Why CIOs are wary of tech startup products

Staff -

Despite the boom in startups and the push for innovative products, buyers of such products — often CIOs — are hesitant about investing in such products, reports The Wall Street Journal.

The reason for the hesitation? Companies and CIOs are concerned about scale and long-term viability. Additionally, some startup products are rather niche and not essential to core business operations, according to the report.

Deanna Johnston, CIO of Haier America, a consumer electronics and appliances company, told WSJ she often looks at products and services offered by startups when she needs to update the company's IT system, but rarely buys them, even after a trial run. She instead negotiates lower prices with large enterprise IT vendors using price quotes offered by startups.

Ms. Johnston told WSJ she doesn't want to risk purchasing a product that isn't from an established company, citing concerns of whether the startup will go out of business.

For startups, getting their products and services into companies is a kind of chicken and egg scenario. Potential customers need to know the product or service can solve its problems reliably and at scale, but they also want to see past examples and customers, Frederic Kerrest, co-founder and COO of software startup Okta, told WSJ.

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