We seem to talk about innovation endlessly—it’s what we need to keep our customers or woo them from our rivals, and it’s our route to a low-cost nirvana or new revenue streams. But at its core, many enterprises and, indeed, service providers still look at innovation as something they can engineer internally. The reality is that start-ups and disruptors bring a disproportionate amount of ideas and solutions to the market, so when enterprise leaders choose a major IT services firm, they need to make sure that their service provider has a clear strategy for investing, incubating, and evolving the potential of start-ups within its ecosystem.
The problem for enterprise leaders is that service providers are quick to promise such an ecosystem, but very few can deliver one. Enterprise leaders must learn to differentiate between providers that are full of hot air and those who have actually developed an innovation ecosystem—Wipro appears to be the latter.
Wipro Ventures: A poster child for investments in innovation
Finding the balance between innovation and execution is a challenge that’s kept many IT services firm CEOs awake at night. One of these, Wipro, is beset on all sides by major competitors—some with war chests capable of acquiring their way into markets and others that are building a clearer narrative of their role in the market. There is, however, an area where Wipro seems to have made a concerted effort to break the mold, and that’s in its investment arm Wipro Ventures, conceptualized by Wipro’s Chief Strategy Officer Rishad Premji and formalized in 2015.
Wipro Ventures describes itself as “a $100 million fund to invest in start-ups developing technologies and solutions that will complement its businesses through next-generation solutions and products.” It is definitely not the only vendor in the market pumping funding into small and cool start-ups, but its security operations firm Demisto was recently acquired by Palo Alto—a big win for the fund, both financially and as reassurance that it’s picking the right firms to work with.
It’s this latter point that’s the most important for the success of Wipro’s clients. The investment program brings with it access to new ideas as well as the brains and brawn of small, cool, innovative start-ups. The combination drives incremental value for new and existing clients, as demonstrated by Wipro’s proud declaration that the Wipro Ventures investment arm has supported the development and growth of over 100 new deals.
Three essentials in Wipro Ventures’ DNA help the firm deliver fresh thinking engagements—enterprise leaders must seek similar qualities from their IT services partners
The rise of start-up culture means that for Wipro Ventures, there is an endless supply of potential investment opportunities. While this has led to some brilliant innovations, there are also countless start-ups that lack the model or the execution to make their business a success. For Rishad and his team, this means developing the perfect strategy for Wipro Ventures to cautiously select each investment and help them navigate their early years, bringing value to their clients by following three steps:
- Wipro Ventures works with potential partners before investment to develop a deep understanding of their model and infuse customer centricity.
It’s virtually impossible to know another enterprise inside and out unless you have feet on the ground and are getting involved, something Wipro believes is crucial when selecting start-ups for investment. Wipro makes a point of working with everyone before investment. This is more than a treasury play; it allows the start-ups to take advantage of Wipro’s services and industry expertise, driving their development. Wipro will then also have the advantage of being able to infuse its customer-centric approach from day one, ensuring that their customers get as much benefit as possible.
- Investment timing is crucial. Finding the right balance of maturity is the key to shortening mean-time-to-client value.
Any investment is a risk, but the success of a project like Wipro Ventures is entirely dependent on selecting the right investments with the lowest risk. To that end, when dealing with emerging technologies like big data, AI, and cybersecurity, to name a few, Wipro believes that the perfect time for investment is around the Series B or C stage because most start-ups will have completed pilots and be moving to production, cutting product risk and allowing them to focus on market adoption challenges.
If a partner adopts a similar investment model, enterprise leaders can be certain of the products these innovators offer them and, more importantly, know they will impact client engagements in the near term.
- Wipro understands that these start-ups are not just there to be absorbed. Enterprise clients want variety and fresh thinking.
Service providers have demonstrated they have an appetite for acquisitions, and that’s not necessarily a bad thing. However, Wipro Ventures is not a pathway to purchase; instead, it hopes to nurture these start-ups and use them to drive benefits to clients. Wipro Ventures allows the start-ups to remain independent, accepting whatever that entails. For example, Wipro understands that young enterprises are hypersensitive to exclusivity; they are willing for the start-up to work with their competitors if they choose, as seen with conversational AI platform Avaamo’s partnerships with Tech Mahindra. Wipro’s clients can be confident that when they are working with the firm’s investments, they won’t be battling conflicts of interest, and they will receive the best possible service. Wipro recognizes this is all about bringing additional capabilities and innovation to clients.
The Bottom Line: If enterprise leaders want real innovation and thought leadership, they need to partner with providers that can offer not only scale but also the opportunity to tap into a diverse pool of start-ups.
Wipro Ventures is just one example, albeit a particularly successful one, of the increasing pressure enterprise leaders are putting on the provider community. As the desire to bring in new ideas, services, and solutions grows in the market, enterprise leaders must push the burden on to their partners and ask them to invest in the community and bring scalable innovations to their business.