Large firms are turning to tech startups because traditional IT suppliers are failing to innovate

Amid all the talk of the growth of the UK’s tech startup scene in recent years, there has been one significant development that has gone relatively unremarked – the failure of traditional IT suppliers to deliver the digital innovation their customers increasingly demand.

Computer Weekly has for some time reported about the growing number of large corporates that are investing heavily in supporting or working with tech startups to find innovative new technologies to help their move to digital and increase competitiveness.

For example, John Lewis has set up a startup incubator, and last week announced the first five firms it will be working with. Unilever last month established a scheme to mentor and fund tech startups to work on global projects. Even public sector bodies such as Ordnance Survey are working closely with the startup scene. Big banks like Barclays and Citi have been courting startups for some time.

It is, of course, great to see large companies supporting innovation and small businesses like this. But it is surely also an indication of the failure of their traditional IT suppliers to deliver the sort of technology innovations that big firms now need.

Those large vendors will point to the number of patents they create, and the size of their research and development budgets. But who can point to any genuinely new or innovative technologies that have come out of the likes of IBM, HP, Microsoft, Oracle, and their ilk in the last five years?

Some experts say that the economic slump is the cause – and some even claim that large firms have deliberately slowed the pace of innovation as they seek to pump up profits to keep shareholders happy in difficult times.

If that’s true, then perhaps that slowdown has created the opportunity that so many tech startups are now able to exploit.

But the rise of cloud, mobile and big data is radically changing the landscape, moving away from the game the traditional suppliers are used to playing – and their most important corporate customers have realised those suppliers are struggling to change fast enough.

Increasingly it is clear that it’s not the tech startup scene per se that is driving innovation in business technology, but the knowledge among the biggest corporate users of IT that they can no longer rely on their traditional suppliers to support them in the digital age.