While reaping benefits from tie-ups with big firms, startups help reduce the former’s overheads as they find solutions to niche problems
By Srinath Srinivasan
Over the years India has seen large enterprises accelerating startups in cohorts, which solve niche problems and eventually get funded or acquired by some of the large entities. While these successful startups get the stamp of credibility that the market demands, they add great value to the large enterprises which have chosen them or work with them for the long term. In short, startups add value to large companies in their digital transformation journeys.
“Digital transformation is central to every large enterprise’s core strategy,” says Madhurima Agarwal, director and leader, NetApp Excellerator. “As large enterprises make extensive investments there is a clear preference for use of Big Data, analytics and Artificial Intelligence (AI)/Machine Learning (ML) to protect existing business and find new growth strategies. Startups have proven to be a key enabler of digitalisation goals of large enterprises.”
A recent Zinnov-Netapp report suggests that by 2023, global digital engineering and R&D spends will touch $750 billion, with startups and tech giants as key drivers.
Currently, startups cover a range of capabilities from data analytics to AI in the digital world. As per the report, in the BFSI value chain alone, 90% of AI infusion use cases that startups are involved in are across operations, products and services. Several operate on the sales and marketing sides as well where the major chunk of the work is digital and metric driven. Similarly, mobility, healthcare, logistics and manufacturing industries have strong AI infusion.
“The Indian B2B technology startup ecosystem is growing rapidly. Not only do they constitute 44% of the total base, 43% of all Indian unicorns are B2B. The fact that three of seven unicorns in 2020 (YTD) are B2B startups reflects the rapidly maturing ecosystem,” says Agarwal.
A good digital infrastructure and a collaboration model between large enterprises and startups stand as key pillars for this growth. New-age infrastructure with hybrid clouds and powerful cloud-based processors play a major role in breaking the data silos. As a result, various use cases involving various data points could be efficiently brought together. While CIOs, CTOs are constantly working towards bettering this, the business folks around the world are experimenting with the collaboration models.
“We partner with startups to create joint offerings. We recently published a whitepaper with Curl Analytics. One of its solutions, Paras, an automated ML engine, was deployed at our AI Centre of Excellence in the Bengaluru campus. The integration of our data management software ONTAP with the Paras AI solution unlocked an end-to-end AI value chain for users, resulting in cost savings of above 80% over the cost of standard AI development and execution,” she adds.
Platform evangelisation, license or vendor agreement, joint go-to-market, co-innovate, equity investment and acquisitions are most popular. According to the report, ecosystem outreach, accelerator, partner program, corporate VC, mergers and acquisitions are the ways that technology corporations approach the above models. In 2019, there were 170+ unique corporates (12-15 y-o-y increase), 90+ investments (up 15% from 2018), 40+ mergers & acquisitions and over 60 open innovations, says Aggarwal.
The startup-corporate relationship needs several iterations to make it a suc- cessful partnership. Both the parties are on a steep learning curve, discovering hidden potential. “Large corporations tend to be complex and most of the times, departments operate in silos. With scarce budgets spread across multiple functions, it is challenging to paint the bigger picture that can drive ROI. Our strength has been the ability to engage across the enterprise to deliver an upfront ROI in just a couple of days,” says Suman Singh, CEO, CyborgIntell.
Enterprise leaders today expect the same speed of execution and reliability as what they experience as individual consumers, says Praphul Chandra, founder, KoineArth. “The appetite for custom projects which require large capital expenditure and months to deploy is low. Enterprises want ready-to-use solutions for which they can pay as they go. This is where they look at startups,” he says.
Different paces of working is a major pain point when two organisations of different sizes partner. According to Agarwal, a dedicated team with experience across both large organisations and startups can best resolve this.