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If you want to know what IT tools and technologies you'll be using in a few years, it pays to keep an eye on enterprise technology start-ups.
Seasoned VCs and entrepreneurs agree that IT start-ups looking for funding should have an offering that makes the CIO's life easier -- and it had better not involve lots of capital investments on software installations and supporting infrastructure. Instead, backers are looking for software-as-a-service, cloud-based and mobile innovations that improve the IT cost proposition.
"There are too many inefficiencies that exist in large enterprise software, such as platforms that have to be upgraded, and that translates into a lot of money for IT," says Will Indest, vice president of venture development at Tech Columbus in Ohio. Indest says that many companies just don't have the budget for large software and hardware buildouts -- especially when there are options like SaaS and cloud storage.
That's a sentiment echoed by Maria Cirino, co-founder of venture capital firm .406 Ventures in Boston, who calls the move to cloud computing the biggest shift since client/server computing took hold in the '90s. "We see small to midsize companies embracing cloud right away, and large enterprises will soon," she says, adding that companies stand to gain too much economic leverage to ignore the trend.
Cirino says she's been culling her stack of prospects to find companies that focus on securing the cloud, because she feels that's the biggest obstacle for larger enterprises. For instance, she's working with a pre-beta start-up called CloudCop that will provide monitoring and analytics for companies that want to move their data to the public cloud. She says that CloudCop aims to provide an audit trail for businesses facing compliance regulations.
Start-ups and more established vendors are offering cloud-based tools that can help IT departments with everything from chargeback to backing up data that users enter on social media sites. Industry experts say the timing for these services is good as IT shops warm to the idea of having their infrastructure and data off-site.
Deborah Magid, director of software strategy for IBM Venture Capital Group in San Mateo, Calif., is closely watching the cloud-based storage arena. She predicts that many large enterprises will adopt a hybrid approach to storing data, where some is on-site and some is in the cloud. However, she notes that vendors still need to work out the speed of search and retrieval, as well as international regulatory issues -- areas ripe for innovation.
Mobile is another key market for successful IT start-ups, says Tech Columbus' Indest. If a start-up looking for funding approaches him without a mobile component that addresses the proliferation of smartphones, tablets and other devices, he says, "it's just not a good prospect."
What are the good prospects? Computerworld has gathered snapshots of five start-ups that are bringing hassle-saving IT products and services to the enterprise. They run the gamut from mobile device management to database virtualization, but all are aimed at alleviating the myriad pain points, including purchasing and managing in-house infrastructure, that IT faces today. And even if you don't end up using these specific products, chances are you'll check out something similar within the next year or so.
Cloud-based IT resource tracking: Apptio
For the past few years, IT departments have been under pressure to move from being a cost center to being a service provider for the enterprise. This means tracking business units' usage of IT resources, including labor, hardware, software, power and cooling.
CIOs and other IT managers often develop bills of services using a combination of spreadsheets, business intelligence software, asset management systems and, in some cases, blind estimates, according to Apptio co-founder, president and CEO Sunny Gupta.
"IT executives are trying to manage IT without any real way to measure costs, quality of service and the actual value of IT products. They have management tools to measure individual aspects of IT -- such as the network, bandwidth and mobile devices -- but not as a holistic view," he says.
Apptio's SaaS Technology Business Management (TBM) Solution Suite promises to give IT teams and corporate executives a consolidated look at all IT investments and their associated costs, showing the financial impact of client, infrastructure and application services, says Gupta. Authorized users can input data, run reports, view data via customized dashboards, or dispatch alerts based on predefined thresholds, such as a business unit's storage usage.
IT also can create a "bill of IT" for each business unit to show its exact service consumption. Gupta says this is critical for forecasting, aligning budgets and developing an accurate chargeback program.
For instance, using the TBM, a company might realize that employees are using 10 applications that perform similar functions. By standardizing on one, it could gain significant cost efficiencies in terms of volume pricing and streamlined support. Also, the TBM offers what-if scenarios so organizations can weigh the pros and cons of granular business decisions, such as moving storage from the data center to the cloud or increasing the use of telepresence.
At a glance
Company: Apptio
Enterprise product: TBM Solution Suite
Pricing: Starts at $100,000 per year, depending on the number of users and modules deployed.
Funded by: Andreesen Horowitz, Cisco Systems, Greylock Partners, Madrona Venture Group and Shasta Ventures.
Gupta says that the Starbucks coffee chain started using the TBM and discovered that the laptops it had deployed to cut desktop expenses were actually costing more because of battery replacements and support issues. Armed with this information, the company was able to change its warranties and help desk strategies to extract the savings it had initially anticipated.
Mark Gibbs, CEO of Gibbs Universal Industries (GUI), a consultancy in Ventura, Calif., and a Network World columnist, says that as the data center becomes more complex, "IT resource tracking is as important as ever." Using SaaS offers benefits such as easily deployed add-ons and instant feature updates based on requests and what-ifs that other companies use, he says.
However, he warns that IT teams must test how data gets into and out of these hosted systems to ensure that they interoperate smoothly with the tools that will feed data into them, and that the information used is accurate in real time.
Cloud storage and backup for Web apps: Backupify
Under strict scrutiny to make data recoverable and secure, IT is faced with an ever-growing challenge: controlling all the data that users generate in Web applications such as e-mail, social media sites, and document-sharing and collaboration tools.
Enterprise Strategy Group senior analyst Lauren Whitehouse calls this issue the "Achilles' heel" for most organizations in this era of third-party hosted applications and cloud storage. "When IT owns and operates applications, they are responsible to make sure that the application and data are available, which includes employing backup/recovery processes and other high-availability technology. Now that more organizations are outsourcing applications, the issue of downtime and data loss is getting exposed," she says.
At a glance
Company: Backupify
Enterprise product: Backupify Pro 500
Pricing: Starts at $19.99 per month for 10 users; additional users are $3 per month each. Includes both a social media account backup module and Google Apps domain backup.
Funded by: Avalon Ventures, First Round Capital, General Catalyst, Lowercase Capital, Betaworks and several individual investors.
This is particularly a concern, she says, because many online service providers don't have well-defined service-level agreements. Whitehouse calls services like Backupify "an insurance policy."
Backupify is SaaS that backs up data from Basecamp, Facebook, Gmail, Google Docs, Twitter and other online applications to Amazon's S3 storage cloud network. "IT struggles because users are creating data in all these silos around the Web, and that data is exposed to hacking and viruses. It's also prone to loss from human error," says Backupify CEO Rob May. By centralizing user data on Amazon's environment, IT managers can apply security and deduplication policies for compliance without building out their own storage infrastructure, he says.
With Google Apps backup, IT registers the accounts to store in Backupify and receives e-mails confirming each completed backup, as well as access to archives and downloads. The social media backup module works similarly; IT can register each service and user it wants backed up.
Backupify is appealing to companies beholden to data-retention standards, such as those in financial services and healthcare, because it enables them to have the benefits of social media and Web-based applications without increased risk, May says.
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