IT incumbents beware: Startup disruption has only just begun

The Collision conference highlighted the dynamic world of startups, particularly those chasing growth opportunities around disruptive technologies — similar to the business strategies established IT players such as IBM (NYSE: IBM) and Accenture (NYSE: ACN) are moving toward. Though unequipped for enterprisewide, consulting-led digital transformation engagements, startups will likely increasingly challenge traditional systems integrators (SIs) for discrete digital projects by offering lower pricing, deep niche expertise, more agile delivery, and emphasis on solving clients’ business needs instead of upselling additional services. Startups also threaten larger vendors in the digital talent war by creating cultures that attract highly coveted design, technology and development talent with flexible work arrangements and accelerated career paths. We expect the trend of large SIs acquiring digital startups to continue for the foreseeable future. However, as the very best startups increasingly gain visibility through successful projects with high-profile brands, we believe SIs will need to work harder (and pay more) to persuade startups to become part of larger, legacy IT services organizations.

Collision was created in 2014 as part of a series of international events hosted by the founders of Web Summit, the Dublin-based event promoted as an alternative to large-scale technology conferences such as the International Consumer Electronics Showcase and the SXSW Interactive Festival. The conference acts as a forum for startup founders, executives of leading large corporations, investors and influencers to connect and network. In its second year being held at the New Orleans Ernest N. Morial Convention Center, the conference welcomed more than 19,000 attendees from 119 countries. The 605 companies exhibiting products, services and technology solutions across three days included 480 “Alphas,” or very early stage startups; 88 “Betas,” or startups that have raised more than $1 million in funding; and 26 “Starts,” or growth-stage startups that have raised more than $3 million in funding. Interspersed with the exhibition booths were four stages hosting nine tracks of sessions with 357 speakers and moderators across a variety of topics, including the Internet of Things (IoT), artificial intelligence (AI), robotics, big data, SaaS, design, the future of computing, marketing, sustainability, music, sports and startup best practices (termed “Startup University”). TBR also interacted one-on-one with several startup founders and speakers