Risky Business - Page 1

Jul 23, 2004

Allen Bernard

Deciding to work with a start-up software company can be a daunting decision. What if the company folds in two years (or less) leaving you with no support, updates or patches? What if the product doesn't do what is its makers say it will do, they don't return your phone calls, and you are left holding the proverbial bag?

Yet, ignoring new technology can be perilous as well. How do you find the new products that will help your IT department run smoother or provide a business advantage? Sifting through the maze of sales pitches and vendor promises is one way. But that can be very time consuming -- and time is something most busy CIOs covet jealously.

Enter Insight Ventures, a start-up itself. Based in Woodside, Calif., the company is composed of its founder, entrepreneur Vince Sosnkowski, formerly with Proof Point Ventures, along with seven former Fortune 500-level CIOs, CTOs and IT managers from companies that include United Airlines, Elf-Atochem, Swiss Re America, Merrill Lynch, Xerox, Computer Sciences Corp., and, the now defunct, Arthur Anderson.

These retired IT executives act as CIOs-in-residence (CIR), that review all new technologies and judge whether or not they would be useful to enterprise-level CIOs. From there, one (or more) of 47 Fortune 1000 (F1000)CIOs that have signed on as product reviewers, spend a few hours with the technology and then produce a brief, based on a standardized questionnaire, for all in the group to share.

The company contracts with, and is paid by, start-ups to evaluate their products. If the technology passes the muster of the company's CIRs, only then is it then passed on the 47 outside reviewers for further analysis and Insight gets paid.

While its pay structure could raise some eyebrows, said Sunil Dhaliwal, a senior associate with Boston-based Battery Ventures, and appear to be a conflict of interest, so long as Insight provides unbiased research and value, the company should do well.

"If these guys can maintain a quality screen and air of impartiality ... then I think there'll be a long-term path to success and need for these companies," he said. "If they quickly devolve into being perceived as being paid 'shills' to handful of startups, they will quickly be irrelevant and no one will care what they have to say regardless of whether or not they are right."

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