REASONS TO BE CAUTIOUS--OR NOT
IT personnel, of course, have good reason to exercise caution. Startups sometimes get acquired or fail; patent disputes can drag them down; and data centers are no place for unproven products. The CIO of a multibillion-dollar company says too many things can go wrong with startups--software bugs, an inability to scale, lack of resources--and she doesn't want to be left picking up the pieces.

In the face of such concerns, many startups are pushing ahead with new software, services, and appliances to businesses. IT pros may be fewer in number than the billion-plus Web users, but they make up for that in buying power. The average IT budget for an InformationWeek subscriber is $48.7 million.

	Zenoss' CEO Karpovich is taking on BMC, CA, HP, and IBM in systems monitoring Photo by David Deal

And, some of that money does in fact go to startups. Opsware managed to exceed a $100 million annual revenue run rate selling to customers such as EDS, General Electric, and JPMorgan. Aveksa, a startup specializing in data access governance software, recently landed health insurer Cigna. PeopleSoft founder Dave Duffield's new HR-as-a-service company, Workday, has signed 26,000-employee Chiquita Brands. "They're the 'try it out' kind of guys," says Duffield. (As these examples show, a startup's lineage counts. Aveksa, Opsware, and Workday were all founded by well-connected software industry veterans.)

Just last month, 2-year-old Zenoss revealed that IPTV and wireless equipment provider UTStarcom has begun using its open source IT management software, which competes with established products from BMC, CA, Hewlett-Packard, and IBM. With annual revenue of $2.7 billion, UTStarcom is the kind of blue chip account that tends to reassure other potential customers. Thousands of companies use a free version of Zenoss' software, but only 50 or so have signed to use its enterprise version, which lists at $50,000 for 500 managed nodes.

Zenoss gives its software away in hopes of hooking paying customers later with more features, support, and indemnity from any legal claims. That's one way startups get around bureaucratic roadblocks in the IT department--find a few early adopters among IT staff who champion their cause. "No CIO ever chose Linux in the early days. It just showed up," says Zenoss founder and CEO Bill Karpovich.

IT managers tend to use startups to fill gaps in their infrastructures or to make processes faster, better, or cheaper. Craig Shumard, chief information security officer with Cigna, uses startups to tighten security when he can't find what he needs from established vendors. "They're more nimble," Shumard says.

Cigna's need to manage data access more methodically caused it to take a look at new software from Aveksa for establishing user access privileges. Last year, when Aveksa first approached Cigna, the startup was only 2 years old, with few customers and not much of a track record. But Aveksa's executives were experts in identity management--CEO Deepak Taneja is the former CTO of Netegrity--and the company's software sounded like just what Shumard needed to put the finishing touches on a role-based access control system in development at Cigna since 2002.

The task was daunting--Cigna has 26,500 employees, 22,000 PCs, 9,000 laptops, thousands of applications, and 140 Tbytes of data. "I've got a lot of pressure on me from our business people looking to enable our business securely," Shumard says.

Aveksa's software promised to do something Cigna couldn't find elsewhere--let business managers collaborate with compliance personnel and security pros in defining roles that determine entitlements, or employees' data access rights. Promised because Aveksa's suite didn't fully support that capability at the time the company started talking about it. Aveksa's full-blown workflow app, Aveksa Role Manager, will become commercially available in December.

Cigna's experience underscores two advantages of working with startups: Early adopters can influence the tech road map, and they can steal a march on their competitors by getting functionality not generally available.

Vince Delperdang took the path less traveled two years ago when he chose Pillar Data Systems--at the time a relative newcomer to the data storage market--over EMC and HP. Delperdang, IT manager with O'Donnell/Atkins, a real estate and land development company in Irvine, Calif., used to stop by EMC's nearby office for lunch. But Pillar offered more storage for the price and better support with no services requirement--and won the business.