkeyBean’s EyeSpy product will allow users to search through your entire corporate Web site and find files such as PDF, Word, Excel, RTF and even rich media such as MP3 and video files.
“We initially developed EyeSpy as part of the reservation systems we were building our clients in the travel industry, but soon realized that its functionality could be extended to the enterprise as well,” said Ostrovsky. And with more large scale enterprises turning to Internet advertising, Ostrovsky said, Web content publishers will need to find better ways to integrate advertisements with their corporate content. For Web sites that have video content, the company developed Oculo, which will automatically insert contextually related ads into video content, before or after it is watched.
“Advertisers have their own dashboard where they upload videos, choose which tags or keywords they want their video ads to be associated with, no different than Google’s AdWords and AdSense,” said Ostrovsky. But he added, “while Google video ads are played along side your content, Oculo automatically combines your content and the advertisers into one package.”
ENOMALY
The Enomalism Elastic Computing Platform is an open source virtual infrastructure tool that lets users create their own cloud computing capacity to manage virtual machines. Created by Toronto-based Enomaly Inc., the platform is very similar to Amazon’s EC2.
“If you have the sudden need for more capacity beyond the context of your data centre, you can easily tie into places like Amazon or other places securely,” said Reuven Cohen, founder and chief technologist at Enomaly. “We bridge the gap between your own data centre and those external resources.”
Cohen said Enomaly’s customers range from hosting firms and telecoms to some of the largest tech industry players like Intel. “The IBMs of the world talk big, but they don’t do this sort of stuff,” he said. “That’s one of the reasons others organizations are coming to our little Enomaly with 20 people as opposed to a larger vendor,” he said.