Posted on 4 January 2009 by James Blake

I've just finished reading Kevin Kelleher's posting on why 2009 May Smile on Disruptive Startups and I have to agree - recessions dry-up venture funding for innovation but also lowers costs of entry for new start-ups that can disrupt the market.

My one reservation with the post is that Kevin mentions only briefly the main issue with being a new start-up in a recession economy - risk aversion.  Organisations are less likely to adopt a risky unknown alternative, no matter how innovative, in a recession economy because the tolerance for picking the wrong product or technology are much smaller with reduced budgets.

We are lucky that Software-as-a-Service has already proven itself, as this offers organisations an opportunity to outsource the expensive and complication of running a sizeable amount of their server infrastructure and support.  Software-as-a-Service's value grows in a recession economy, whereas large on-premise projects become a millstone around the neck of IT departments that have had to trim budgets and staff.

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